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The general objective of the dissertation is to identify the conditions for the development of private voluntary funded pension funds in Viet Nam stock market, thereby recommending policy implications for the development of private voluntary funded pension funds in Viet Nam stock market.
MINISTRY OF EDUCATION & TRAINING STATE BANK OF VIET NAM BANKING UNIVERSITY HO CHI MINH CITY TRAN NGUYEN MINH HAI DEVELOPING PRIVATE VOLUNTARY FUNDED PENSION FUNDS IN THE STOCK MARKET OF VIET NAM SUMMARY OF DOCTORAL THESIS IN ECONOMICS MAJOR: FINANCE - BANKING CODE: 34 02 01 SUPERVISORS TS LE THI THANH HA, PH.D TRAN THI KY, PH.D Ho Chi Minh City - 2018 i The thesis is completed at BANKING UNIVERSITY HO CHI MINH CITY SUPERVISORS LE THI THANH HA, PH.D TRAN THI KY, PH.D REVIEWER REVIEWER REVIEWER The thesis will be examine by Examination Board of Banking University Ho Chi Minh City at BANKING UNIVERSITY HO CHI MINH CITY Time & Date The thesis can be found at THE NATIONAL LIBRARY LIBRARY OF THE BANKING UNIVERSITY HO CHI MINH CITY ii LIST OF PUBLICATIONS RELATED TO THE THESIS In the course of the thesis, a part of the dissertation was used for publication in journals and specialized seminars in the field of economics - finance - banking in order to increase the credibility of the thesis through the reviews of the prestigious experts and readers Specific articles are as follows: Tran Nguyen Minh Hai (2016) Developing private voluntary funded pension funds in the securities market of Viet Nam Financial and Monetary Market Review, Vol 22 (463), November, 2016, pp 21 - 27 Tran Nguyen Minh Hai (2017) An overview of pension system reform: World trends and in Viet Nam context Journal of Development and Integration, Vol 34 (44), May - June, 2017, pp 88 - 93 Tran Nguyen Minh Hai (2018) The impact of private voluntary funded pension funds on the stock market: the case of APEC economies Proceedings of the first international conference on Vietnam’s Business & Economics Research 2018 (VBER 2018), July 22 - 24, 2018, Ho Chi Minh City Retrieved from http://vber.ou.edu.vn/speakers-slides/ CHAPTER INTRODUCTION 1.1 Reasons for selecting the topic For a long time, the development of financial intermediaries in the stock market has been the subject of much research interest from theory to practice One of the financial intermediaries is the voluntary funded pension funds, formed from the process of reforming the national public pension system in the context of an aging population and gradually becoming an important large institutional investor in the stock market Meanwhile, in the world, the traditional PAYG pension system is gradually being replaced by a (fully/partially) funded pension system The introduction of a funded pension system allows pension funds to voluntarily accumulate funds for investment in financial markets This accumulation is expected to increase the depth and liquidity of the capital market At the same time, with their accumulated assets and long-term capital, private voluntary funded pension funds have the incentive to invest more in long-term and illiquid assets to generate higher returns, then they also contribute to long-term funding for the capital market in general, the stock market in particular (Davis, 1998, Davis, 2000) In the world, there are many empirical studies on the development of private voluntary funded pension funds for the growth of the stock market (Catalan, Impavido & Musalem, 2000, Walker & Lefort, 2002, Impavido, Musalem & Tresselt, 2003; Meng & Pfau, 2010; Liang & Bing, 2010; Rocholl & Niggemann, 2010; Raisa, 2012; Hu, 2012; Zandberg & Spierdijk, 2013; Sun & Hu, 2014) Although these empirical studies use different quantitative models in order to find reliable estimation methods and time periods for different data sets, most conclusions show a consistence about the meaningful positive role of private voluntary funded pension funds in the development of the capital market Accordingly, these empirical studies confirm the role of institutional investors of the private voluntary funded pension funds and the need to develop these funds in the stock market However, most of these empirical studies have encountered limitations on the number of observable variables, namely that the available observed time is not long enough On the other hand, these above research focus on the developed countries of the OECD as well as the emerging markets According to the Asian Development Bank (ADB), retirement markets in Asia and the AsiaPacific region are rare in existing literature (Hu, 2012) Through this study, the topic provides new empirical evidence for the voluntary funded pension funds’ development relationship to the growth of the domestic securities market in APEC economies (Asian Pacific Economic Cooperation) The research examines the impact of voluntary funded pension funds’ assets on the development of the stock market through the unbalanced