William Joseph Price, Senior Financial Sector Specialist at the World Bank, gave the advice at a seminar themed “Pension Investments: International experience and recommendation for Viet Nam” on July 13 in Ha Noi.

The seminar, which was co-organised by the Viet Nam Social Security and the World Bank, was attended by representatives of agencies of the National Assembly, Government, Viet Nam Social Security, the World Bank and international experts.

He said that Resolution No 28-NQ/TW expressed a desire for a lean, professional, efficient, modern and diversified Vietnam Social Security to improve efficiency and ensure sustainable social security.

Delegates at the seminar

It is a good ambition, associated with the Master Plan on Social Insurance Reform, approved by the Prime Minister of Viet Nam, he added.

He suggested that it is necessary to give Viet Nam Social Security more authority to operate the investment of the pension fund.

Along with that, it has to strengthen supervision and support from experts in order to improve investment capacity and the ability to use external managers as well as improve risk management and management capacity for the agency, he said.

He also said if the agency has the opportunity to invest in more varieties of assets, the pension fund must publish a detailed report, explaining their plans for the next three years and showing how they will safely perform them.

Alternatively, investing in new varieties of asset scan initially be done by using “index funds” – where you own a fraction of a hundred or a thousand of different companies or different bonds, which can be invested very cheaply, he said.

Only when the Viet Nam Social Security Board of Commissioners, relevant ministries and National Assembly Committees feel more satisfied with the growing expertise of the agency, could the agency invest in newer varieties of assets, he said.

Data from the agency shows that by the end of 2021, the total balance of the social insurance fund nearly doubled compared to 2016 with an increase in fund size of about 18 per cent per year.

The average return on investment in the whole period grew positively and it was higher than the growth rate of the consumer price index (CPI).

The social insurance fund has become the largest public financial fund in the country, actively contributing to the development of the capital market in Viet Nam, ensuring the stability of interest rates and liquidity in the Government bond market.

VSS