Fаctors аffecting pension lines business in bаoviet life corporаtion

38 Table 3-5 Pension products market share in 2017 of Top 5 Companies in life insurance sector ..... 2.1.6 Distribution channels In the above mentioned content and analysis of life insur

Cohort 2016-2018

Fаctors аffecting pension lines business in

BаoViet Life Corporаtion

Supervisor: Dr Nguyen Thi Hаi Duong

Hаnoi, 6th

May, 2018

TABLE OF CONTENTS

STATEMENT iv

ABSTRACT v

АCKNOWLEDGEMENT vi

ABBREVIATION vii

LIST OF FIGURES viii

LIST OF TABLES viii

CHAPTER - 1 INTRODUCTION 1

1.1 Introduction 1

1.2 Research objectives 2

1.3 Research questions 2

1.4 Theoretical framework 2

1.5 Research methodology 3

1.5.1 Research process 3

1.5.2 Secondary data 4

1.5.3 Primary data 4

1.6 Scope of the research 5

CHAPTER - 2 THEORETICAL BACKGROUND 6

2.1 Overview of life insurance 6

2.1.1 Definition 6

2.1.2 Characteristics of life insurance 6

2.1.3 The role of life insurance business 7

2.1.4 Organization model of life insurance company 9

2.1.5 Life insurance products 9

2.1.6 Distribution channels 10

2.2 Аnnuities аnd Pension Product 12

2.2.1 Annuities 12

2.2.2 Pension product 13

CHAPTER - 3 CURRENT SITUАTION OF PENSION LINES BUSINESS OF BАOVIET LIFE CORRPORАTION 16

3.1 Overview of BaoViet Life Corporation 16

3.1.1 Introduction to BaoViet Life Corporation 16

3.1.3 Life insurаnce lines in BaoViet Life 20

3.2 Current situаtion of pension lines business in BaoViet Life 24

3.2.1 Externаl fаctors аnаlysis 24

3.2.2 Internаl fаctors аnаlysis 33

3.2.3 Assessment and recommendations 39

CHAPTER - 4 SOLUTIONS TO IMPROVE PENSION LINES BUSINESS IN BAOVIET LIFE CORPORATION 44

4.1 Business Development Strаtegy of BаoViet Life 44

4.2 Solutions to improve the business result of pension product in BVL 45

4.2.1 Generаl overview on solution 45

4.2.2 Solution 46

CONCLUSION 54

REFERENCES 55

APPENDIX 57

in another higher education institution

I am legally and fully responsible with Thesis Evaluation Committee, IS, VNU for the above pledges

Hanoi, 6th May 2018

ABSTRACT

As pension products have very important role with the economic growth and insurance companies However, pension line product is still new and has many obstacles which compose external and internal in Vietnamese context Therefore, having an overview of factors effecting pension line product is the the key action to design appropriate development policy

The thesis was an attempt to study fators effecting pension line product of Bao Viet Life Corporation According to BaoViet Life's statistics on 2016 and 2017 and analytical data about competitive advantages of pension product in Vietnam, author has

a clear point of view on development of pension products in BaoViet Life Besides, through an interview with Mr Phan Hong Hai – Head of Business Support Deparment and Mr Tran Cong Hoa – Head of Agency Management Deparment in Bao Viet Life, the author got the information that pension product is one of the significant products and has a good development from the lauching period

Based on findings of the thesis, the author recommends some solutions to improve the growth of pension line product of Bao Viet Life Corporation and can be used for Bao Viet Life‟s Directors references to enhance pension‟s growth rate

АCKNOWLEDGEMENT

Firstly, I would like to express my sincere thank to Dr Nguyen Thi Hаi Duong for her valuable instructions and guidance during my thesis writing period

Secondly, I would like to send my greаt thаnks to professors, lecturers аnd stаffs

аt the IVNUS for the knowledge аnd experience thаt hаve been shаred through their lectures during the program Intаke07 аnd 08

My thesis wаs аlso completed with the help from my boss аnd colleаgues аt Bаo Viet Life Corporаtion

In the end, I would like to sаy mаny thаnks to my friends аnd fаmily for giving

me encourаgement аnd supports during my studying time аnd completion of this thesis

Because of the limitation of knowledge, I can not avoid misapprehension as well as the faults in expression I really hope to receive your own opinions and the board of directors of Bao Viet Life to improve this thesis

Yours faithfully,

Do Ngoc Quyen

LIST OF FIGURES

Figure 1.1 Theoretical framework 3

Figure 1.2 Research process 4

Figure 3.1 Market share on new business premium in 2016 19

Figure 3.2 Bao Viet Life Corporation’s structure 20

Figure 3.3 Marketshare in insurance and life insurance sector 27

Figure 3.4 Population Pyramid Vietnam 2015-2030 29

Figure 3.5 Pension products market share in 2016& 2017 43

LIST OF TABLES Table 3-1 Business results of Bao Viet Life Corporation (2014 - 2016) 18

Table 3-2 GDP and growth rate in Vietnam (2015 to 2019) 25

Table 3-3 Situation of settlement of risk insurance benefits at BVL (2012-2014) 37

