By 2050 nearly one in four people in Asia and Latin America and more than one in ten in sub-Saharan Africa will be aged over 60. For older people, pensions are a key element of social protection. Modest pensions are a human right and also make economic sense if the Millennium Development Goals are to be achieved.

As populations in developing countries age, older people face increasing debt, hunger and isolation: 100 million live on less than a dollar a day. However, research and debate has so far focused on contributory pension programmes in the developed world.

A report from HelpAge International (HAI) in the UK examines social pension programmes, or non-contributory pensions, for the developing world. Such pensions can be universal (unconditionally available) or means-tested (for the poor). The report argues that establishing or extending existing non-contributory pension programmes could have a significant impact on reducing poverty and vulnerability among households with older people.

Resource-poor governments running large social pension schemes include Bolivia, Namibia, Nepal and South Africa. Bangladesh and India provide means-tested pensions to the poorest older people. In Brazil pensions reach 5.3 million poor older people but cost only one percent of GDP. Having a pensioner in the family reduces a Brazilian household’s probability of becoming poor by 21 percent. South Africa regards its means-tested pension as a key poverty reduction measure. In households that share income the health of all family members is better when a member of the household receives a pension.

The report finds that small regular payments to older people can:

• improve social cohesion and the ability of a household to cope
• improve health, social standing and ability to access basic services such as credit, health care and water
• be crucial for households with older heads and with children orphaned by HIV/AIDS or conflict: six million children in sub-Saharan Africa are cared for by their grandparents
• build good governance, increase state accountability and promote citizen-state trust
• encourage schooling – in rural Brazil pensions are strongly associated with increased school enrolment, particularly of girls aged 12 to 14
• support economic growth and job creation.

Social pensions therefore encourage physical, human and social investment through improvements in health, education and social relations. The costs of existing pension schemes in developing countries is relatively low – between one and two percent of Gross Domestic Product. Universal provision is administratively simpler and less expensive than means-tested provision.

Key recommendations include:

• Developing countries must incorporate social protection, through pensions to the chronically poor, into their national Poverty Reduction Strategy Papers.
• Discussions of affordability must consider the growing evidence of the economic and social benefits that social pensions deliver.
• More evidence is needed on the impact of cash payments to the older poor. Research is required to identify who receives pensions and with what impact, and the nature of poverty in households with older people.
• Universal social pensions, basic education and health care should be incorporated as a single social protection goal in international development agreements, and donors must advise developing countries on cash transfer programming and help fund pilot cash transfer programmes.

Millennium Development Goal 8 calls for a ‘global partnership for development’: donors and developing countries must work together to guarantee protection against poverty in old age, as included in the United Nations Declaration on Human Rights.

Source(s):
‘Age and security: how social pensions can deliver effective aid to poor older people and their families’ by Mark Gorman, HelpAge International, 2004 Full document.

Funded by: Help the Aged

id21 Research Highlight: 14 June 2005

Further Information:
HelpAge International
PO Box 32832
London N1 9ZN
UK

Tel: +44 (0) 20 7278 7778
Fax: +44 (0) 20 7713 7993
Contact the contributor: mgorman@helpage.org

HelpAge International

Contact the contributor: hai@helpage.org

Other related links:
'Understanding old age and poverty in South Africa'

'Non-contributory pensions – costly luxury or weapon against poverty?'

'Including the older poor: challenging assumptions and changing policies on ageing'

'Older people in post-communist Europe: can marginalisation be challenged?'

'Why is ageing an urgent global issue?