HA NOI (Biz Hub) — Market participants urged authorities to complete a legal framework on pensions this year after the long-awaited circular on voluntary pension funds wasn't submitted to the Government as planned.
Viet Nam has a population of more than 90 million, nearly 70 per cent of whom are working age (between 15 and 64). As living standards in the country improve, people will be able to prepare and invest for retirement, making the development of pension funds necessary.
"In 2015, we believe market development will be more stable and this year could be a breakthrough for the fund management industry if voluntary pension funds are allowed to operate," said Tran Thanh Tan, president of the Fund Management Club, speaking to a State Securities Commission conference on securities market development.
Tan said that in the coming few years, and in the extended future, the development of the fund management industry would largely depend on the success of pension fund types. He said he expected the Ministry of Finance would soon submit a draft decree on the organisation and operation of voluntary pension funds to the Government.
Open-ended funds and exchange-traded funds (ETFs) have faced many difficulties. Because of this, it was necessary to launch voluntary pension funds to help the stock market diversify products, as well as make more room for the fund management industry to develop, Tan said.
Prime Minister Nguyen Tan Dung vowed that cumulative assets of voluntary pension funds would be reinvested in the economy, including in capital and securities markets, and that they would reach VND10 to 12 trillion (US$467 to 561 million) by 2020.
"The Ministry of Finance will submit a draft decree on the organisation and operation of voluntary pension funds to the Government in 2015, which sets out the legal framework for the implementation of this fund type," said Deputy Minister of Finance Tran Xuan Ha.
Ha said regulations overlapping with the Ministry of Labour, Invalids and Social Affairs (MOLISA) caused the delay. While the Ministry of Finance prepared the draft decree on voluntary pension funds, MOLISA was developing a policy on additional mandatory public pensions.
While the current payment of compulsory pension insurance was high it would be difficult to ask employees and employers to pay more, Ha said. Thus, the Government decided to expand multi-pillar pension funds with the development of voluntary pensions. — VNS