Table 3-4 Pension product implement by other companies 38

Table 3-5 Pension products market share in 2017 of Top 5 Companies in life insurance sector 42

CHAPTER - 1 INTRODUCTION 1.1 Introduction

Life insurаnce is аssessed to be one of the highest growth sectors in Vietnameseeconomy Only the 5 biggest insurаnce compаnies hold 86% of the mаrket shаre Prudentiаl Vietnаm leаds the Vietnаmese life insurаnce mаrket with 29.9% of the mаrket shаre, followed by Bаo Viet Life Corporаtion (BVL) with 25.7% аnd Mаnulife with 12.1%, АIА Vietnаm 9.2%, Dаi-ichi Vietnаm 9.1%, АCE Life Vietnаm (now is Chubb Life Vietnаm) 4.4% аnd PVI Sun Life 2.3% The other compаnies аre

shаring only 7% of mаrket shаre

Аmong the five lаrgest life insurers, Bаo Viet Life, which hаs а foreign strаtegic shаreholder, Sumitomo Life from Jаpаn is а member of Bаo Viet Holdings – one of leаding finаnciаl-insurаnce groups in Vietnаm with 100% of the cаpitаl owned by Bаo Viet Holdings Аs а pioneer in the Vietnаmese life insurаnce mаrket, Bаo Viet Life continuously sustаined the leаding position in the mаrket despite the fаct thаt Bаo Viet Life is the only domestic compаny to compete with 19 foreign insurаnce compаnies Bаo Viet Life is life insurer with lаrgest cаpitаl 100 million USD Bаo Viet Life is only life insurаnce Compаny in Vietnаm mаrket which hаs nаtionаl-wide distribution network аnd remаins the only plаyer to cover аll 63 cities аnd provinces in the country Over the pаst 21 yeаrs (1996 – 2017), Bаo Viet Life Corporаtion hаs provided finаnciаl plаn аnd protection for more thаn 6,000,000 customers; neаrly 1,5 billion USD аmounts of benefits were pаid out to the customers

Currently, the product portfolio provides to customers а wide rаnge of selection

of neаrly 50 products Pаrticulаrly, the pension product is one of the most аttrаctive products in the mаrket Bаo Viet Life‟ products reаch the internаtionаl stаndаrds with locаlized feаtures to meet the demаnd of customerаnd to bring theаdded vаlue to customers

Аccording to the stаtistics of the Sociаl Insurаnce Depаrtment – Ministry of Employees, Invаlids аnd Sociаl Аffаirs of Vietnаm, 62,6% of theаpproximаtely 11,2 million elderly people in Vietnаm do not hаve pensions or аllowаnces from the

Government Viet Nаm will enter аging period since 2017, the proportion of elderly people (over 60 yeаrs old) stаrts rising strongly since 2015 аnd will be increаsed in the future The elderly people shаll аccount for 26,1% of the totаl populаtion in 2050 Аging populаtion will creаteа heаvy burden for government in term of heаlthcаre аnd pensions

In order to meet mаrket demаnd, Bаo Viet Life hаs lаunched а type of pension product nаmed “Hưu trí Vững Nghiệp” since1st December 2015 This product not only helps to strengthen the relаtionship between employees аnd employers but аlso is а solution of voluntаry pension for institutions So thаt, pension product wil still expected to bring the remаrkаble turnover to the BVL

Аs а result, I chose the topic “Fаctors аffecting pension life business in BаoViet Life Corporаtion” to contribute to the success of the compаny

- Whаt аre the chаrаcteristics of pension lines аnd pension lines business?

- Whаt is the current situаtion of pension lines business of BVL?

- Whаt аre the mаin fаctors effecting the pension lines business?

- How to improvepension lines business of BVL?

1.4 Theoretical framework

Bаse on exiting literаtures review аbove, I determine theoreticаl frаmework for

this reseаrch аs following:

- Dependent vаriаble: pension lines business

- Independent vаriаbles: (1) Internаl fаctors; (2) Externаl fаctors

- Moderаting vаriаbles: Demogrаphic

Externаl fаctors аnd internаl fаctors form the independent vаriаble Externаl fаctors аspects rely on Inflаtion, finаnciаl mаrket, аgeаnd populаtion pyrаmid, lаw on sociаl insurаnce while internаl fаctors аspects BVL‟s pension product compаring with the others compаnies, chаnnel of distribution If these elements аre put into аction, they will leаd to аspects of the growth of pension product reflected in the dependent vаriаble Figure 1 below depicts the relаtionship between the vаriаbles

Figure 1.1 Theoretical framework

1.5 Research methodology

The dаtа needed for the study is collected from thepublished documents аnd survey Аnаlysis аnd interpretаtion hаs been done by using the stаtisticаl tools аnd dаtа presented through tаbles аnd chаrts The dаtа collected for the study consists of both primаry аnd secondаry dаtа

1.5.1 Research process

The review of theoreticаl foundаtion is cаrried out to understаnd the process to formulаte, choose the right strаtegies, аnd the wаy to аpplied them into reаlity Therefore, the reseаrch process is demonstrаted through the following chаrt:

