‘Nearly half of world’s older people do not get pension’

On the day a ₹ 1,000/month minimum pension scheme was launched in India, an ILO policy paper report said that close to half (48 per cent) of people over pensionable age in the world do not receive a pension. And those who do get a pension, do not receive an adequate amount to cover for their health, and old age-related problems.

“As a result, the majority of the world’s older women and men have no income security…and have to continue working as long as they can – often badly paid and in precarious conditions,” says a paper on policy trends in social security protection in 178 countries by International Labour Organisation (ILO).

The world average of public expenditure on pensions stands at 3.3 per cent of gross domestic product, ranging from 0-2 per cent in low-income countries to 11 per cent in higher-income ones.

However, the paper notes the progress made by some countries in universal coverage. About 45 countries were close to reaching 90 per cent coverage, both contributory and non-contributory, with more than 20 developing close to achieving universal coverage, such as Argentina, Belarus, Bolivia, Botswana, Guyana, Kazakhstan, Lesotho, Maldives, Mauritius etc.

Among India’s neighbours, China has achieved near universal coverage of pensions and increased wages, says the paper, adding that in the Asia-Pacific region, only about one-third or 34 per cent of the labour force contributes for retirement benefits. Incidentally, the scheme for assuring a minimum of Rs 1,000/month by India is aimed at benefiting 32 lakh pensioners, even as over 90 per cent of the unorganised sector workforce still has no social security cover.

“Social protection is both a human right and sound economic policy…. Social protection also contributes to economic growth by supporting household income and thus domestic consumption; this is particularly important during this time of slow recovery and depressed global demand,” said Isabel Ortiz, Director, ILO social protection department, in her introduction to the report.

Calling for filling up the wide gap in coverage by largely expanding non-contributory pensions to at least guarantee basic income security in old age, the report proposes that this be made part of the development agenda.

On contributory pensions, it notes that 86 governments in 47 developing and 39 high-income countries have been considering a variety of changes to their systems, such as making eligibility conditions stricter or raising the statutory pensionable age, so that people have to work longer.

Pension coverage: Some policy alternatives

■ Mozambique used savings from a phased-out fuel subsidy to fund its social protection floor

■ Costa Rica and Mauritius converted military spending into social spending.

■ Mongolia is financing a universal child benefit from a tax on copper exports

■ Bolivia funds a universal old age pension out of a tax on gas exploitation

■ Brazil and China expanded rural pensions by increasing general taxation.

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