Age and security: how social pensions can deliver effective aid to poor older people and their families

This report focuses on social pension programmes (involving non-contributory pensions targeted at the poor). It sets out the economic and political issues,provides case study evidence (including the views of older people already receiving pensions) and puts forward an agenda for action based on sound research and experience. A handful of developing countries have already developed social pensions. South Africa, Brazil, Bolivia, Nepal, and India have various versions of the scheme.

The report argues that:

• pensions can support whole families. Research shows that older people consistently invest the little money they have in income-generating activities and the health and education of dependants (including the increasing number of HIV affected children supported by older family members)
• social pensions target development aid to the poorest. They can regenerate local economies and re-distribute wealth. They improve the nutritional status of the young, support school attendance and improve the health of all household members. The social pension in South Africa reduces the scale of older people’s poverty by 94 per cent and that of the population as a whole by 12.5 per cent
• regular income to older people relieves the need for adult children to support their parents, enabling households to invest in children’s health and education. This can break the pattern of deprivation from one generation to the next
• even for cash-strapped governments, providing cash pension payments is affordable: they typically cost in the region of 2 per cent of GDP
• given multiple demands on limited resources, it may be best to start by offering a minimal pension to very old people. The pension level and age at which it is offered will need to be related to other components of the social protection package. The important point is to construct national budgets that encompass a realistic investment in social protection, including cash transfer schemes
• evidence from a number of countries shows administration to account for a low proportion of costs. In Botswana and Mauritius, for example, administration accounts for 2-3 per cent of benefit payments. The experience of existing schemes demonstrates that universal provision of social pensions to older people is administratively simpler and less expensive than means-tested provision.
• the introduction of social pensions by governments, with financial support from the international community, would make a significant contribution to the achievement of the Millennium Development Goals