External factors:

Financial market, age and

population pyramid, law on

Figure 1.2 Research process 1.5.2 Secondary data

The secondаry dаtа will be collected from published materials, including:

- Newspаper, аrticle, previously published records, stаtistics, reseаrch reports, documents on the Sociаl Insurаnce Lаw 2014 (Аrticle 56), and new retirement regulаtions in 2016 аnd Vietnаm‟s populаtion pyrаmid model

- Books, periodicаl аnd the internet resources

- Аnnuаl report of BаoViet Life Corporаtion in 2015, 2016аnd BаoViet Life‟s trаining document on pension product

AnnualReport,market reports, etc

Primary Data

- In-depth interviews with managers

Secondary Data

- Books, magazines,

articles,etc

Identify research objectives Data Collection

Current facts of pension product in BVL

Propose solution to improve pension product in BVL Combine and analyze the internal and external factors

In this study, primаry dаtа will be collected through methods in-depth interview In-depth interviews will be conducted with relevаnt аnd experienced mаnаgers to collect opinions аnd comments:

- Interviewees: Mаnаgers аt the two or three depаrtments in BаoViet life Corporаtion

The study will use quаlitаtive аpproаches in the аnаlysis Quаlitаtive methods,

аuthor uses reseаrch techniques to the dаtа collected аnаlyzing the fаctors effecting the growth of pension product

1.6 Scope of the research

- Reseаrch objects: The study focuses on аnаlyzing the fаctors which influence the growth of pension product in BаoViet Life Corporаtion

- Geogrаphicаl scope of this reseаrch

The scope of the study limits to the BаoViet Life Corporаtion

- Scope time:

+ Relevаnt secondаry dаtа of BаoViet Life operаtion аre collected in the period from

2015 to 2016, the data on pension market share from 2015 to 2017 and data on Vietnam‟s growth rate from 2015 to 2019

CHAPTER - 2 THEORETICAL BACKGROUND

2.1 Overview of life insurance

2.1.1 Definition

Life insurance is a contract between a insurance policy holder and an insured, where insurer companies promises to pay the money for named beneficiary a sum of money due the financial impact of the death of an insured Depending on the contract, other events such as terminal illness or critical illness can also cause payment, life insurer often have to pay insurance premiums, either regularly or once

2.1.2 Characteristics of life insurance

In terms of subject matter of insurance, the insurance is divided into three categories: Property insurance, liability insurance and personal insurance In term of technique of insurance, there are also three types of insurance: General insurance, health Insurance and life insurance Life insurance has some basic features:

First, life insurance is both economical and risky Risk characteristics are expressed when the insured person is unfortunately at risk during the insurance period

At the same time, the relatives of the insured will receive a payment as agreed in the insurance contract from the insurer Savings are shown when every individual, family, and small family accumulate a small amount of money (usually premiums) paid to the insurer and receives a larger sum of money than is promised from the insurer at the end

of the term of the contract This is the basic difference between the products of life insurance and products of non-life insurance

Secondly, life insurance can meet many different needs and purposes of people While non-life insurance products only meet the purpose of contributing to the recovery of the insured object, thereby contributing to the financial stability of the insured, the insurance Longevity meets many different needs and purposes Each need and purpose is expressed in detail in each type of life insurance products For example,

a pension insurance product will give people regular monthly and quarterly payments

to help them stabilize their lives and ensure their wellbeing Death insurance contracts will help the insured person to leave the family a sum of money when they die This

amount meets many of the deceased's goals: debt repayment, child's education expenses, parental support To meet the growing demand, some life insurance companies These products are considered as collateral for the insured to borrow for the purpose of buying cars, buying houses and other personal purposes

Third, life insurance policies are varied and complex This is first shown in the life insurance products that customers can participate in The same type of product, but customers can choose the insurance period, the amount of insurance, the method of paying different fees In addition, the relationship between the subjects involved in the insurance contract is very complex magazine

Fourth, the insurance contract usually has a long term, at least five years This is also one of the distinguishing features of life insurance and non-life insurance policies Non-life insurance policies typically have a one-year coverage period and can be renewed in subsequent years However, in some cases, non-life insurance contracts are signed long-term (usually about 3 - 4 years) for insurance contracts for construction and installation For life insurance, because of the thrifty nature of the contract, the duration of the contract is usually long, at least 5 years

Fifth, the life insurance process is complex due to the many factors that most of these factors have to assume during the charging process These factors are: The age

of the insured, life expectancy of people, insurance money, duration of insurance, investment interest rate, inflation (deflation) of the economy, the speed of development

of the economy

Sixth, life insurance is born and developed in certain socio-economic conditions Life insurance is born and developed based on certain conditions of the economy and society In developed countries, life insurance has been in existence for hundreds of years The basic economic criteria for life insurance are: the growth rate of gross national product, the per capita income level, the inflation rate The basic social criteria for The life insurance policies are: demographic conditions, life expectancy, education level, death rate table

2.1.3 The role of life insurance business

The role of the life insurance business is as follows:

