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Pension Liabilities and Generational Relations: The Case of Vietnam

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  • Giang, Thanh Long

Abstract

In the next fifty years, according to the United Nations Population Prospect (2004), an aging population is expected in Vietnam. The operation of a pay-as-you-go defined benefit pension scheme will inevitably elevate pension liabilities. These liabilities, in turn, threaten the financial sustainability of the scheme, and affect generational relations. This paper estimates the size of pension liabilities of the current pension scheme in Vietnam, and analyzes generational relations under various economic scenarios. Pension liabilities are considered by a closed-group approach. The estimated results show that pension liabilities account for a small part of 2002 GDP, and this is partially explained by two primary factors: (i) the method of estimation currently employed by the scheme, and (ii) the fact that currently the scheme covers only a small portion of the total population and labour force. It is, however, obvious that the government will have to pay existing pension liabilities, which will affect generational relations in the longer term, particularly from an economic point of view. Whether the impacts on generational relations will be serious or not depends upon payment settings and reforms of the scheme.

Suggested Citation

  • Giang, Thanh Long, 2005. "Pension Liabilities and Generational Relations: The Case of Vietnam," MPRA Paper 970, University Library of Munich, Germany, revised Mar 2006.
    • Handle: RePEc:pra:mprapa:970
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    File URL: https://mpra.ub.uni-muenchen.de/970/1/MPRA_paper_970.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Kunieda, Shigeki, 2002. "Pension Reforms in Asian Countries," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 43(2), pages 55-56, December.
    3. Holzmann, Robert & Palacios, Robert & Zviniene, Asta, 2004. "Implicit pension debt: issues, measurement and scope in international perspective," Social Protection Discussion Papers and Notes 30153, The World Bank.
    4. 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.
    5. Franco, Daniele & Marino, Maria Rosaria & Zotteri, Stefania, 2004. "Pension Expenditure Projections, Pension Liabilities and European Union Fiscal Rules," Discussion Paper 231, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    6. Deborah Roseveare & Willi Leibfritz & Douglas Fore & Eckhard Wurzel, 1996. "Ageing Populations, Pension Systems and Government Budgets: Simulations for 20 OECD Countries," OECD Economics Department Working Papers 168, OECD Publishing.
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    Cited by:

    1. Giang, Thanh Long & Pfau, Wade Donald, 2008. "Demographic Changes and Pension Finances in Vietnam," MPRA Paper 9931, University Library of Munich, Germany.
    2. Long T. Giang & Wade D. Pfau, 2009. "Vulnerability of Vietnamese Elderly to Poverty: Determinants and Policy Implications," Asian Economic Journal, East Asian Economic Association, vol. 23(4), pages 419-437, December.
    3. Giang, Thanh Long, 2008. "Social Health Insurance in Vietnam," MPRA Paper 9926, University Library of Munich, Germany.

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    More about this item

    Keywords

    aging; inter (intra)generational relations; pension liabilities/debts; Vietnam;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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