Social Pensions to Ease Economic Crisis

www.helpage.org

August 4, 2009

World

Several countries are expanding social pension schemes to mitigate the effects of the economic crisis.

In May 2009, Russian president Valdimir Putin announced plans to raise the level of both the labour pension and social pension by 45%. In 2010, the average monthly labour pension should be 7,946 roubles (US$251) and the social pension of 4,917 roubles (US$156), he said. 

President Putin said that despite the impact of the economic crisis and the high costs of increasing the pension, it would be inadmissible to postpone the reform. 

He outlined the economic benefits: “It spells growing demand, more money in people's pockets to spend on basic necessities. That will create more jobs in the real sector, in retailing, and in the services.”

Action in Asia
The Government of Thailand has announced the continuation of a temporary extension of the Old Age Allowance, which it introduced in April 2009 in response to the economic crises.

For a three-week period, everyone over 60 who was not in receipt of a state pension or other state benefit was eligible to register for the Old Age Allowance, which had previously been means-tested. Nearly three million people registered – around 63% of those eligible.

The attempt to extend pension coverage to the whole population marks a paradigm shift in Thailand’s pension provision. 

Speaking at a forum hosted by HelpAge International in Bangkok in April, Prime Minister Abhisit Vejjajiva was eager to highlight that the pension was not social assistance, but a right. “The old age social pension is not populist policy, but rather a basic human right that everyone deserves,” he said.

Challenges remain, however. The level of the Old Age Allowance remains low at 500 baht (US$15) a month, and there is not yet any system for more older people to register under the new criteria.

In July 2009, the Government of the Philippines announced that it would introduce a non-contributory pension of 500 pesos (US$10.5) a month to people over the age of 70 living in poverty.

The announcement follows persistent lobbying by the Coalition of Services of the Elderly (COSE), a partner of HelpAge International, including a rally of older people at the House of Representatives during the Week of the Elderly in October 2008. 

Advances in Africa

In Lesotho, the government increased the non-contributory pension from 200 maloti (US$25) to 300 maloti (US$38) a month in February 2009.
This has doubled the level of the pension since it was introduced in 2004, and increased it by about 50% in real terms (taking account of inflation).

The pension is distributed to everyone over 70 who is not receiving any other pension. It is one of the most generous social pensions in relation to GDP per capita, at about 40% of GDP per capita.

In June 2009, Kenya announced an allocation of 200 million Ksh (US$2.6 million) to a new poverty-targeted pension, which is due to start in September. The amount budgeted has since increased to 550 million Ksh (US$7.2 million).

The pension will be distributed to those over the age of 65 who are chronically ill, living with disability or caring for orphans and vulnerable children. Around 30,000 people – 3% of the population over 65 – will receive it. 

HelpAge Kenya, a partner of HelpAge International, has lobbied the government for a pension for many years, and has been invited to take part in designing it.

Latin American proposals

The Government of Ecuador is considering how to deliver the right to a universal pension. This right is included in a new constitution that was approved in September 2008.

Around 300,000 older people – a quarter of the population over 65 – receive the poverty-targeted Bono de Desarollo Humano (the Human Development Grant). One suggestion is extend coverage of this.

In Paraguay, the Senate is considering a proposal for 257,000 of the poorest older people to receive a non-contributory pension of 335,000 guarani (US$65) per month, worth one-quarter of the minimum wage. This would replace the current means-tested pension. 

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