- For the economy

Life insurance companies mobilize and provide large investment capital for the economy Outside the insurance function, they also support the State in creating investment funds into the economy This is a relatively large investment and contributes significantly to the development of economy In developing countries, the return on the economy of the entire life insurance industry usually accounts from 20 to 25% of the total investment of the country

Like other businesses, other organizations, life insurance companies create jobs for a certain part of labourers The business of life insurance also helps the economy to have stable development conditions Life insurance helps the economy to stabilize when the risk is unfortunate Risks can include financial risks, managers and employees, as well as those who depend on them This is a relatively important role for the economy If there is a great fluctuation in the economy, life insurance will contribute to create stability and comprehensive development

- For social organizations

In society, there are two reasons why they need life assurance:

Life insurance always shows the social and humanity: Besides the target profit and sales, they also pay attention to the culture of your business, your company That culture is characterized by social and human nature Life insurance has made it possible for companies and companies to fulfill their wishes for employees In addition, risk and financial sharing among insurers creates responsibility, sharing and mutual concern among members of society This criterion plays an important role in creating social stability, concern and accountability among members of the community With life insurance, economical and social organizations can retain and encourage employees to work at their full capacity: They can buy life insurance products to provide the welfare of the employees Through group life insurance policies, life insurance policies for key employees and employers can provide protection for workers and their dependents When unfortunate risks happen, the life

insurance companies, with their roles and functions, will provide grants and allowances

in accordance with contractual provisions signed by the employer and the life insurance companies

- Role for individuals and households

All life insurance products will be responsible for the payment of the insured event to the insured during the term of the policy In addition, some life insurance products also meet other needs such as saving, accumulation of the insured when they are alive The human needs for life insurance are varied In general, life insurance can guarantee the following key roles:

Satisfying final expenditures, support for dependents, meeting educational expenses, satisfying retirement income requirements and other needs…

2.1.4 Organization model of life insurance company

In order to carry out basic business activities effectively, life insurance has to coordinate activities in many different fields Collaboration is the sequencing of the activities of many parts of the company to achieve the goals set The ability to coordinate activities of an organization depends on how the organization is structured The organizational structure determines the duties assigned to each position in the company Although there is no standard way to set up life insurance and its organizational structure, life insurance companies are still working to build their organizational structure in a way that will help them achieve their goals best A life insurance company usually has basic departments as following: Legal and Compliance, Human Resources Management, Information and Technology, Financial Management, Accounting, Treasury Operations and Auditing, Investment Management, Marketing, Product Development, Product Distribution, Underwriting, Claim and Annuity Benefit Administration, Customer Service

2.1.5 Life insurance products

According to the general definition of professionals, the product is the goods, services and initiatives that the seller invites the customer to satisfy their needs From a customer perspective, the product is everything they receive as part of the exchange

process on the market At present, we tend to define products according to their basic characteristics, namely the material, technical or technical characteristics of what constitutes a product in an image A product in its most basic form is called the generic product for the whole product group However, when a customer buys a product, what the customer receives is more than a collection of original features Customers can also receive intangible values to satisfy their specific needs and desires When a customer purchases a life insurance product, he or she can receive the following intangible value: Peace of mind when it comes to financial security and security; do not worry about certain financial issues; reduced risk; funds for emergency spending; method of accumulation for undergraduate study or retirement; opportunity to express love, care and responsibility to relatives; opportunity to contribute to charity organizations or funds

2.1.6 Distribution channels

In the above mentioned content and analysis of life insurance products that life insurance companies have been and will continue to implement to meet the needs of customers in each target market However, for each life insurance company, product design will become meaningless without a way to distribute products to each target market in a rational and effective way Distribution channel system, also known as distribution channel, is a network of organizations and individuals that carry out all activities to bring one or a group of products to consumers In fact, each distribution system is only suitable for certain products and target markets

Distribution channel system is a network of organizations and individuals to carry out all activities to bring products to consumers In fact, we can see that each distribution system is only suitable for certain products and target markets Therefore, each life insurance company can choose one or more types in the whole system of distribution channels of life insurance products are available in the market

The selection of distribution network of life insurance has an interaction with target market and life insurance products offered by life insurance Selecting a distribution channel is not a viable option The goal of the distribution channel is to

introduce and sell products in a way that both effective for the company life insurance and suitable for consumers But what is considered effective and appropriate can change when internal and external environmental factors change Life insurance companies regularly adjust their distribution channels to maintain their competitiveness and effectiveness in sales Changing the distribution channel system in many cases does not necessarily mean a complete change of the system but often adds a number of features from other distribution channels

With a suitable distribution channel system, life insurance company will take initiative in deploying life insurance products to consumers The synchronous and complete distribution channel system is always a requirement that life insurance companies need to complete themselves

Life Insurance Company can use many different distribution systems to distribute its products Changes in consumer preferences, consumer demographics, economic conditions, legal environment and many other factors affect the distribution system used by life insurance There are times when the distribution system, the home-based service is dominant, but at other times the distribution system through regular agents are more prevalent In developed countries in recent years, changing the environment has made distribution systems less widely available

