Should older people be targeted? Social pensions for elderly or social assistance for households
Charles Knox-Vydmanov, HelpAge International Morning Symposium on social pensions verses social assistance World Bank, Washington 3rd April 2013
Social assistance vs social pensions
What are countries saying?
An guaandBarbuda
Argen na
Australia
Bangladesh
Belize
Bolivia
Botswana
Brazil
Canada
CapeVerde
Colombia
CookIslands
CostaRica
Denmark
EcuadorElSalvador
Finland
France
Guatemala
Guyana
Iceland India
IndonesiaIreland
Jamaica
Kenya
Kiriba
Kosovo
Lesotho
Malaysia
Maldives
Malta
Mauri us
Mexico
Namibia
Nepal
Netherlands
NewZealand
Nigeria
Norway
Panama
Paraguay
Peru
Philippines
SaintVincentandtheGrenadines
Samoa
Seychelles
SouthAfrica
Suriname
Swaziland
Sweden
Thailand
Timor-Leste
TrinidadandTobago
Turkey
UnitedKingdom
Venezuela,BolivarianRepublicof
VietNam
0
2000
4000
6000
8000
10000
12000
14000
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Incomeperperson(fixedPPP$)
Year
Latin America
In spite of CCTs, many countries
are introducing social pensions
• Mexico
• Ecuador
• Paraguay
• Peru
China
Long history of catch-all social
assistance. Since 2009,
massive expansion of Rural
Social Pension.
Agenda Why are countries making this choice?
Beyond
Poverty and vulnerability are too widespread and complex to be dealt with by a single safety net
Beyond
Old age is a societal issue
“the poor”
“the elderly”
versus
Beyond “the poor” Logic for a catch-all safety net
Resources are limited
A residual group we can
identify as “the poor”
Target resources efficiently to
the poor:
“Surgical targeting”
+
=
"How I would like a poor church for the poor"
Poverty is dynamic with complex causes
Mother died
She was very bright and was doing well at school, but father refused to pay her school fees. She had to drop out.
1963. Married and first child born
Father died
Husband lost job
Husband became sick
Lack of money to buy basics
Low fluctuating wellbeing Children born: 1963, 1965, 1968, 1970, 1973, 1978, 1981
2000s 1963 1986
Wellb
ein
g
Grand children left with them
Bukuluki and Carol Watson (2012)
Implications (1) poverty and vulnerability widespread
13%
24%
38%
50%
57%
69%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Po
pu
lati
on
belo
w p
overty
lin
e
(%
)
$PPP 1.2
$PPP 1.4
$PPP 1.8
$PPP 2.1
$PPP 2.4
$PPP 3.0
World Bank (2012) Targeting poor and vulnerable households in Indonesia
Implications (2) poverty-targeting incredibly challenging
• Significant exclusion errors – normal for half of those targeted to miss out
• Driven by:
• Complexity of poverty
• Long gaps between targeting (2 years is good)
• Administrative costs and perverse incentives
• Political costs
• Targeting of the poor suggests it is something that one part of society does to another
• “Benefits meant exclusively for the poor often end up being poor benefits.” Amartya Sen
• Social assistance rarely large in scale
“The aim was maximum mobilization of resources, from all sources, to be targeted upon the needs of the poor as assessed ‘scientifically’. .... As it turned out, the extent of poverty was too great, its causes and cure too complex for such simple ‘scientific’ treatment; … After a decade or so the policy was an admitted failure.”
Pat Thane (2000) Old Age in English History: Past Experiences, Present Issues
The alternative?
Resources are limited
A residual group we can
identify as “the poor”
Target resources efficiently to
the poor:
“Surgical targeting”
+
=
Not so simple
+
Poverty and vulnerability are
widespread and dynamic
Overlapping system covering
the big life course risks:
A social protection floor
=
Beyond “the elderly” Why to countries invest in basic pensions?
• Basic pensions (including social pensions) often prioritised in social protection system
• Sequencing: Set pace for wider SP system development
• Remain core spend
• with major impact on poverty and inequality for whole population
• But why?
• Because older people are poorer?
• Evidence of relative poverty rates not compelling
• Poverty analysis from household surveys can only tell us a limited amount about individual wellbeing of older people
• The “grey vote”?
• Lesotho? – 4.3% over 65
• Nepal? – 4.2% over 65
• Brazil? – 7% over 65
Characteristics of old age? Old age doesn’t just affect older people
• A fundamental human concern
• “How will I support myself when I get older?”
• Affects life course decisions (eg. fertility)
• “Having too many children was for a long time, and still is today, the main form of social protection in Mozambique and, perhaps, in most Sub-Saharan African countries.” Francisco, Ali and Ibraimo (2010)
• Good evidence of link between pension provision and fertility
• Situation of current older people is an shared/intergenerational issue
• Supporting an older person is an additional strain for a vulnerable family
• Pensions shared amongst other household members
• Dignity and autonomy: enough to rely on family support?
Universal and inevitable
We all expect to get old
Issue of autonomy and dignity
Few want to be wholly dependent
Changing expectations?
53%
45%
40% 40%
31%
9%
31%
36% 37%
32%
39%
63%
5% 7%
12%
22%
14%
4%
0%
10%
20%
30%
40%
50%
60%
70%
South Korea Taiwan Hong Kong Singapore Malaysia China
Retirees themselves
Government
Grown children or other familymembers
“Who, ideally, should be mostly responsible for providing income to retired people?”
Pensions as a societal good Katete, Zambia
“Before, people used to bypass us as we had nothing to offer. Now there is a much stronger relationship within the community.”
“the village is very proud of us, they call us ‘bosses’ now.”
“The people who receive assistance, the aged, are my old parents; so I am relieved when the transfer is given to them.”
“Now they buy enough food and the children come to school fed. When the child is fed concentration levels are higher and the output of the pupils is good. So, even the results are improving.”
Concluding thoughts
• Poverty and vulnerability go beyond “the poor”
• Ultimately need for a more systematic approach
• Issues of old age go beyond “the elderly”
• Challenge is to guarantee basic income security for all people when they reach old age
Changing the question • What is the “mix” for guaranteeing income security in
old age
• How to integrate non-contributory (basic security/adequacy) and contributory (consumption smoothing/insurance)?
• How to integrate the two sides of a system? (avoiding perverse incentives)
Thank you
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Twitter: @pensionwatch
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