Non-contributory pension schemes: a new model for social security in the South?

This paper considers existing non-contributory pension programmes, or more accurately cash transfers for the old, in Africa and Latin America. It evaluates their impact on poverty and vulnerability of the old, on aggregate poverty, and on household investment in physical and human capital. The paper argues that these programmes have a significant impact on poverty and social investment in developing countries.

Overall, the discussion in the paper supports the conclusion that cash transfer programmes for the old do indeed have the potential to make a significant contribution to reducing poverty and vulnerability, as well as reducing the intergenerational transmission of poverty. Cash transfer programmes to the old also provide an important stimulus to economic activity, and can act as valuable insurance against risks to household consumption and investment. These programmes have the potential to make an important contribution to the development process. The experience of the countries reviewed confirms that these programmes are able to deliver in all three dimensions, and with the right design and financing features, they could constitute the embryo for more embracing social protection systems in the developing world.