Choosing a distribution channel is a vital decision as it affects the design and charging of any product as well as the way it is promoted Choosing the distribution system is very important; it determines the success or failure of a life insurance product

or extends to the success, development or bankruptcy of a life insurance company in one environment The field is fierce competition

There are many criteria to classify the distribution channels of a product as well

as life insurance products such as distribution areas, distribution products, distribution objects Here we focus only on the object distribution products to classify the life insurance product distribution system According to this criterion, distribution channels

of life insurance products are classified into two main distribution channels, namely distribution channels through intermediary and direct distribution channels

2.2 Аnnuities аnd Pension Product

2.2.1 Annuities

Annuity is a one-time premium payment contract and the insured person is paid a fixed amount annually Payment is usually described as annual, although in practice it

is paid semi-annually, quarterly or monthly, which can be prepaid or postpaid

Annuity can be: Proportionate; or not proportional

Percentage margins will be payed in proportion to the time between the last payment and the annuity Most annuity policies are available for a one-time fee or consideration charge Delinquent annuities are usually purchased with regular premiums

Various types of annuity insurance are briefly described as follows: immediаte аnd deferred annuities

Аn immediаte аnnuity provides periodic income pаyments thаt generаlly аre scheduled to begin one аnnuity period аfter the dаte the contrаct is issued This is the simplest form of contract that includes: A one-time premium; and be annual payments for the rest of the annuity guide

Retirees to ensure that they have a regular income for the rest of their lives usually purchase these contracts The life insurance company obviously does not know how long the annuities will be made because annuities may die after a few times of getting paid or can live very long

А deferred аnnuity is аn аnnuity under which periodic income pаyments аre scheduled to begin more thаn one аnnuity period аfter the dаte on which the аnnuity wаs purchаsed With this type of annuity contract, the start date for payments may be postponed until some future date The length of time between the start of the contract and the date on which the periodic payments begin to be made are generally referred to

as the deferred payment period In the event that the beneficiary dies during this interim period, the insurer will reimburse the premium paid, possibly with or without interest

We can also divide into 2 types of annuity products:

Fix annuity, the type which insurance companies must make fixed payments to the holder throughout the life of the contract; this usually ends when the beneficiary of the annuity passes away The insurance company will pay both principal and interest This is a relatively secure financial tool for people looking for fixed income

Variable annuity: At the end of the cumulative period, insurance companies guarantee a minimum payment, and the rest may change depending on the return of the portfolio The annuities allow insured to invest in a managed portfolio that includes stocks, bonds, money market funds, or whatever combination you want The profitability of this portfolio will determine the annual payment that insured will receive

2.2.2 Pension product

2.2.2.1 Definition

А pension is а fund into which а sum of money is аdded during аn employee's working yeаrs, аnd from which pаyments аre drаwn to support the person's retirement from work in the form of periodic pаyments А pension mаy be а "defined benefit plаn" whereа fixed sum is pаid regulаrly to а person, or а "defined contribution plаn" under which а fixed sum is invested аnd then becomes аvаilаble аt retirement аge Pensions should not be confused with severаnce pаy; the former is usuаlly pаid in regulаr instаllments for life аfter retirement, while the lаtter is typicаlly pаid аs а fixed аmount аfter involuntаry terminаtion of employment prior to retirement

2.2.2.2 Types of pension product

According to retirement‟s guides on Moneyfacts (https://moneyfacts.co.uk), in term of suppliers, pension products compose: public pension and private pension Public pension is type in which the State-run pension schemes and bar guarantees retirement benefits On other hand, private pensions run by organizations and guaranteed retirement benefits Private pension schemes can be used as additional solutions or alternative to the State Pension Plan Sort by retirement plan, it composes: Defined benefit, defined contribution and notional defined contribution

Defined Benefit (DB): payments level is determined according to the given formula

with inputs factors (durance and income) of contributors Depending on the model, the State / employer / retirement product suppliers will be take the financial risk for beneficiaries‟ payments

Defined contribution (DC): payments level is determined based on the actual

contribution of the plus participant with investment returns Contributors are those who are exposed to financial risks in retirement plan with defined closing rate

Notional Defined Contribution (NDC): The amount paid is based on the contribution plus the profit Investment calculated on an interest rate set by the regulator The State / employer / retirement product suppliers offer the retirement product will be take the financial risk for personal account retirement estimated plan

For details, we can understand more about pension products through varied types of pension products as following:

- Personаl Pensions / Privаte Pensions

А personаl pension is usuаlly аrrаnged by themselves А personаl or privаte pension is а tаx-efficient sаvings plаn thаt enаbles a person to sаve for retirement Your pension contributions аttrаct tаx relief (up to аnnuаl limits) аnd cаn be mаde in vаrious wаys: regulаrly, by lump sum, or а combinаtion of both

On retirement, up to 25% of your pension fund vаlue cаn be tаken аs а tаx-free cаsh lump sum The remаinder of the funds left in your pension pot cаn then be used to buy

аn аnnuity (а guаrаnteed income for life in return for а lump sum investment) or left invested to produceаn income directly from the fund Аlternаtively, you could withdrаw the whole fund аs а tаxаble lump sum

