By Cherian Mathews, CEO of HelpAge International
Around the world, populations are ageing at a pace and nowhere more so than in Asia-Pacific, where, by 2050, one in four people will be over the age of 60.
Longer lives undoubtedly are a triumph of development, but these seismic changes also raise increasingly urgent questions of how to safeguard the well-being and dignity of all older people. What is clear is that pensions that guarantee income security for older people are essential for a world where older people do not just survive but are able to thrive.
Many of the world’s most vulnerable older people are excluded from pension systems. As a result, millions enter older age without any guaranteed income, forcing them to continue working even if they are experiencing health issues, or depending on family support that can be precarious. In lower-income countries, just 12 per cent of older people receive a pension, and older women face even slimmer chances. Due to high levels of informal employment, as well as unpaid care work, large segments of today’s older people in lower- and middle-income countries have not paid into a contributory pension. Recognising the urgency of closing gaps in their pension systems, governments are increasingly turning to tax-financed pensions—also called social pensions—to ensure that all older people have a guaranteed income.
Organisations of older people understand the urgent need and transformative potential of universal pension systems better than anyone, and around the world they advocate unwaveringly for the introduction and improvement of social pensions. Supporting their advocacy towards realising social pensions is central to HelpAge International’s mission and strategy.
To support these efforts, Development Pathways and HelpAge International have collaborated on a new report, Adding life to years: a review of tax-financed pensions in the Asia-Pacific region, which surveys the state of social pensions in the Asia-Pacific region – the world’s fastest ageing region. The report helps us better understand where the implementation of social pensions is progressing—and where it is stalled—as well as the features and impacts of successful models. It should also help advocates at all levels to push more effectively for social pensions to be introduced or strengthened.
A number of important messages emerge from the study:
Firstly, broad-based social pensions are essential for a pension system to achieve universal coverage: virtually no country has accomplished universal pension coverage without a robust social pension.
Secondly, implementing universal social pensions that reach all older people have proven most effective at expanding coverage, ensuring inclusivity and maintaining adequate transfer levels, in part because of the wide societal support they receive.
Thirdly, there is strong and consistent evidence of the positive economic and social impacts of social pensions, even where the amounts paid out are modest. Social pensions significantly increase household consumption, with the highest increases among the poorest households. They also improve health outcomes, reduce disability rates, and enhance cognitive functioning, likely due to better diets and access to healthcare. Mental health benefits have also been documented. Social pensions do not just benefit older people but also their families and communities. Older people often support grandchildren and contribute to household needs, while families with children can redirect resources from supporting ageing parents to investing in their children. Pensions strengthen community life, enabling older people to participate in voluntary work and local leadership.
Finally, the study confirms that social pensions are affordable even in lower-income countries, particularly when introduced gradually and expanded over time. Several countries in Asia-Pacific that have robust social pensions achieved this over time by either starting with a higher age of eligibility and reducing it, or by commencing with a low transfer value and gradually increasing it, or both.
Social protection is a human right, and social pensions are the most effective means of realising this right for older people. With a large and growing body of evidence showing they are affordable and effective, there is no excuse for governments to deny older people their right to income security.
I had the pleasure of chairing a panel on universal social protection in an ageing world at the Second World Summit for Social Development in Doha, where this report was discussed. Participating in the Summit—through countless plenary sessions, panels and informal chats with government representatives, officials of international organisations and civil society—made it clearer than ever that ageing has fully arrived at the heart of social development. Expanding and improving social pensions would be an immediate and impactful way of moving forward on the commitment made in Doha to “equal, full, effective and meaningful participation of older persons in political, social, economic and cultural life”.
The report can be found here.