Reforming the Old-Age Security System in Vietnam

Abstract

AbstractOur paper examines changing systems of state support to the elderly in Vietnam, based primarily on two recent surveys in northern and southern subregions. We focus on the pension system, the most generous source of such support. Prior to 1995, pensions were primarily available to workers in the state sector. The funding system was ostensibly pay-as-you-go, yet heavily reliant on government subsidies. Our surveys reveal distinct regional patterns in the prevalence and size of pensions (as well as age at retirement), patterns we relate to Vietnam's partition and reunification. We then describe recent policy changes enacted as part of Vietnam's transition to a more market-oriented economy. A new Social Security Administration is attempting to extend old age security to employees of non-state enterprises based on enhanced employer contributions and new payroll deductions. We identify ideological, financial and demographic rationales for these reforms as well a variety of challenges to the new system.