October 1st is the International Day of Older Persons, this year about ensuring older people can fully contribute to society. It’s a day for everyone, since we all hope to reach old age and enjoy long and fruitful lives. And, of course, none of us want our last years destroyed by poverty, which is why we want to access a decent pension.
In fact, one of the big success stories in social protection in recent years has been the expansion of pension systems across low- and middle-income countries for older persons. Excellent examples of inclusive pension systems offering income security to all citizens once they reach old age can be found in countries as diverse as Argentina, Bolivia, Nepal, Uzbekistan, Georgia, Swaziland, Lesotho, Thailand, Timor Leste and Samoa (alongside many others). In 2016, Zanzibar joined the club while the Government of Kenya has announced that, in January 2018, it will give a pension to every citizen on reaching 70 years of age (the InuaJamii70 pension), and recently allocated funding for this.
Evidence is growing on how these schemes not only benefit older persons; they also have significant impacts on children, other household members and local economies (as evidenced by the results from a recent evaluation of Uganda’s old age pension). And, of course, they strengthen the national social contract by demonstrating that the state cares for its citizens by guaranteeing income security in old age for everyone.
Namibia is a great example of a country with a universal pension, as well as universal disability benefits for both children and working age adults. The programmes are incredibly popular and have helped to transform the lives of many older people. Furthermore, research has indicated that pensioners give around 70 per cent of their transfer to others, mainly children. A recent World Bank report has estimated that the old age pension reduces the national poverty rate by 33 per cent and the national poverty gap by 87 per cent. The three universal schemes together reduce inequality by 4.4 per cent, which is significantly more than the 0.6 per cent reduction resulting from the country’s poverty-targeted child benefit (universal benefits are demonstrably more successful than targeted benefits in reducing inequality).
So, what was the World Bank’s response? In the same report, it recommends that Namibia should not only introduce poverty-targeting into its universal old age and disability benefits, but should use a proxy means test (PMT) to do so. In effect, they are proposing ending these successful programmes by excluding a high proportion of current recipients, including many of those living in poverty. We know this because the most effective poverty-targeted benefits have errors of at least 50 per cent, and recent research by Development Pathways and the World Bank has demonstrated that the proxy means test is both highly inaccurate and arbitrary. Indeed, the World Bank’s PMT paper recommends that countries should consider introducing universal benefits instead of targeting those living in poverty.
It is disappointing, therefore, to see World Bank continuing to advocate for a neoliberal approach to social protection for older persons, following the 19th Century model of poor relief. But, it’s not only in Namibia that we see this: for example, the World Bank has recently continued its attacks on Mongolia’s universal child benefit and Nepal’s universal pension, and it wasn’t that long ago that it recommended to Mauritius that it target its highly successful universal pension (despite the government losing the election of 2005, following the last time it introduced targeting).
A colleague of mine recently met with a social protection specialist from the World Bank. This person argued that they don’t impose their views on governments but, instead, get behind what governments themselves want (I’ve heard the same argument myself). The Namibia report is yet another example that this is nonsense. If you take advice from the World Bank, you know that you’ll be told to target your programmes using a proxy means test, build an anti-social registry, introduce conditions and sanctions or, as an alternative, implement workfare (the so-called [un]productive safety nets). And, if they’re really imaginative, you’ll be persuaded to introduce a Graduation programme, despite the evidence on their failures and lack of cost-effectiveness.
Social protection is an essential component of any successful and sustainable market economy. But, this depends on countries being willing to invest adequately in its social protection system including, over time, establishing a basic floor of inclusive entitlements, incorporating, at a minimum, old age, disability and child benefits. All countries can establish a minimum floor for less than 2 per cent of GDP and, if they do, they’ll enjoy significant economic, social and political benefits. Bear in mind that a relatively poor country like Uzbekistan is investing 11 per cent of GDP in social protection, alongside economic growth of 8 per cent per year.
It’s difficult to understand how the call for targeting aligns with the World Bank’s laudable commitment to ‘universal social protection’. We all, including those of us working in social protection, want dignity in our old age and many of us already have guaranteed old age pensions (including our friends in the World Bank). So, on this Older Person’s Day why don’t we all get behind a commitment to act to ensure that nobody is excluded from a pension (and most definitely, that we don’t take pensions away from those who depend on them). This would not only be a great, life-changing move for many, it would also make sound social, economic and political sense.