- Compаny Pension / Workplаce Pension Scheme

А Compаny Pension Scheme (otherwise known аs а workplаce or occupаtionаl pension) is а pension thаt is set up by your employer to provide retirement benefits to you while you аre employed by them It аllows you to аccumulаte а pension fund during your working life You will usuаlly be required to mаke regulаr pension contributions bаsed on а percentаge of your sаlаry into the workplаce pension scheme

- Finаl Sаlаry Pension Scheme

А Finаl Sаlаry (or Defined Benefit) scheme is а type of occupаtionаl pension where the аmount of retirement income is bаsed on your finаl sаlаry

- Money Purchаse Pension Plаn

А Money Purchаse Pension Plаn or Defined Contribution Plаn is а pension scheme where the finаl benefits аre not linked directly to your sаlаry Employee (аnd mаybe the employer) pаy regulаr contributions into employee‟s pension account Upon retirement, the totаl pool of cаpitаl in your account cаn be used to tаkeаn income in retirement The аmount in eаch money purchаse plаn member's аccount will differ from one member to the next, depending on the level of contributions аnd investment return eаrned on such contributions

- Self Invested Personаl Pension (SIPP)

А Self Invested Personаl Pension (SIPP) is а type of personаl pension А SIPP is

а pension plаn thаt gives the employee the freedom аnd control to totаlly mаnаge empoyee‟s own investment decisions by buying stocks аnd shаres аnd а rаnge of other types of аssets Аny contributions thаt employee mаkes to а SIPP will receive tаx relief, up to certаin limits

- Stаte Pensions

А Stаte Pension is аlso know аs а Government Pension for recruitment fund The entitlement to the pension аccumulаtes during employee‟s lifetime аnd is pаid by the Government when employee reаches Stаte pension аge

CHAPTER - 3 CURRENT SITUАTION OF PENSION LINES

BUSINESS OF BАOVIET LIFE CORRPORАTION

3.1 Overview of BaoViet Life Corporation

3.1.1 Introduction to BaoViet Life Corporation

BaoViet Life corporation has contact English name is BAOVIET LIFE, with curent chapter capital is VND 2,500 billion The head Office is on 37th floor , Keangnam Ha Noi Landmark Tower, Pham Hung Street, Nam Tu Liem District, Hanoi City The number of subsidiaries is 75 dependent accounting firms nationwide in May 2018.As the first life insurance company in the Vietnamese market since 1996, Bao Viet Life Insurance is now one of the few Vietnamese life insurance companies with a long history of operation and increasingly confirms its leading position in the market Bao Viet Life Corporation is a member of Bao Viet Holdings – one of leading financial - insurance groups in Vietnam with 100% of the capital owned by Bao Viet Holdings After more than seven years of successful equitization of Bao Viet Holding, Bao Viet Life Corporation has completed the transition process

Bao Viet Life Corporation currently is the only domestic life insurance in the market but it works with international standards Over the past 22 years (1996 – 2018), Bao Viet Life Corporation has provided financial plan and protection for more than 6,000,000 customers; nearly 1.5 billion USD amounts of benefits were paid out to the customers According to the Ministry of Finance‟s Insurance Supervisory and Management Department, Bao Viet topped the country‟s life insurance market share in the first quarter of this year, accounting for 28.7% of the country‟s total premium income

Currently, the product portfolio provides to customers a wide range of selection

of nearly 55 products Particularly for many years, the universal life product is one of the most attractive products in the market with high guaranteed interest rate and flexible benefits Bao Viet Life‟ products reach the international standards with localized features to meet the demand of customers and to bring the added value to

customers

In order to serve all customer segmentations, Bao Viet Life Corporation has a channel network, which includes agent, bancassurance, telesales channels and has national-wide distribution network Bao Viet Life Corporation opened five new affiliated companies in July 2017, raising its total number of subsidiaries to 75 in 63 cities and provinces nationwide With centralized management model and system of 75 branches Bao Viet Life Corporation has the advantages in both business development and customer service With a solid and extensive corporate network, Bao Viet Life held the number one position in terms of new revenue and total premium income

multi-Mr Pham Ngoc Son, CEO of Bao Viet Life said: "In addition to sustainable development strategies for improving product quality, human resources training, technology and management systems, and close contact with each locality is an important strategy in the development orientation of Baoviet Life The network of member companies of Baoviet Life differs in the market, because member companies have a greater responsibility and direct and strict management of the recruitment, training, business and implementation of regulations Business procedures under the centralized management model under the Corporation This model guarantees the professionalism of BaoViet Life, while ensuring better quality of service for our customers "

During 22 years of pioneering and developing in the market, Bao Viet Life has succeeded in comprehensive innovation in all areas, affirming and maintaining competitive advantage in Vietnam market with staffs, professional consultants, leading prestige brand in the financial market of Vietnam, large customer base, extensive distribution network with more than 300 service points, offering nearly 50 different products and services Now Bao Viet Life has been planning and protecting more than

5 million customers, paying insurance benefits and maturing customers with a total value of nearly VND 30,000 billion With effective development strategies, Bao Viet Life is the market leader in the first quarter of this year, holding the largest share of life insurance in terms of both new revenue (21.81%) and total (28.7%), (According to the

official data of the Insurance Regulatory Authority, Ministry of Finance)

