The Relationship Between Population Ageing and Private Savings in Vietnam

Nguyen Thi Thu Ha, Lam Ba Hoa
University of Economics, The University of Danang


Population ageing is recognised as a significant issue, following which many studies have emerged and indicate the presence of a significant relationship between this element with private savings in developed and developing countries both. However, the direction of causality linking these variables has continued to generate numerous debates among researchers; to date, there is no empirical study available and conducted regarding this linkage in the context of Vietnam. Accordingly, the study aimed to investigate the relationships between population ageing and private savings in Vietnam within the Life Cycle Hypothesis framework. The findings revealed four negative long-run relationships and three negative short-run associations of the youth and elderly dependency ratios and social insurance funds with private savings. The policy implications suggest that the government can promote savings by mobilising its resources, facilitating financial institutions to initiate insurance schemes, and carefully investing in projects to generate higher benefits for the elderly population. Moreover, the governing entity should limit the effects of dependency ratio by offering attractively beneficial programmes, reforming the pension system, and providing opportunities for the elderly to increase their income. Finally, establishing a sound regulatory framework is necessary to encourage the population’s participation and stimulate the voluntary insurance scheme.

Keywords: Dependency ratio, Life cycle hypothesis, Life expectancy, Social insurance funds, Private savings