About 90 per cent of social insurance funds are currently invested in government bonds (G-bonds), Dao Viet Anh, deputy general director of Viet Nam Social Security (VSS) said at a seminar last week.
The annual average investment interest rate of the entire social insurance fund in 2017 was 7.25 per cent.
Anh said that when investing, the VSS always considered factors such as market, liquidity and especially the safety of the fund.
The social insurance fund invested in G-bonds helped secure the fund while raising capital for development investment, contributing to the restructuring of public debt and overspending, Anh said.
The participation of the social insurance fund in the government bond market also significantly increased the term of government bonds. If in the past, the longest term for G-bonds was just ten years, now there are 30-year G-bonds.
This, Anh said, has led to an increase in the average maturity of G-bonds, which helped reduce pressure on the repayment of government debt.
“We did a good job in investment efficiency of the social insurance fund and contribute to socio-economic development,” Anh said.
The main investment forms of the social insurance fund are the purchase of G-bonds, the loans for State budget and deposits at commercial banks.
According to a report by VSS, the accumulated fund investment till the end of 2017 reached nearly VND610 trillion (US$26.4 billion), 2.6 times higher than that in 2012 of nearly VND234 trillion. Profit earned from investment in the period 2013-2017 reached nearly VND150 trillion, of which the profit in 2017 was VND37.5 trillion, doubling that in 2012, which was nearly 19 trillion.
The report said VSS’ investment practice was in accordance with Government regulations. The investment structure was shifted towards safety orientation, gradually increasing the proportion of investment in government bonds. The size of the fund’s investment and the profit from investment both increased annually.
However, according to this report, the investment activities of the social insurance fund had not diversified, mainly through the purchase of G-bonds with long-term periods and through short-term deposits at commercial banks. The fund had not yet focused on other forms of investment with higher profitability.
Moreover, the overspending of the health insurance fund had increased. Bad debts and evasion in health insurance and social insurance still occurred in many localities. The number of enterprises owing social insurance and health insurance remained high and the amount of debt was still large and no appropriate handling measures had been put in place. — VNS
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