In order to encourage the development of the voluntary pension scheme, the State would grant tax incentives to voluntary pension fund management companies.
This is provided in a draft decree on the establishment and operation of voluntary pension funds which has been designed by the Ministry of Finance with the aim of reducing the current pressure on the social insurance fund and, at the same time, boosting the domestic financial market.
Under the draft, only enterprises licensed to operate in the banking, life insurance or investment fund management sectors would be entitled to establish and manage voluntary pension funds.
Each pension fund management company would be required to establish at least three pension funds with escalating profit goals and risk levels, including capital preservation pension fund, balanced pension fund and growth pension fund.
To ensure the safety of pension funds, the draft allows pension funds to invest in only four types of assets: government bonds, certificates of open-ended bond funds, bank deposit certificates, and certificates of other open-ended funds.
The ratio of capital invested by a pension fund in government bonds, including investments via open-ended bond funds, must always equal at least half of the total value of the fund. The specific ratio for capital preservation pension funds, balanced pension funds and growth pension funds would respectively be 50 percent, 60 percent and 70 percent.
The draft decree is warmly welcomed by financial investors. “A properly designed decree on voluntary pension funds can give Vietnam’s fund market the boost it needs and guarantee a stable cash flow for the capital and insurance market over the long term,” said Nguyen Thi Thai Thuan, acting general director of VinaWealth Fund Management.-