panel data collected during the period 2000 - 2015 and using macro economic - social factors as explanatory variables for controlling in the regression models The results show that there is a positive relationship between the voluntary funded pension funds’ assets and the development of the stock market at a 1% significant level while other factors unchanged in the period of 2000 - 2015 The results from the quantitative analysis of the regression model of the author's study also confirmed the findings from previous studies on the positive correlation between the growth of private voluntary funded pension funds and the development of the stock market Therefore the author believes that the thesis will contribute to the debate on the effects of private voluntary funded pension funds’ development on the Asian capital markets and financial markets Being one of the APEC member economies, Viet Nam is a developing country with a low average per capita income compared to other economies in the region and in the world despite the stable GDP growth rate in recent years Therefore, Viet Nam is likely to face the situation of "aging before getting rich" in the context of increasing the aging population Therefore, ensuring social security is an urgent issue that needs to be addressed thoroughly, including ensuring pension in the old age Meanwhile, the public pension system of Viet Nam operates under the PAYG mechanism with defined benefit (DB) schemes leading high burden on pension payment which is increasing significantly in the coming decades Thus, the public pension system of Viet Nam implies the financial instability and inequities among generations (Giang Thanh Long, 2004) Moreover, the pressure to pay pension is increasingly heavy on the Viet Nam Governmental budget in the future, consequently contributing to the Governmental budget deficit, resulting in negative impact on the overall financial situation (MOF, 2015a, Luu Hai Van, 2014) Therefore, Viet Nam has implemented pension reforms but these reforms are mainly in parameters (Giang Thanh Long, 2004, Dieu Ba Duoc, 2013, MOLISA, 2015) In 2013, the Ministry of Finance's announcement of Circular No 115/2013 / TT-BTC guiding private voluntary funded pension insurance and vprivate voluntary funded pension schemes in Viet Nam marked a turning point for the Vietnamese pension system as well as introducing new financial intermediary in the role of institutional investors in the stock market of Viet Nam This event has shown the interest of the Government and other stakeholders in the development of private voluntary funded pension funds in Viet Nam stock market in order to meet the needs of society and the market as well as contributing to the development of the stock market since the development of Viet Nam stock market is still evaluated and ranked low compared to other stock markets in Asia-Pacific region and in the world (WEF, 2015) due to the quantity and quality of goods delivered (VSD, 2015) as well as activities of market institutional participants are still very limited (SSC, 2012) Although the development of private voluntary funded pension funds in the stock market in Viet Nam is concerned by the Government and other stakeholders to meet the needs of society and the market as well as contributing to the development of the securities market, Viet Nam still lacks studies on developing this type of fund Most studies have been conducted after the Ministry of Finance has issued Circular No 115/2013/TT-BTC guiding voluntary pension insurance and private voluntary funded pension plans/schemes in Viet Nam, focusing only on (i) situation and the challenge of retirement in the context of aging populations and (ii) the role of private voluntary funded pension funds in a multi-pillar pension system (Dieu Ba Duoc, 2013, Khuat Thi Kieu Van, 2013; TTBD, 2014; Chi Tin, 2014; Luu Hai Van, 2014; Nguyen Thi Le Thu, 2014, Tran Phuong Thao & Nguyen Anh Tuan, 2014, Luong Xuan Truong, 2014, Bui Cam Huong, 2014, Thuy Duong, 2017) Therefore, within the research scope of the thesis on developing private voluntary funded pension funds in the stock market, private voluntary funded pension funds are focused on analysis afor the following main reasons: Firstly, the private voluntary funded pension fund is a long-term institutional investor in the stock market Voluntary pension funds have contributed to the instistutional investor base in the development of the stock market when (i) providing large scale, stable, long-term capital to the stock market and (ii) simultaneously holding a large portion of financial assets as well as constantly developing with increasing asset volume in the stock market Secondly, private voluntary funded pension fund is a pillar of the nation's pension system, contributing to the improvement of pension after retirement, contributing to social security in the context of an aging population and the burden of the public pension system is