Why social pensions?

Older people who care for grandchildren experience greater income insecurity. Antonio Olmos/HelpAge International Four out of five older people worldwide have no access to a pension.

Social pensions are non-contributory cash transfers paid regularly to older people. They are widely acknowledged to be one of the most effective tools to reduce old age poverty and invest in human capital development.

This statement is based on international evidence.

Income security

Income security is a concern for all age groups, but becomes even more acute for older people.

In most African countries fewer than one in ten older people receive a pension. At a time in their life where their capacity to earn a living decreases, older people have no choice but to continue to work well into old age.

Additionally most older people in developing countries have worked all their life in the informal sector. This kind of work is often irregular and poorly paid, meaning few have been able to save for old age.

Old age poverty

Income insecurity has a significant impact on the welfare and wellbeing of older people, their families and households.

In Tanzania for example, households which have both people over 60 and children experience poverty at a level 33% greater than the national average.

Intergenerational poverty and lack of family support

The devastating impact of poverty, conflict, migration, and HIV and AIDS means that older women and men cannot rely on support from their adult children. In fact, increasingly, older people are having to support their adult children and grandchildren. A study in Indonesia found that older people with savings or pensions financed their children when they were unemployed or ill, and did not necessarily receive reciprocal support.

In countries that are worst affected by HIV and AIDS, older people’s income and their role as carers are a vital part of the household economy. As many younger adults migrate to find work, older people stay at home to care for children, and often they receive only sporadic remittances.

Social pensions: reducing poverty

Governments in developing countries have recognised the impact social pensions can have on reducing old age and intergenerational poverty. Countries such as Nepal, Lesotho, Bolivia, Brazil and South Africa are amongst over 80 countries which have set up social pensions. 47 of these are low and middle income countries.

Evidence shows that not only do social pensions reduce old age poverty but they also reduce intergenerational poverty. For example, pension income is spent on children in the household, leading to significant improvements in their education and health.