Lao officials improve understanding of investment diversification and investment governance in social security

VIENTIANE, The Lao People’s Democratic Republic (ILO News) – Officials from the Lao People’s Democratic Republic have strengthened their skills to oversee the financial management and investment of the country’s social security fund following training provided by the International Labour Organization.

Members of the Social Security Investment Committee (IC) and officials of the Lao Social Security Organization (LSSO) gained a better understanding of social security investment principles, risk management, and an Investment Diversification Strategy and Governance Model during a workshop held in Vang Vieng on 5–7 March 2025.

© Keomany Sipaseuth/ILO

© Keomany Sipaseuth/ILO

With the ultimate objective of improving fund management and ensuring the long-term financial sustainability of the National Social Security Fund (NSSF), the workshop was organized by the ILO-UNDESA Project on “Accelerating universal social protection for achieving the SDGs and ending poverty through strengthened governance and digital transformation, which is funded by the UN Peace and Development Fund.

When the NSSF was first set up, investment opportunities in the Lao People’s Democratic Republic were very limited, and the main avenue was bank deposits. Since then, the financial market landscape has changed considerably with the Government now issuing long–term bonds and the Lao Securities Exchange (LSX) running with around 11 listed companies.

Madam Keo Chanthavixay, Vice–Minister of Labour and Social Welfare stated in her opening remarks: “The workshop plays a crucial role, particularly for the Investment Committee and its research functions. Our goal is secure and steady growth for the Fund, while maintaining sustainability.”

The intensive workshop saw participants engaging in group discussions, interactive lectures, and practical exercises focused on risk analysis of banks. The sessions included developing an Investment Policy Statement (IPS), clarifying the roles and enhancing the composition of the IC, an introduction to strategic asset allocation, and discussing the interplay of global and regional factors on the domestic market. Participants also learnt about best practices in social security accounting and how to conduct due diligence of banks and companies to invest in.

© Keomany Sipaseuth/ILO

© Keomany Sipaseuth/ILO

The Government of the Lao People’s Democratic Republic is currently reforming the Law on Social Security Law, with a view to expanding coverage, enhancing governance, and improving the NSSF’s sustainability. The ILO has supported the Government in this reform by conducting a review of the national legislation against International Labour Standards as well as an actuarial valuation of the NSSF and the health insurance system. At their request, the ILO also conducted a technical study to explore viable avenues for diversifying investment of the NSSF’s long–term benefit funds and for strengthening investment governance, while managing risks.

Key takeaways and recommendations from the Report on an Investment Diversification Strategy and Investment Governance Model for the National Social Security Fund of Lao PDR were presented during the training, to equip the IC and LSSO with technical and practical knowledge.

Loveleen De, Social Protection Programme Manager at the ILO emphasized that being a young country with a relatively young social security scheme, the NSSF reserves have been growing until now. “The majority of the NSSF reserves is invested in bank deposits and a small proportion used to purchase government bonds. Risk analysis is not being done regularly or its findings used in decision making—which is why the IC wants to diversify.”

“The report contains a set of 19 recommended actions for the short, medium and long terms. We hope that this technical report and workshop can serve as useful first steps towards the IC’s goal”, she added.

© Keomany Sipaseuth/ILO

© Keomany Sipaseuth/ILO