growing For these above reasons, within the framework of the thesis entitled "DEVELOPING OF PRIVATE VOLUNTARY FUNDED PENSION FUNDS IN THE SECURITIES MARKET OF VIET NAM", the study focuses on the systematization of the general theories related to developing private voluntary funded pension funds, the position of private voluntary funded pension funds in a multi-pillar pension system, criteria for evaluation as well as conditions for the development of private voluntary funded pension funds in the stock market from theoretical reviews to empirical evidences in order to supplement and contribute to the understanding of the development of private voluntary funded pension funds in the stock market and the development of private voluntary funded pension funds in the stock market of Viet Nam In particular, the study conducted online surveys for individuals and investors who are Vietnamese citizens and knowledgeable in the field of finance insurance in order to collect information about their choices to private voluntary funded pension funds based on (i) the level of financial literacy and attitudes to risk; (ii) interest and personal behavior in pension At the same time, the study also examines the impact of private voluntary funded pension funds' development on the development of the stock markets of some economies in the world, namely the APEC economies and proposes some recommendations to develop private voluntary funded pension fund in the Viet Nam stock market 1.2 Research objectives and questions 1.2.1 Overall research objectives The general objective of the dissertation is to identify the conditions for the development of private voluntary funded pension funds in Viet Nam stock market, thereby recommending policy implications for the development of private voluntary funded pension funds in Viet Nam stock market 1.2.2 Specific research objectives To address the general research objectives, the thesis focuses on addressing specific objectives as follows: Analyzing the situation of pension reform in Viet Nam and developing private voluntary funded pension funds in Viet Nam stock market The impact of private voluntary funded pension funds to the stock markets of economies in the world, particularly APEC economies, in which Viet Nam is an economy member Policy implications and recomendations to develop private voluntary funded pension funds in Viet Nam stock market 1.2.3 Research questions From the specific research objectives, the thesis solves the following research questions: What are the conditions for developing private voluntary funded pension funds in the stock market through the PESTLIED model? How has the development private voluntary funded pension funds in Viet Nam stock market been achieved? Developing private voluntary funded pension funds in the stock market that impacts on the development of the stock market in the economies of the world, namely, APEC economies What are the experience lessons learned from empirical research on the development of private voluntary funded pension funds in the stock market of APEC economies drawn up for the developing of private voluntary funded pension funds in the stock market of Viet Nam? How are Vietnamese individuals aware of issues related to private voluntary funded pension funds, private voluntary funded pension funds' development in the stock market and the demand for private voluntary funded pension funds in the stock market of Viet Nam? From the results of research on the impact of the private voluntary funded pension funds' development on the growth of the stock market in APEC economies and the results of the online survey on individual needs of Vietnamese citizens, what are the possible solutions? What are the recommendations for developing private voluntary funded pension funds in the stock market of Viet Nam? 1.3 Research scope and subjects 1.3.1 Research subjects The research subject of the thesis is developing of private voluntary funded pension funds in the stock market 12 CHAPTER LITERATURE REVIEWS ON DEVELOPING OF PRIVATE VOLUNTARY FUNDED PENSION FUNDS IN THE STOCK MARKET 2.1 The pirvate voluntary funded pension fund The concept of private voluntary funded pension fund implies the type of pension fund to be fully funded based on the voluntary contributions of people participating in private pension plans/schemes in relation to the public compulsory unfunded pension fund (unfunded and managed by the public sector - the PAYG system) (Blommestein, 1997; OECD, 2004) Private voluntary funded pension funds are the third pillar in the multi-pillar pension system introduced by the WB in 1994, including: (i) a private employee/occupational voluntary funded pension fund which can be based on a defined benefit (DB) or a defined contribution (DC) model: A private voluntary funded pension fund may have contributions from the employer and is a type of pension fund under a contract signed by the fund management company and employers who