Like Brazil in the 1960s, China is now facing problems of large geographical inequalities, as well high rates of rural to urban migration of younger aged adults. However, rural older people account for a much higher share of China‟s total population than in Brazil. This both increases the urgency for universal pension provision and increases the economic cost of doing so.

This briefing looks at Brazil's successful development of a pension fund specifically for rural workers - Fundo de Assistência ao Trabalhador Rural (Rural Workers‟ Assistance Fund) known as FUNRURAL- and argues that China can learn valuable lessons for its own rural elderly.

The main aspects of FUNRURAL and their implications for China include:

• FUNRURAL has been providing rural pensions since 1963. Along with other government programmes, it has led to universal pension protection for older people in rural areas
• a range of independent studies demonstrate that FUNRURAL has significantly reduced rural poverty and economic vulnerability
• there is also evidence that it can promote human capital and economic development in disadvantaged rural areas
• rural pensions are usually shared across entire households and are associated with a strengthening of family solidarity
• household access to a rural pension increases their access to health services and medication
• the extension of entitlements to women has led to the elimination of a poverty gap between older men and women
• FUNRURAL currently costs around 1% of GDP
• the historical experience of FUNRURAL shows that a programme may start small, providing limited protection to a narrow range of older people, and may later be extended if it is assessed to be effective and affordable
• FUNRURAL also demonstrates the value of a centralised approach to financing rural social protection, rather than devolving responsibility to lower levels of government. Currently, only around 2 per cent of women aged 60 and over living in rural districts of China have access to a pension. It is fair to ask whether China can afford the consequences of not developing a rural pension programme

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