2009年-世界发展银行全球_Voluntary_Pension_System___Challenge_of_Expanding_Coverage_25页_827kb

Summary of Poverty Assessment: Social Protection Chapter - Voluntary Pension System Challenge

Core Content

This background paper examines the challenges of expanding social security coverage in Vietnam, focusing on the voluntary pension system introduced in 2006. It analyzes the current participation levels, the characteristics of employment, and the affordability and willingness of workers to join the pension system.

Key Findings

1. Social Security Coverage in Vietnam

• Historical Context: Vietnam Social Security (VSS) has been providing social insurance to public servants and armed forces since 1947. In 1995, it merged with the Vietnam General Confederation of Labor and became mandatory for private sector employees with 10 or more workers. Since 2005, all private sector enterprises with labor contracts of 3 months or more are required to register employees.
• Voluntary Expansion: In 2006, the Social Insurance Law expanded the pension system to include farmers and self-employed individuals on a voluntary basis.
• Current Coverage: As of 2006, only 16.2% of the employed population (approximately 6.6 million out of 41.894 million) were registered with VSS. This low rate is attributed to informal employment, lack of legal compliance, and limited awareness.

2. Working Age Population Classification

• The working age population (15 years and above, under the standard retirement age of 55 for women and 60 for men) is divided into 8 groups based on their employment status and income.
• Registered Workers: 12.9% of the total working age population.
• Avoiders and Temporaries: 5.7%.
• Household Unit Employees: 14.7%.
• Farmers and Self-Employed: 36.9%.
• Low Income Earners: 9.7%.
• Pensioners and Unemployed/Inactive: 19.3%.

3. Participation in Mandatory Scheme

• Mandatory Coverage: Only 38.8% of wage workers with income above the minimum wage are registered with VSS.
• Informal Employment: A large portion of non-registered wage workers (44.1%) are employed in household units, often without formal contracts.
• Non-Compliance in Enterprises: Only 10.7% of non-registered wage workers are in enterprises that do not comply with registration requirements.
• Experience Levels: Avoiders and temporaries have significantly lower experience (25.1% with less than 1 year) compared to registered workers (10.4%).

4. Voluntary Pension System

• Regulations: The voluntary system requires a minimum contribution of 16% of the minimum wage, increasing to 22% by 2010.
• Benefits: Workers with less than 20 years of contributions receive a lump sum, while those with 20 years or more receive a monthly pension.
• Potential Participants: The voluntary system could potentially cover 19.357 million self-employed and farmers. If including non-registered workers with income above the minimum wage, the number rises to 20.6 million.
• Affordability: Low-income earners (35.6% of the working age population) are unlikely to participate due to the high contribution rate. Among those earning above the minimum wage, farmers and informal sector workers still face high poverty rates (17.5% and 17.4%, respectively), making participation challenging.
• Willingness to Participate: A survey (VSIIS) found that 34.5% of respondents were willing to join a pension scheme, but this number would increase by 16.5 percentage points with subsidies. However, 49% were not interested due to low expected benefits, high contribution costs, and other barriers.

5. Expected Benefits and Participation Rates

• Contribution Rates: In the actuarially fair VSIIS system, contribution rates increase with age. In the voluntary system, they are relatively flat due to uniform minimum contributions.
• Replacement Rates: In the VSIIS, replacement rates are flat, while in the voluntary system, they decrease with age due to shorter contribution periods.
• Predicted Participation: Middle-aged and older workers show very low participation rates (e.g., 8.1% for 45–49 years and 0.4% for 50–54 years). Young workers (15–19 years) have the highest participation rate (60.6%), but overall, the voluntary system's potential coverage is limited to 48.8%.

Conclusion

The voluntary pension system in Vietnam has the potential to expand coverage, but significant challenges remain. Low income, lack of awareness, and low expected benefits are major barriers. The current participation rate is low, and without policy interventions such as subsidies or improved benefits, the system may struggle to achieve universal coverage in the near future. The informal sector remains a key area for expansion, but its structural characteristics and financial constraints hinder progress.