represent employees participating in the contract, but employees have the right not to participate and are not obliged to participate in this contract (GoC, 1999; OECD, 2004; NBS, 2011; OECD, 2011) (ii) Private personal/individual voluntary funded pension based on the defined contribution (DC) model: Private voluntary personal funded pension funds are established by financial institutions (such as banks, life insurance companies) and applied to all individuals, operating within the framework of the legal regulatory system like investment funds in the market and encouraged by the government's tax incentives (WB, 1994, WB, 2008) Private voluntary funded pension funds are mainly managed by the private sector, which are funded by voluntary contributions from participants under the 13 agreements specified in the contracts of pension plans/schemes based on DB or DC model The development of private voluntary funded pension funds has been accompanied by a shift towards a transition from DB to DC model (WB, 1994, Blommestein, 1997, OECD, 2004, WB, 2008, Hinz, Rudolph, Antolín & Yermo, OECD, 2011; Holzmann, 2012; Mishkin, 2012) 2.2 Criteria for assessing the development of private voluntary funded pension funds in the stock market In most empirical studies, the volume of the private voluntary funded pension fund's assets is the most commonly used proxy to measure the development of private voluntary funded pension funds in the stock market And for the level of development of the stock market, it is usually expressed through two indicators: (i) the depth of the stock market; and (ii) liquidity of the stock market (Catalan, Impavido & Musalem, 2000, Walker & Lefort, 2002, Impavido, Musalem & Tresselt, 2003, Davis & Hu, 2008; Raddatz & Schmukler, 2008; Hryckiewicz, 2009; Kim, 2010; Meng & Pfau, 2010; Liang & Bing, 2010; Rocholl & Niggemann, 2010; Raisa, 2012; Hu, 2012; Zandberg & Spierdijk, 2013; Sun & Hu, 2014) 2.3 Developing the private voluntary funded pension funds in the stock market Developing private voluntary funded pensiopn funds in the stock market has become an important objective trend and is encouraged in the process of developing financial movements of countries around the world in order to: Increasing total savings to meet social needs and market requirements Developing institutional investors in the stock market Providing stable and long-term capital in the stock market Increasing the depth and liquidity of the stock market 2.4 Conditions for the development of private voluntary funded pension funds in the stock market As any institutional investor in the stock market, the development of private voluntary funded pension fund in the stock market is also influenced by the 14 objective conditions of economic - political - social -cultural factors, technological advances in the macro environment and internal micro-elements of private voluntary funded pension funds However, with regard to pension and voluntary contributions from pension plan/scheme participants, the conditions to develop private voluntary funded pension funds in the stock market revolve around the basic features are synthesized and analyzed according to the PESTLIED model In which, external macro-economic factors, including (i) inflation and macroeconomic stability; (ii) modernizing the infrastructure of the stock market; (iii) legal regulations on investment activities and asset allocation are the conditions under which the empirical studies on the development of private voluntary funded pension funds in the domestic stock market in the world are accepted its importance for the developing private voluntary funded pension funds in the stock market (Fischer & Reisen, 1994; Blommestein, 1997; Vittas, 2000; Impavido, Musalem & Tresselt, 2003; Hryckiewicz, 2009; Kim, 2010; Rocholl & Niggemann, 2010, Raisa, 2012) 15 CHAPTER DEVELOPING PRIVATE VOLUNTARY FUNDED PENSION FUNDS IN THE STOCK MARKET: EXPERIENCE LESSIONS FROM APEC ECONOMIES 3.1 Background In the APEC economies, in the period 2000 - 2015, the average annual growth rate of private voluntary funded pension fund is higher than the annual average growth rate of domestic capital market, except in Thailand, Singapore, Philippines and Indonesia As the results, the figures from 2000 to 2015 show the spectacular growth of private voluntary funded pension funds in the world in general and in APEC economies in particular Private voluntary funded pension funds have increased by an average of 5,5% per year between 2000 and 2015 in terms of asset volume, while market capitalization of APEC economies has been on average 3% per year Consequently, does the private voluntary pension funds' volume increase contribute to the development of the stock market in APEC economies in the period 2000 - 2015? Which recommendations could be made for the formation and development of private voluntary funded pension funds in Viet Nam? This problem leads to the quest for answers through the process of