The Ministry of Labour, Invalids and Social Affairs will submit to thePrime Minister a pilot programme for the implementation of a voluntarysupplementary pension fund this year, which is expected to help increasepensions for retirees.
At present, retirees inVietnam receive their pensions, up to a maximum of 75 percent of theirsalary, from part of the Vietnam Social Security Fund (VSS).
The fund is currently based on an average of about 152 USD per month,but many retirees receive monthly pensions of about 50 USD.
The pension was paid based on minimum wage, thus a burden is created for the VSS each time minimum wage increases.
Moreover, the International Labour Organisation has warned that theVSS, currently covering about 20 percent of the labour force, couldbegin showing a deficit by 2021 and run out of money by 2034 if noreform is made.
Deputy Minister Nguyen Minh Huansaid that besides current compulsory contributions to the pension fund,employers and employees could contribute to a supplementary pensionscheme in which they negotiate for contribution proportion.
The contribution could be 5-22 percent of the employee's monthlysalary but not to exceed 5.06 million VND per person per month or 60.72million VND per person per year.
The assets andrights generated from the employees' contributions would be managedthrough individual accounts under the overseeing functional agencies forsavings and investment.
Huan said that theGovernment would develop proper legal framework for the implementationof a three-year-long pilot programme while offering incentives forparticipating employers and employees such as exemptions from personaland corporate income tax for the contributions made to the supplementarypension fund.
Deputy head of the ministry's SocialInsurance Department Pham Truong Giang said that now was the right timefor Vietnam to implement a supplementary pension scheme, as the countryis entering a golden population period where the number of workingpeople exceeds the number of dependant people, but once the period ends,the aging population would put increasing pressure on the fund.
"The supplementary pension could help reduce the pressure for the State budget," he said.
A survey by the ministry revealed that 70 percent of 700 enterprisesin Hanoi and Ho Chi Minh City showed they welcomed the policy on asupplementary scheme, he said, adding that so far, over 20 enterprisesincluding State-owned companies, multi-nationals and private ones wantedto join.
The official said that the supplementarypension scheme could be seen as a tool for employers to attractcompetent employees, as employees could be more reassured about theirpension.
Under the pilot programme, at least 70percent of the supplementary pension would be spent to buy Governmentalbonds, a safe investment channel, so if fund management companies failedto use the fund effectively or accrue losses, employees would stillreceive profit from the Government bonds.
DirectorGeneral of VietFund Management Company Tran Thanh Tan said that bigdomestic and international groups have wanted such supplementary pensionscheme for long time, but could not implement it due to the lack oflegal framework.
If the supplementary pension isused to buy Governmental bonds, it could help increase liquidity in thebond market and money supply to public investment, thus boostingproduction and generating more jobs, he said.
If approved, the pilot programme for a supplementary pension would begin next year.-VNA
At present, retirees inVietnam receive their pensions, up to a maximum of 75 percent of theirsalary, from part of the Vietnam Social Security Fund (VSS).
The fund is currently based on an average of about 152 USD per month,but many retirees receive monthly pensions of about 50 USD.
The pension was paid based on minimum wage, thus a burden is created for the VSS each time minimum wage increases.
Moreover, the International Labour Organisation has warned that theVSS, currently covering about 20 percent of the labour force, couldbegin showing a deficit by 2021 and run out of money by 2034 if noreform is made.
Deputy Minister Nguyen Minh Huansaid that besides current compulsory contributions to the pension fund,employers and employees could contribute to a supplementary pensionscheme in which they negotiate for contribution proportion.
The contribution could be 5-22 percent of the employee's monthlysalary but not to exceed 5.06 million VND per person per month or 60.72million VND per person per year.
The assets andrights generated from the employees' contributions would be managedthrough individual accounts under the overseeing functional agencies forsavings and investment.
Huan said that theGovernment would develop proper legal framework for the implementationof a three-year-long pilot programme while offering incentives forparticipating employers and employees such as exemptions from personaland corporate income tax for the contributions made to the supplementarypension fund.
Deputy head of the ministry's SocialInsurance Department Pham Truong Giang said that now was the right timefor Vietnam to implement a supplementary pension scheme, as the countryis entering a golden population period where the number of workingpeople exceeds the number of dependant people, but once the period ends,the aging population would put increasing pressure on the fund.
"The supplementary pension could help reduce the pressure for the State budget," he said.
A survey by the ministry revealed that 70 percent of 700 enterprisesin Hanoi and Ho Chi Minh City showed they welcomed the policy on asupplementary scheme, he said, adding that so far, over 20 enterprisesincluding State-owned companies, multi-nationals and private ones wantedto join.
The official said that the supplementarypension scheme could be seen as a tool for employers to attractcompetent employees, as employees could be more reassured about theirpension.
Under the pilot programme, at least 70percent of the supplementary pension would be spent to buy Governmentalbonds, a safe investment channel, so if fund management companies failedto use the fund effectively or accrue losses, employees would stillreceive profit from the Government bonds.
DirectorGeneral of VietFund Management Company Tran Thanh Tan said that bigdomestic and international groups have wanted such supplementary pensionscheme for long time, but could not implement it due to the lack oflegal framework.
If the supplementary pension isused to buy Governmental bonds, it could help increase liquidity in thebond market and money supply to public investment, thus boostingproduction and generating more jobs, he said.
If approved, the pilot programme for a supplementary pension would begin next year.-VNA
