Viet Nam’s Social Security Reform Looks To The Future
28 May 2018
By 2030 the number of people above 65 with a contributory pension is projected to be less than two million leaving around ten million without a pension.
Viet Nam is one of the fastest aging societies in the world. Rising longevity and declining fertility have combined to swell the number of older persons needing care and reduce the number of workers supporting them. While in 2015 there were about six working-age adults for one older person above 60 years, in 2055 it will only be two workingage adults per older person. This means that tomorrow’s so-called “sandwich generation” will face an increased burden of caring for three generations. In the absence of pensions, the responsibilities of society are also heavier. Ensuring universal protection in old-age is hence not only beneficial for older persons, but also for families.
Currently the coverage of social insurance in Viet Nam is merely 27% of the labour force. By 2030 the number of people above 65 with a contributory pension is projected to be less than two million leaving around ten million without a pension.
In May 2018, Resolution 28-NQ/TW on MPSIR was approved, representing a breakthrough on social policy in Viet Nam. MPSIR brings Viet Nam closer to the most advanced economies in the world in regard to social security policies, particularly through its focus on comprehensive and integrated approaches to address contemporary social security challenges. ILO contributed to shaping the MPSIR by assessing the current social security system, recommending possible options for the reform through technical papers, and supporting policy dialogues with workers, employers and other stakeholders.
The resolution also established the goal of universal social protection coverage, aligning Viet Nam’s policies with international commitments and obligations such as the right to social security in the International Covenant on Economic, Social and Cultural Rights, the ILO Recommendation on Social Protection Floors (R202) and the UN 2030 Sustainable Development Agenda. The decision to reach universal coverage through both contributory (social insurance) and non-contributory (tax funded) benefit sets Viet Nam on a similar path to neighbouring countries with universal coverage such as Japan, South Korea, China or Thailand.
Proposed incremental reforms such as the gradual increase in retirement age, equalizing the qualifying ages for men and women for retirement age and old-age benefits, and aligning replacement rates to international levels will all contribute to ensuring the long-term financial sustainability of the system. These are essential elements of the reform to guarantee that the system respects and furthers the rights being acquired today.