conducting empirical research of this study In most empirical studies on developing private voluntary funded pension funds in the stock market, beside the volume of private voluntary funded pension funds that represents the development of private voluntary funded pernsion funds, measurable factors concretize the conditions affecting the development of private voluntary funded pension funds as well as the development of the stock market, which are usually selected for analysis such as (i) the inflation rate; (ii) long-term interest rates in the government bond market; (iii) GDP per capita; (iv) economic freedom index; (v) the proportion of older people per 100 people in working age 16 (Impavido, Musalem & Tresselt, 2003; Hryckiewicz, 2009; Kim, 2010; Rocholl & Niggemann, 2010; Raisa, 2012) 3.2 Data sources From the reference to the major foreign experimental studies, the study also selected the most frequently used variables, with the most frequently mentioned, including the measurable variables representing conditions for developing private voluntary funded pension funds in the stock market as well as the growth of dtock market in order to implement a regression model to analyze the impact of private voluntary funded pension funds's development on the growth of the stock market Thus, in order to contribute to the role and assessment of the long-term institutional investors' impact, namely private voluntary funded pension funds, to the development of the stock market, this study focused on the scope of APEC member economies during the period from 2000 to 2015 with secondary data accessed from open sources by international organizations such as APEC, OECD, WB, WEF This data set is a short panel data due to T N and an unbalanced panel data due to unpublished data, which is the missing value resulting in cross-sections not having the same number of observations over time 3.3 Regression models The overall regression model was applied for the panel data to examine the impact of private voluntary funded pension funds’ development on the development of the stock market is described as follows: MK i ,t i i ,t LTRi ,t GDPPi ,t EFi ,t OADR i ,t PFAi ,t i ,t In which, MK i ,t represents the development of the stock market as a dependent variable and is calculated by the market capitalization of domestic listed companies (% of GDP) of the economy i at the time of the year t ; PFAi ,t epresents the development of private voluntary funded pension funds as an independent variable, measured by 17 the private voluntary funded pension fund’s asset value (% of GDP) of the economy i at the time of the year t In addition, in order to control the explanatory variables that may affect the development of the domestic capital market, the author focuses on the following variables, including: i,t is the variable that explains the inflation rate (%) of the economy i at the time of the year ; LTR i ,t is a variable that explains the market demand for government bonds that have a maturity of 10 years (%) of the economy i at the time of the yea r t ; GDPPi ,t is the variable that explains GDP per capita of the economy i at the time of the year t ; EF i ,t is the variable that explains the economic freedom index of the economy i at the time of the year t ; OADR i ,t is the proportion of elderly dependents aged 65 and over per 100 people in working age of the economy i at the time of the year t ; i are the particular unobserved fixed effects of the economy i ; i,t is a random error with i and t represent the corresponding economy and time dimension 3.4 Variable descriptives (i) MK : Market capitalization of domestic listed companies (% of GDP) The market capitalization (also known as market value) is the current price of a common stock multiplied by the number of ordinary shares in circulation (outstanding shares) Valuable data is recorded at the end of the year and collected from domestic listed companies Data from investment funds, trust funds and companies with a business objective of holding shares of other listed companies are excluded This criterion represents the depth of the stock market (Catalan, Impavido & Musalem, 2000; Impavido, Musalem & Tresselt, 2003; Hryckiewicz, 2009; Kim, 2010; Rocholl & Niggemann, 2010; Raisa, 2012) (ii) : Inflation rate (% / year) The inflation rate measured by the consumer price index reflects the percentage change in the annual cost to the average consumer buying a basket of goods and services that can be fixed or variable annually Accordingly, Laspeyres 18 formulas are commonly used and also apply to data on inflation rates collected in this study (iii) LTR : Long-term interest rate in 10 - year government bond market (%/năm) LTR is mainly determined by (i) the price charged by the lender, (ii) the risk from the borrower, and (iii) the decrease in the value of the loan Data collected for long-term interest rates are calculated as the average of daily interest rates, and the unit