A study on the current situation of the pension system in Cambodia

Abstract

Cambodia's pension system is gradually developing towards modernization and sustainability within the framework of the Social Security Law, adopting a multi-pillar structure that includes a universal non-contributory social pension, a contributory defined benefit (DB) plan, and an optional funded contributory (DC) plan based on voluntary contributions. As the main operating institution, the National Social Security Fund (NSSF) is responsible for managing social security programs for private sector employees, including work-related injury insurance, health insurance, and pensions.However, there are significant differences in the coverage of Cambodia's pension system between formal and informal sectors. Workers in the informal sector, accounting for 90% of the labor force, are mostly excluded from the pension system. In addition, the sustainability of the pension system is facing financial pressures brought by population aging and the impact of macroeconomic fluctuations. To address these challenges, this paper proposes reform suggestions such as strengthening the financial management of the pension system, expanding the coverage of the pension system, and optimizing the investment strategy of the pension system. Through the implementation of these comprehensive measures, the Cambodian government will be able to effectively expand the coverage of pension schemes, improve management efficiency, provide more reliable livelihood security for the elderly, and promote social stability and sustainable economic development.