One of the 10 countries with the fastest ageing population in the world, Vietnam has an estimated 30 years within the “golden population structure” period, considerably shorter than many neighbouring countries. The rapid ageing rate and the low ratio of independent seniority are expected to entail pressures and burdens on social security.
|Many Vietnamese people are at the risk of "growing old before becoming rich" |
Vietnam is enjoying a golden population structure, the most balanced development stage of each country when the proportion of the labour force is double the number of dependents. 75 per cent of the population is of working age, making a crucial contribution to driving Vietnam's GDP growth – the fastest in Southeast Asia. However, this optimism will not last for long. From 2040, Vietnam will transition into an undesirable stage: a period of the ageing population.
|Phuong Tien Minh, CEO of Prudential Vietnam |
Meanwhile, concerns are rising as the majority of people are unprepared for the risk of population ageing. A survey conducted by Prudential Vietnam on 500 people in the 30-45 age bracket in Ho Chi Minh City and Hanoi revealed that only four out of 10 respondents are confident of being financially independent in their old age. “The Prudential survey reflects the current social picture. Our goal is to change the perception among the community so that anyone can start preparing for independent seniority,” said Phuong Tien Minh, CEO of Prudential Vietnam.
Putting the situation of an ageing population in the context of low per capita income, Le Van Thanh, Deputy Minister of Labour, War Invalids and Social Affairs, identified the risk of many Vietnamese people “growing old before becoming rich”.
Where are the senior citizens in the big picture?
The expansion of urban areas has attracted a wave of young migrants seeking jobs, leaving behind nearly 30 per cent of senior citizens living alone in rural areas. Nguyen Xuan Truong, director general of Population Structure and Quality said that 70 per cent of old adults in Vietnam are making their own living with the offspring’s support; only 25.5 per cent of them live on pensions and social benefits.
Dr. Giang Thanh Long, associate professor of the National Economics University, also estimated that the current government’s support policies only cover about 8 per cent of the senior group. Meanwhile, it is forecast that by 2049, the medical needs of this group will increase by 2.5 times compared to today. Consequently, when Vietnam enters the aging population period, it will not only place many financial pressures on the young generation but also create a burden on social security.
Early action, early financial freedom
According to Dr. Long, many developed countries have successfully prepared for their aging population period based on three pillars: economic, health, and social preparedness. He said that insurance organisations, banks, and the like should be encouraged to actively participate in the provision of life insurance-related services. This diversity not only supports middle-income earners and above but also creates income safety nets and protects the health of low-income people.
CEO Minh of Prudential Vietnam said that an aging population is a challenge. While governors must resolve the macro problem, everyone can actively participate by preparing a personal financial plan. “People have different perceptions of finance per life stage. The earlier you prepare, the easier it is to achieve financial freedom and independent seniority,” said Minh.