of measure is expressed as a percentage LTR is the interest rate at which government bond prices are traded on the financial market rather than the interest rate at which loans were issued LTR is therefore used to measure the effect of changes in the market interest rate of return on bond holdings (alternative financial instruments compared to stocks in the market) (iv) GDPP : Real GDP per capita (current USD currency) The GDPP data collected from WB’s calculated data as the GDP divided by the mid-year population In particular, GDP is the gross value added of all resident producers in the economy plus product taxes and minus subsidies not included in the value of the product In addition, one point to note is that GDP is calculated without a deduction for fixed asset depreciation or for depletion and degradation of natural resources The GDPP data collected is in current USD currency (v) EF : Economic freedom index (points) The economic freedom index EF assesses 10 basic elements of each economy, including business freedom, trade liberalization, financial freedom, government spending, monetary freedom, financial freedom, property rights, freedom from corruption, labor freedom With a score of 100 being the maximum freedom for each factor to be evaluated, score 100 implies the economic environment or economic policy that is most conducive to economic freedom In this study, the level of general economic freedom is simply calculated from the mean of the 10 basic elements and chosen to be the value of explanatory variable EF 19 (vi) OADR : The percentage of elderly dependents per 100 persons of working age This ratio of population aging is calculated based on the ratio of the population aged 65 and over (the age at which the worker is economically inactive) compared to people aged 15 to 64 years The value of data collected is expressed in units of 100 people in working age (from 15 to 64 years) (vii) PFA : Pension funds’ assets (% of GDP) PFA is defined as a property purchased with contributions to a pension plan solely for the purpose of financing pension plan benefits In it, a private voluntary funded pension fund is a set of assets that constitute an independent legal entity This indicator is in US $ million or as a percentage of GDP 3.5 Data processing methods The estimation by using simple linear regression models for panel data model can be conducted through the use of three methods: (i) with the general constants in the regression equation; (ii) fixed effects; (iii) random effects 3.6 Empirical results Table 3.4 Statistical descriptives of variables in the sample period 2000 - 2015 Variable Obs Mean Std Dev Min Max MK 151 65,64896 29,70931 14,01656 118,1327 151 3,125655 2,426735 -1,346719 15,52533 LTR 151 5,246457 2,77952 0,3466667 15,68075 GDPP 151 19.9947,82 17.387,59 958,0116 67.652,68 EF 151 68,15533 9,995838 50,3 87,4 OADR 151 15,83827 7,939747 5,598219 43,32391 PFA 151 23,93331 27,71412 0,305036 118,7 Source: Extracted from Stata 11 Table 3.5 The matrix of correlation between the variables MK LTR EF GDPP OADR MK 1,000 -0,3751 1,000 PFA 20 0,0000 LTR GDPP EF OADR PFA -0,5244 0,6834 1,000 0,0000 0,0000 0,4202 -0,4623 -0,5767 0,0000 0,0000 0,0000 0,4231 -0,4602 -0,3826 0,7164 0,0000 0,0000 0,0000 0,0000 0,3434 -0,4615 -0,6610 0,7611 0,4631 0,0000 0,0000 0,0000 0,0000 0,0000 0,6217 -0,2472 -0,3381 0,6956 0,7037 0,3906 0,0000 0,0022 0,0000 0,0000 0,0000 0,0000 1,000 1,0000 1,0000 1,0000 Source: Extracted from Stata 11 In addition, to determine whether multi-collinearity exists, the Variance Inflation Factor (VIF) test was conducted to test for panel data by Collin's command in Stata 11 The results of the VIF test showed that all coefficients were less than 10 (Mean VIF = 3,22), which means that multiplicity was not found in the study population (Kennedy, 1992) Table 3.6 A summary of the results of the voluntary retirement fund development to the stock market with OLS, FE, FE-cluster and RE models Variable OLS FEM FEM-cluster REM -0,8813978 -2,155102** -2,155102* -1,778959** 0,387 0,011 0,055 0,031 1,016 0,839 1,035 0,826 -4,598254*** -4,785188*** -4,785188*** -4,578459*** 0,000 0,000 0,000 0,000 0,993 0,904 0,734 0,882 -0,0006348*** -0,0006722*** -0,0006722* -0,0009343*** 0,003 0,009 0,060 0,000 0,000 0,000 0,000 0,000 -0,1277528 -0,7771847 -0,7771847 0,1497132 0,649 0,319 0,342 0,750 0,279 0,777 0,792 0,469 0,1637325 2,098729*** 2,098729*** 1,20526** LTR GDPP EF OADR 21 PFA Constant R-squared 0,661 0,001 0,008 0,019 0,372 0,646 0,680 0,513 0,7826034*** 0,0114778 0,0114778 0,551053*** 0,000 0,963 0,970 0,001 0,097 0,249 0,299 0,171 92,57421*** 130,3531** 130,3531** 72,71303** 0,000 0,010 0,011 0,017 18,755 49,588 45,257 30,334 R-squared 0,5472 within = 0,3518 within = 0,3518 within = 0,3188 Adj R-squared between = 0,0071 between = 0,0071 between = 0,6337 overall = 0,0877 overall = 0,0877 overall = 0,4709 151 0,5284 Observations 151 151 151 F test that all β=0 F( 6, 144) = 29,01 