Social pensions key to protecting elderly, reducing poverty

As Asia's population ages, developing countries in the region should explore social pensions that provide cash benefits to vulnerable older citizens who are most in need of a safety net, according to a new publication from the Asian Development Bank (ADB).

“Social pensions can help older people gain access to health care, and enhance their status and social standing,” said director general of ADB’s Regional and Sustainable Development Department S Chander. “They also help the most vulnerable, particularly women and widows who often lack savings or any form of social security, and face discrimination in terms of employment, inheritance and property laws.”

The study – Social Protection for Older Persons: Social Pensions in Asia – looks at various non-contributory social pension schemes in the region and suggests that even providing a small bit of assistance can go a long way to reducing poverty.

Case studies from Bangladesh, Nepal, Thailand and Vietnam illustrate that a social pension programme with low benefits to many beneficiaries is more beneficial than high benefits to few beneficiaries. Asia’s ageing population is a development challenge; since caring for the elderly can be costly and economic growth and productivity depend on a labour force regularly replenished with young adult workers.

Only a minority of Asia's elderly receive pension benefits. Indeed, only about one-quarter of the workforce is covered by contributory pensions in China, the Philippines and Sri Lanka. Less than one in 10 are covered by contributory pensions in Bangladesh, India, Indonesia and Vietnam.

The study found that targeting social pensions to income or poverty levels – as opposed to universal coverage – makes it difficult to identify eligible beneficiaries and can lead to mismanagement and favouritism.

Social pensions can be attractive to policy makers in countries where national budgets are tight and poverty rates are high, as the beneficiary group is clearly defined and liabilities are simple to track.