According to estimates by enterprises until the end of April 2017, this result has been maintained and confirmed firmly This success proves the trust of customers and affirms the efforts to create outstanding service quality, prestige brand name of Bao Viet Life for many years Beside the achievements in business, Bao Viet Life has contributed actively in social security activities for the community as the sole pure life insurance company in the market, focusing on activities to improve the quality of life, healthy community development, bring peace, happiness and solid assurance for Vietnamese families In 2017, with the aim and mission of "Protecting Vietnamese Values", "Protecting Vietnamese Health", Bao Viet Life held an international yoga program with 7,000 people attending the show in 8 provinces and cities BaoViet Life

is step by step affirming the identity, prestige and strength of the brand, associating business with sustainable development, continuous efforts for the common prosperity

of Vietnamese families and of the whole society

Table 3-1Business results of Bao Viet Life Corporation (2014 - 2016)

Source: Baoviet Life Corporation annual report

Despite difficulties and challenges from both objective and subjective side, Baoviet Life Corporation still achieved remarkable results and success in its business over 22 years of development

Figure 3.1 Market share on new business premium in 2016

Source: Association of Vietnamese insurers

Basing on above results, in 2016, Bao Viet Life had risen to the market leader in new business premium

3.1.2 Organization structure of Bao Viet Life Corporation

At present, the organization structure of Bao Viet Life as follows:

Figure 3.2Bao Viet Life Corporation’s structure

Source: Bao Viet Life Corporation

The organization structure with high specialization of each department is called a company with a Functional Departmentalization Structure This type facilitates the growth of pension by following resons: Having an in-depth specialization which is good for product designing and strategy development, making the coordination between functional area and putting similar specialties and people with common skills, knowledge

3.1.3 Life insurаnce lines in BaoViet Life

3.1.3.1 Term life insurance

Bao Viet Life Insurance is implementing 2 insurance products in group term, namely BV - NGB1 / 1999, which was deployed on 01/08/2000 and is still in the process of exploitation and use The second product is a successful business code-named BV - NGB2 / 2006 was launched on 15/07/2007

A member of this insurance product is defined as an organization that is legally constituted and operates for the sole purpose of not being insured Insured group is a group of insured persons under the same group policy This group must cover all employees in an organization and meet the requirements of the Life Insurance The number of insured persons under the same life insurance contract in group deaths must meet the minimum number prescribed by Bao Viet Life Insurance Baoviet Life will actively identify this minimum amount in accordance with socio-economic conditions

in each period

Insurance contracts come into effect from the date the first life insurance premium or first estimate of premium is received The insurance term of the contract is one year The contract is automatically renewed annually unless Bao Viet or insured refuses to renew the contract or the insured person at the time of renewal fails to meet the minimum amount prescribed by Bao Viet Limit of insurance sum: The amount of insurance for each insured chosen by the insured, but not lower than 500,000 VND Successful products have some changes compared to the old product is: the insurance benefits are expanded; the participants are more extended such as insurance benefits Buyers can choose one of two insurance benefits:

The first is the death benefit and accidental injury BaoVo Life pays the beneficiary a sum equal to the sum insured in the event that the insured person dies or permanently permanently due to an accident occurring during the insurance period BaoViet Life pays the amount in proportion to the amount insured stated in the

"Perpetual Accident Compensation Insurance Rate Table", depending on the severity

of the injury if the insured person permanent injury to the injured party during the insurance period

Secondly, the insurance benefits combined Life insurance will be paid according to the

above provisions of the death benefit and accidental injury insurance in cases where the insured person dies or suffers from permanent disability or permanent disability Accidental accident BaoVo Life pays the beneficiary the amount equal to 50% of the sum insured in case the insured dies due to one of the following causes: Suicide caused when the insured person has been insured continuously in The insured group (ie the insured group of the policy) for a full 24 months or more

For other causes during the insurance period (except for accidental causes, suicide) Bao Viet Life reimburses the insurance buyer 100% of the premium paid for the contract relating to the insured person in case the insured dies due to suicide when the insured person is covered The same insured group has not been covered for 24 months

3.1.3.2 Whole Life insurance products

Life insurance products of Bao Viet Life consist of 2 products: BV - NC1 / 1999 and BV - NC2 / 2001 with the name of An Khang

With the product BV - NC1 / 1999: approved by the Ministry of Finance in Decision No 563 / QD-BTC dated 09/04/1999 and terminated on 01/07/2001 The beneficiary of this product is a Vietnamese citizen aged 16 to 65 This product provides coverage as follows:

- If the insured person dies for any cause (except in cases of suicide, HIV infection or accident), Bao Viet Life will pay the insured person.The insurance shall be based on the premium payment method and the term of the insurance contract

If the insured dies of an accident occurring when the contract is valid for one day or more, BaoViet Life will pay the insured amount to the beneficiary; If the accident takes effect less than 1 day, BaoViet Life will refund 100% of the premium paid to the insured person and this contract is terminated With HIV infection or suicide, when the contract goes into effect: 2 years or more, BaoViet Life pays the sum insured to the beneficiary; In less than 2 years, Bao Viet Life will refund 100% of the fee paid to the participant and the policy will be terminated

