Viet Nam-EES Paper N 32.doc
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3.2.4. Income security for the elderly
Existing provisions There are a total of 1.9 million pensioners having reached the retirement age of 55 for
women and 60 for men authors’ calculations based on ILSSA, 2010. Old-age benefits are provided through:
– compulsory pension insurance covering 18 per cent of the total workforce Viet Nam
Social Insurance Agency. At present about 9 per cent of the retirement-age population receive retirement pensions excluding pre-1995 retirees, while 200,000
workers received a severance payment in 2009 due to a period of contributions of less than 20 years;
– the inclusion of pre-1995 retirees – almost one million people or 20 per cent of the
retirement-age population, whose pensions are financed by the Government at a cost of 1.5 per cent of GDP;
– the voluntary pension insurance scheme, which after two years of operation now
covers about 90,000 voluntary participants; and –
targeted social assistance for people above age 80 and single elderly people in poor households or elderly people in poor households who have no spouse or other relative
to rely on. The coverage was 430,000 pensioners in 2008 and 538,000 in 2009 representing almost 70 per cent of elderly not covered by social insurance, including
pre-1995 retirees. The scheme is financed as part of the regular social assistance under Decrees 67 and 132010. The overall budget represents less than 0.2 per cent of
GDP in 2010, with the majority of the resources allocated to targeted assistance for the elderly authors’ calculations based on ILSSA, 2010.
Policy design gaps –
There was a coverage gap among people aged 60-80 of about 680,000 people in 2010: these were not covered by the contributory pension and the various targeted
programme groups under the NTPs.
– Thirty per cent of people over 80 are not covered by social insurance and do not
receive social assistance; the level of benefits is low despite the recent increase raised from 180,000 to 270,000 in January 2011 and is still lower than both the rural
and urban poverty lines.
Implementation gaps –
There are obvious delivery problems, such as difficulties in identifying the elderly entitled to the social assistance pension.
– There is substantial contribution evasion in the contributory insurance scheme as well
as under-reporting of wages among formal economy workers. This creates multiple problems: it reduces the perceived value of social insurance benefits in income
protection and results in a situation where there are likely to be many retirees receiving a guaranteed minimum pension although they were not low-income earners
before retirement Thanh and Castel, 2009.
– The coverage of the theoretically compulsorily insured population is still low; so far
the system has covered only about 70 per cent of the total number, nearly 13 million targeted compulsory participants in the formal sector. The contribution rate for
workers in the non-state sector is very low.
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Viet Nam-EES Paper N 32.doc
– A problem linked to the design of the scheme is that a large share of workers aged 45
and over for men and 40 and over for women are unable to participate in the voluntary social insurance scheme with the aim of earning a pension when they reach
retirement age, because it is impossible for them, given their age, to contribute to voluntary social insurance for at least 20 years MOLISA, 2010.
Agency involved During the assessment mission the ILO was requested to undertake an actuarial study of
the contributory social security pension scheme. The ILO also recommends that the possibilities be studied of lowering the age of the social pension to age 65+ and of
increasing the level of benefits to at least the poverty line.
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