The price of income security in older age
The lack of a secure income in older age is one of the biggest problems facing people in developing countries. Few people in poverty can afford to save for older age and family support for older people is under pressure. Around the world, the majority of older people lack a secure income, and fewer than one in five people over 60 receive a pension. The best way to tackle this problem is for governments to provide non-contributory (‘social’) pensions, as more than 80 governments around the world have done including Nepal, Bolivia, South Africa and Brazil.
Universal social pensions have a number of benefits as a foundation to any pension system. They are the most effective way to reach poor older men and women, are relatively simple to implement, and avoid many of the challenges associated with means-tested programmes. Existing universal pensions have not only contributed to the income security of older people, but also the wellbeing of their families and communities, especially that of grandchildren in the household. In this sense, they have proven to be an effective step towards providing a minimum ‘floor’ of social protection across the life course.
In spite of these benefits, one of the biggest concerns about universal pensions is their cost. Can developing countries really afford them, and are costs sustainable in the long term? This briefing addresses part of this question by looking at the costs of universal pensions in 50 low- and middle-income countries. The aim is to contribute to the growing debate on social protection and pensions by providing figures for a range of scenarios in a variety of contexts. The paper aims to build on previous costings by organisations such as the International Labour Office by looking at a greater number of countries, and focusing in more detail on social pensions.