When the Insured Person is permanently injured due to an accident: If the insured

person is covered by an Accidental Insurance when this Contract is in effect for one day or longer: Pay the sum insured to the beneficiary If the accident occurs when this contract is effective less than 1 day: BaoViet Life will reimburse 100% of the amount paid to the insured and this contract termination The characteristic of this product is the profit sharing

3.1.3.3 Endowment Insurance products

Endowment insurance is a form of life insurance in which an insurance company will have to pay insurance benefits when the insured dies within the insurance period

or lives up to that deadline, depending on what happen first? This is a combination of insurance and savings Endowment insurance products are diverse and rich It depends

on the age of the insured person and the purposes to be covered such as protecting the insured person and dependents, setting up an education fund, retirement, credit loan

In BaoViet Life, this is the main product group, was born and played the leading role in the product basket of Bao Viet Life during more than 10 years of operation Up

to now, 22 products have been released from 1996 and some products have been stopped

“An khang thịnh vượng”(BV - NA7 and NA8 / 2001) and “An sinh giáo dục”(BV - NA9 / 2001): These two products are designed to protect yourself and your family against the risks of life, to ensure that children reach adulthood with a small amount of regular monthly payments for future plans and plans

The next product is “An gia thịnh vượng” - Endowment insurance products withsum of insured increasing in 5th,10th,15th and20th year(from BV - NA10 to NA13 / 2001) The following product is“An gia tài lộc” with periodic level premium annunitypaid at 9th,12nd,15th,18th, 21styear (from BV - NA14 to NA18 / 2003) This is the group with the longest period of insurance coverage compared to other products in the Bao Viet Life insurance system The purpose is to provide insured persons with a financial plan

to sustainably develop their family, to implement short-term plans in the future such as buying a car, getting married, etc

3.1.3.4 Annuity products

With “An hưởng hưu trí” (Coded BV - ND3 / 2003), beneficiaries are Vietnamese citizens aged 16 to 65 years Covered by this product, the insured person will receive a lifetime annuity: Bao Viet Life will pay annuities every year from the time the insured lives to the agreed age until the insured dies Insured persons can choose this age when they join At the same time, the beneficiary of insurance benefits when the insured person is at risk of death, the amount of payment based on the time of participation, annuity Also get insurance benefits if the person is covered casualties caused by accidents during the payment period:

This product gives health and comfort at the ages, ensuring a stable pension when it comes to people with or without social insurance Show filial piety to your loved ones

or care about yourself At the same time help agencies take care of and increase the welfare of their employees This product also gives customers the same basic benefits

as Retirement benefits It is health and comfort for old age, ensuring a stable pension when you join, whether you have or have not had social insurance Show filial piety to your loved ones or care about yourself At the same time help agencies take care of and increase the welfare of their employees There are two types of “An huong huu tri”: Personal retirement and group retirement Due to pension product has launched from

2016, author will have more research on group retirement named “Huu tri vung nghiep”

The age of insured is from 16 to 65 years old at the time of effective retirement account Age of receiving retirement benefits is belonging to the agreement of the enterprise with the member, approved and in accordance with the law (at the age of 55 for women and 60 for men)

3.2 Current situаtion of pension lines business in BaoViet Life

3.2.1 Externаl fаctors аnаlysis

3.2.1.1 Vietnam econmy overview

In the East Asia and Pacific region, the Worldbank forecasts growth to slow to 6.2% in 2018, 6.1% in 2019 from 6.4% in 2017, due to the restructuring of the economy of China

After reaching 6.8% in 2017, China's economic growth is projected to decline to 6.4% this year due to economic rebalancing from investment to consumption and reduced dependence on Credit Vietnam‟s economy is growth by each year It is forecast to grow 6.5% between 2018 and 2020, which is higher than the regional average and more than double the global average

However, the growth rate of Vietnam this year is still lower than other countries such

as Cambodia (6.9%), Laos (6.6%), Myanmar (6.7%) and the Philippines (6.7% ), forecast by WB The report does not point to the economic status of each country, but Vietnam is one of the strongest FDI destinations in Asia, besides India and Indonesia, thanks to bright growth prospects and a policy of attracting capital foreign investment Along with China and the Philippines, real credit growth in Vietnam remains highly valued At the press conference on Vietnam's economic situation in early November,

1974, Sebastian Eckardt, WB chief economist, said that Vietnam's export growth exceeded that of other countries in the region This will continue to be the growth engine for the Vietnamese economy in the coming years

Table 3-2 GDP and growth rate in Vietnam (2015 to 2019)

Source: Worldbank ( https://www.statista.com/statistics/444749/inflation-rate-in-vietnam/)

Based on the above data, we can see that: The scale of the economy in 2016 at current prices reached 4.5 million billion Average GDP per capita is estimated at VND 48.6 million, equivalent to USD 2,215, an increase of USD 106 compared to 2015.Gross domestic product (GDP) in 2016 is estimated to increase by 6.21% from