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Demographic Changes and Pension Finances in Vietnam

Author

Listed:
  • Giang, Thanh Long
  • Pfau, Wade Donald
Abstract
This paper aims to provide a long-term financial vision for the Vietnamese pension scheme using stochastic modeling for key variables under an actuarial framework. In particular, we project the pension fund balances in order to see whether the scheme will be financially sustainable. The median values of the status-quo projections show that the pension fund will be depleted in about 2052 with a 90-percent confidence interval range of 8 years. The estimated results from our sensitivity tests show that the retirement age, the indexation method for pension benefits, and the contribution rate are all crucial determinants of the pension fund balance in the long term. At the same time, some factors, including coverage rates, administrative costs, the long-term fertility rate, and the rate of return on pension fund assets play less important roles in determining the fund’s balance.

Suggested Citation

  • Giang, Thanh Long & Pfau, Wade Donald, 2008. "Demographic Changes and Pension Finances in Vietnam," MPRA Paper 9931, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9931
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    File URL: https://mpra.ub.uni-muenchen.de/9931/1/MPRA_paper_9931.pdf
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    References listed on IDEAS

    as
    1. Pfau, Wade Donald, 2006. "Comparing the Impacts of Social Security Benefit Reductions on the Income Distribution of the Elderly," MPRA Paper 19033, University Library of Munich, Germany.
    2. Giang, Thanh Long, 2004. "The Pension Scheme in Vietnam: Current Status and Challenges in an Aging Society," MPRA Paper 969, University Library of Munich, Germany.
    3. Lee, Ronald D., 1993. "Modeling and forecasting the time series of US fertility: Age distribution, range, and ultimate level," International Journal of Forecasting, Elsevier, vol. 9(2), pages 187-202, August.
    4. Giang, Thanh Long, 2005. "Pension Liabilities and Generational Relations: The Case of Vietnam," MPRA Paper 970, University Library of Munich, Germany, revised Mar 2006.
    5. Ronald Lee & Timothy Miller, 2001. "Evaluating the performance of the lee-carter method for forecasting mortality," Demography, Springer;Population Association of America (PAA), vol. 38(4), pages 537-549, November.
    6. Lee, Ronald & Tuljapurkar, Shripad, 1998. "Uncertain Demographic Futures and Social Security Finances," American Economic Review, American Economic Association, vol. 88(2), pages 237-241, May.
    7. Ronald Lee, 2000. "The Lee-Carter Method for Forecasting Mortality, with Various Extensions and Applications," North American Actuarial Journal, Taylor & Francis Journals, vol. 4(1), pages 80-91.
    8. Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
    9. Holzmann, Robert & Mac Arthur, Ian W. & Sin, Yvonne, 2000. "Pension systems in East Asia and the Pacific : challenges and opportunities," Social Protection Discussion Papers and Notes 23088, The World Bank.
    10. Robert P. Hagemann & Giuseppe Nicoletti, 1989. "Ageing Populations: Economic Effects and Implications for Public Finance," OECD Economics Department Working Papers 61, OECD Publishing.
    11. Pfau, Wade D., 2006. "Comparing the Impacts of Social Security Benefit Reductions on the Income Distribution of the Elderly," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(2), pages 195-210, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Vanella, Patrizio & Rodriguez Gonzalez, Miguel & Wilke, Christina B., 2021. "The Impact of Population Aging on the German Statutory Pension Insurance - A Probabilistic Approach," Hannover Economic Papers (HEP) dp-688, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

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    More about this item

    Keywords

    aging; stochastic projections; pension finances; Vietnam;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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