The International Business Chamber of Cambodia (IBC) hosted a special luncheon to discuss the nation’s developing pension industry and the need for Cambodia to expand its local investment markets. The event followed the recent implementation of Cambodia’s National Social Security Fund (NSSF), which came into effect in October 2022.
During the luncheon, Mrs. Chan Sinon – Deputy Director of Customer Services and Public Relations Department at National Social Security Fund delivered a keynote on the current progress of the social security schemes as well as its vision for the future.
She explained, the Pension Scheme is applied to both local and foreign workers in the territory of Cambodia, and the NSSF member can request to receive benefits as of the age of 60 if they reside in Cambodia.
For the first five years, the contribution rate of Pension Scheme shall be determined 4% of an employee’s contributory wage [the current ceiling wage is $300] with 2% to be paid by the employee and 2% to be paid by the employer, [at the ceiling contribution is $12 per month per employee]. The contribution rate will be increased to 8% after 5 years with more increases expected in the future.
In addition, an industry-leading panel discussed various aspects of the developing pension industry in Cambodia.
The guest panelists included:
• Mrs. Chan Sinon – Deputy Director of Customer Service and Public Relations Department at National Social Security Fund
• Mr. Freddie Wong – Chief Actuary at Prudential (Cambodia) Life Assurance.
• Mr. Ric Nuttall – Director of Tax & Corporate Services at KPMG Cambodia Ltd.
• Mr. James Roberts – Head of Advisory at KPMG Cambodia Ltd (moderator)
Mr. Freddie Wong emphasized the importance of establishing the concept of savings for the future in the Cambodian community, given the increasing longevity of the population and the burden it could place on the state. He also highlighted the growing investment in developing securities markets such as corporate and government bonds are crucial for the pension scheme as these investments need to cover policyholders for their entire lives.
When asked about strategies and policies the Royal Cambodian Government could introduce to assist the pension industry, Mr. Wong suggested that long-term government bonds would be an essential starting point in the situation that investing overseas is not permitted.
More employment options for Khmers
Addressing the adoption of the pension industry by younger generations in Cambodia, Mr. Ric Nuttall explained that the anticipated growth of both public and private pension policies would open up employment opportunities for the youth across all sectors. He also stressed the need for sufficient support and training to help the industry grow.
To support the growth of the industry in terms of professionals like accountants and actuaries, Mr. Freddie Wong mentioned the founding of the Cambodia Actuator Working Group under the Insurance Association of Cambodia in 2021. The group aims to bring together current and aspiring actuaries and promote the profession to young Cambodians to ensure long-term sustainability.
Regarding the role of the pensions industry in helping the government manage its aging population, Mr. Wong highlighted the challenges faced by many countries worldwide, such as longevity risk and the inflationary impact of living expenses, which must be considered over long periods.
Increasing local investment options
In response to an audience question about the need for a broader investment base to fund pension schemes, Mr. Wong acknowledged the limitations faced by the private sector in local investments due to the lack of diverse investment options. He emphasized the importance of a properly functioning local sector and the need for patience in the development of local investment markets.
Mr. James Roberts expressed confidence in the Cambodian government’s ability to meet these challenges as inbound investment into Cambodia continues to grow and become more sophisticated, providing more opportunities, especially in the capital markets.
The discussion hosted by the IBC served as an essential platform for discussing Cambodia’s pension industry development and exploring strategies to expand local investment markets. The insights shared by the expert panelists highlighted the importance of collaboration between the public and private sectors in achieving these goals.
