Pension tension

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The article about the challenges of an aging population (issue no.85, Vietnamese elderly face "double health burden"), refers to developments that could have been foreseen much earlier. It was apparent to me in the UK in the 1950s that the pay-as-you-go pension scheme was merely a blank check for future generations of taxpayers which would go wrong sooner or later. At that time, demographics and longevity hadn't changed, so I didn't know when or by how much.

I'd suggested that from 2005 to 2015, when the post-war bulge had retired and medical science had improved, we would be saddled with a serious problem of having less people working while the older generation lived longer. Which generation would pay the pension for two generations (their own and that of the older generation)?! Pensions are expensive and getting more expensive.

So we had to change from the younger generation paying for older generation's pensions to have them pay for their own. It is essential to start on the right path, no matter how small the initial scale may be.

This is also true of Vietnam where it was also apparent that the process (of moving from ageing to aged) would be much faster. To my knowledge no other nation but Singapore has opted for a funded pension scheme (where the government collects money from the younger generation, invests it and pays their pension later), so it is worth looking at and learning from their experience.

Yours faithfully,

Patrick Moran

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