Pension Liabilities and Generational Relations: The Case of Vietnam
AbstractIn 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.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 970.
Date of creation: Jun 2005
Date of revision: Mar 2006
aging; inter (intra)generational relations; pension liabilities/debts; Vietnam;
Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
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