F(6,129) = 11,67 F(6,15) = 34,68 Prob>F Prob>F = 0,0000 Prob>F = 0,0000 Prob>F = 0,0000 Wald (chi2) Wald chi2(6) = Prob> Chi2 82,31 Prob > chi2 = 0,0000 Breusch and chi2(1) = 192,56 Pagan test Prob> Prob > chi2 = Chi2 0,0000 F test that all F(15, 129) = 11,76 u_i=0 Prob > F = 0,0000 Prob>F Hausman test chi2(5) = (b- Chi2 Prob>Chi2 B)[(V_b-V_B)^(1)](b-B) = 10,45 Prob>chi2 = 0,0636 Wald test for chi2 (16) = 390,65 heteroskedasticity Prob>chi2 = Chi2 Prob>Chi2 0,0000 Wooldridge test F( 1, 13) = 3,428 for autocorrelation Prob > F = 0,0870 The results are presented in each of the variables in the model order in turn: (i) the mean value of the coefficient; (ii) statistic significance level (P-value) and (iii) standard error; * Statistically significant at 10%; ** Statistically significant at 5%; *** Significant at 1% 22 Source: Compiled and extracted from Stata 11 In general, the results from the quantitative analysis of the regression model (REM - radom affect model chosen) of the study also confirmed the findings from previous studies on the positive correlation between the growth of private voluntary funded pension fund and the development of the stock market The increase in the private voluntary funded pension funds led to the growth of financial assets of these funds that were positively correlated with the development of market capitalization with a positive regression coefficient and statistical significance at 1% while other factors remain unchanged in APEC economies for the period from 2000 to 2015 The research results also provide lessons for proposing and recommending policy implications and solutions for developing private voluntary funded pension funds in the Viet Nam stock market 23 CHAPTER DEVELOPING PRIVATE VOLUNTARY FUNDED PENSION FUNDS IN THE VIET NAM STOCK MARKET 4.1 An overview of private voluntary funded pension funds in Viet Nam pension system Private voluntary funded pension funds are the third pillar in the multi-pillar pension system Private voluntary funded pension schemes are a model that countries have implemented and can apply in Viet Nam currently In particular, the implementation and application of the private voluntary funded pension schemes is aimed at three objectives set by the Government, including: (i) encouraging and providing financial services products for employees to increase saving for the future at the end of working age; (ii) diversification of social security programs that will help to formulate a multi-pillar pension system in Viet Nam and reduce the social security burden on the Government in the long term; (iii) developing capital markets through the consolidation of long-term investor base 4.2 An overview of the developing private voluntary funded pension funds in the Viet Nam stock market In Viet Nam, private voluntary funded pension insurance and private voluntary funded pension schemes have started to be implemented after the Ministry of Finance's Circular No 115/2013/TT-BTC on guidelines for private voluntary funded pension insurance and private voluntary funded pension schemes which was effective from 15/10/2013 Accordingly, a private voluntary funded pension funds is an investment fund managed by a fund management company entrusted or hired by a life insurer under the supervision of the Ministry of Finance through approving regulations to ensure safety and prudence in the operation of the fund to protect the interests of customers An open-ended fund management company that manages the investment assets of the private voluntary funded 24 pension funds of the insurer separately from other funds of the insurer and other clients 4.3 Conditions for developing private voluntary funded pension fund in Viet Nam stock market In Viet Nam, pension system reforms are mainly the reform of parameters Therefore, in order to sustainably develop the pension system, the government should pay more attention to the NDC reform and the system reform, moving from non-funded PAYG pension system to funded pension systems with a certain direction In particular, the analysis on the development of private voluntary funded pension insurance and private voluntary funded pension schemes, the conditions for developing private voluntary funded pension funds in the PESTLIED model confirms that the development of private voluntary funded pension funds in the stock market is an indispensable trend in the context of the aging population and the financial burden of the public pension system Private voluntary funded pension funds are not the most important pillar in the national pension system, but they are an integral part of supporting the other pillar, creating a solid balance 4.4 The prospect of developing private voluntary funded pension funds in Viet Nam stock market from the choice of individuals (demand) After 2013, Viet Nam stock market has restructured with many innovative policies In particular, Viet Nam stock market welcomed the formation of private voluntary