Pensions Core Course 2013: Should Older People be Targeted?
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This document summarizes Charles Knox-Vydmanov's presentation at the World Bank on social pensions versus social assistance. The presentation argues that poverty and vulnerability are too widespread and complex to be addressed only by targeted social assistance for "the poor." It also argues that issues of old age affect society more broadly than just "the elderly" and are a universal concern. The presentation examines evidence that pensions can help reduce poverty, inequality, and fertility rates while also enhancing dignity in old age. It concludes by shifting the question from targeting certain groups to how to guarantee basic income security for all in old age through integrated social protection systems.
Pensions Core Course 2013: Should Older People be Targeted?
- 1. 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
- 2. Social assistance vs social pensions What are countries saying? An gua and Barbuda Argen na Australia Bangladesh Belize Bolivia Botswana Brazil Canada Cape Verde Colombia Cook Islands Costa Rica Denmark Ecuador El Salvador Finland France Guatemala Guyana Iceland India IndonesiaIreland Jamaica Kenya Kiriba Kosovo Lesotho Malaysia Maldives Malta Mauri us Mexico Namibia Nepal Netherlands New Zealand Nigeria Norway Panama Paraguay Peru Philippines Saint Vincent and th Samoa Seychelles South Africa Suriname Swaziland Sweden Thailand Timor-Leste Trinidad and Tobago Turkey United Kingdom Venezuela, Boliva Viet Nam 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
- 3. 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.
- 4. 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
- 5. 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” + =
- 6. "How I would like a poor church for the poor"
- 7. 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 2000s1963 1986 Wellbeing Grand children left with them Bukuluki and Carol Watson (2012)
- 8. Implications (1) poverty and vulnerability widespread 13% 24% 38% 50% 57% 69% 0% 10% 20% 30% 40% 50% 60% 70% 80% Populationbelowpovertyline (%) $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
- 9. 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
- 10. “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
- 11. 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 =
- 12. 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
- 13. 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
- 14. 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 family members “Who, ideally, should be mostly responsible for providing income to retired people?”
- 15. 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.”
- 16. 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
- 17. 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)
- 18. Thank you Find more at… www.pension-watch.net Twitter: @pensionwatch