funded pension insurance (annuities) provided by life insurance companies and private voluntary funded pension funds in Viet Nam from the end of 2013 based on the Scheme of Private voluntary funded pension insurance and private voluntary funded pension funds of the Insurance Supervision Bureau under the Ministry of Finance The development of private voluntary funded pension insurance, private voluntary funded pensipn funds to help create and diversify institutional investors alongside commercial banks and other intermediaries in the 25 Viet Nam stock market and contributes to the development of Viet Nam stock market The activities of private voluntary funded pension insurance and private voluntary funded pension funds in Viet Nam are still at an early stage Hence, the data is still limited in the market This will also limit the direct research into the performance of private voluntary funded pension funds in Viet Nam In addition, private voluntary funded pension insurance products are in fact more insurance and higher fees due to insurance coverage during the contribution process, leading to less income for the beneficiaries At the same time, the private voluntary funded pensipn funds' activitives will focus on maximizing the value of the fund's assets so it is expected to give investors higher returns Although the number of respondents who prefer the DC pension system is relatively high, the number of respondents who prefer the DB pension system is still greater than choosing DC, still prefer a high rate of pension from wage and still prefer the professional pension fund to make investment decisions In addition, respondents tend to grasp opportunities and as close as possible to risk acceptance The majority of respondents are well-educated and financially savvy Respondents, who tend to favor risk and have a certain financial understanding, tending to prefer a DC pension scheme, preferring a lower rate of pension extracted from wage and being more likely to favor investment autonomy From that point of view, the selfassessments and risk acceptance's measurement as well as the individual's financial self-assessment play a significant role in explaining individual preferences for pension scheme The collection of personal choice on pension and private voluntary funded pension funds in Viet Nam has shown that private voluntary funded pension funds' activitives in the stock market of Viet Nam is still new but has also received interests from individuals with bachelor degree or above, professional knowledge of finance The results of this survey are an important reference for contributing to the targeting of private voluntary funded pension funds' beneficiaries in Viet Nam 26 CHAPTER RECOMMENDATIONS AND CONCLUSIONS 5.1 Orientation for developing private voluntary funded pensiuon funds in Viet Nam stock market until 2020 Developing of private voluntary funded pension funds in the stock market is one of the important solutions to expand the base of long-term investors to perfect and develop the stock market and contribute to ensuring social security 5.2 Recommendations to contribute to the development of private voluntary funded pension funds in the Viet Nam stock market Macroeconomic stability, especially inflation Modernization of infrastructure of Viet Nam stock market Improving legal framework, especially regulations on investment and asset allocation Continuing to pension reform toward multi-pillar pension system model Raising the awareness for individuals Accelerating the development of private voluntary funded pension funds as a large institutional investor in Viet Nam stock market Strengthening and enhancing the transparency and security of private voluntary funded pension funds in Viet Nam stock market 5.3 Conclusions Although there are some limitations, the thesis still achieves the achievements and ensures the content of research has set According to the author, this is an interesting and meaningful subject, contributing both economically and socially Thus, the author will continue to pursue this topic in subsequent studies to evaluate and propose a system of recommendations that will contribute practically to the development of private voluntary pension funds in the Viet Nam stock market in order to accelerate the growth of the Viet Nam stock market, Viet Nam's economic growth ... voluntary funded pension funds in the Viet Nam stock market 23 CHAPTER DEVELOPING PRIVATE VOLUNTARY FUNDED PENSION FUNDS IN THE VIET NAM STOCK MARKET 4.1 An overview of private voluntary funded pension. .. An overview of the developing private voluntary funded pension funds in the Viet Nam stock market In Viet Nam, private voluntary funded pension insurance and private voluntary funded pension schemes... development of private voluntary funded pension funds in Viet Nam stock market, thereby recommending policy implications for the development of private voluntary funded pension funds in Viet Nam stock market