I recently came across this excellent article by political scientist Pablo Yanes, who compares two noncontributory age pensions in Mexico. The first began in 2006 as an add-on to a conditional cash transfer programme (Oportunidades) targeted to poor families with school-age children. The second began in 2007 as a universal transfer with geographic targeting. (It was restricted to senior citizens living in rural areas.) The article was published two years ago in the Economic and Political Weekly, a left-leaning magazine from Mumbai (India).
Oportunidades is the federal government’s main social programme; its predecessor was Progresa. …. Currently, Oportunidades covers 5.8 million households in Mexico. ….
The introduction of [a monthly transfer for 820,000 Oportunidades household members aged 70 or older] was a large shift (even as it maintained targeting and conditionality) …. It represented an adjustment in the objective of breaking the intergenerational transmission of poverty – the heart of the Oportunidades programme consists of scholarships for children aged between 9 and 21 years. The new programme was no longer about addressing the poverty of today’s children but about today’s senior citizens. However, this aspect of the programme is almost closed due to the existence of a programme of transfers for senior citizens called Setenta y Más (“Seventy and Over”). ….
The case of Setenta y Más is very interesting because it expresses the transition from an individually targeted and conditional programme to a territorially targeted one that has no conditions. By 2010, the programme had incorporated a little over 2.3 million people in rural areas and small cities. …. [This] shows that there are different paths for transfer policies, and also that it is possible to go from a model of individual targeting to territorial targeting as a halfway point towards universality, and from conditional transfers to unconditional transfers. All of this within the same country, Mexico, and within the same government agency, the Secretaría de Desarrollo Social (Ministry of Social Development). ….
[There are many obligations for families participating in Oportunidades.] There is also an obligation with respect to senior citizens that remain in Oportunidades rather than in Setenta y Más. The obligation is of “delivering to the senior citizens the monetary support intended for them”. As the mother of small children in the home is usually the titular receiver of the transfers in Oportunidades, the absurd situation of the money intended for the senior citizens being delivered to the daughter who, in turn, must deliver it to the senior citizen, ensues. This introduces a lamentable relationship of power within the family nucleus in which the senior citizen is rendered child-like and has no direct access to resources that are his by right, and so depends completely on the intervention of the daughter.
Even worse, according to the same operational rules, the support is terminated when “the senior citizen leaves the household”. So, the possibility of an independent life or at least a separate house is negated. The senior citizen under Oportunidades must get her support from the daughter and will lose it should she live in a different home.
This serves to illustrate the contrast between being a senior citizen under Oportunidades and under Setenta y Más, two federal transfer programmes aimed at the same group of people. In the first case, the citizen receives a $25 monthly transfer, in the second, it is $40. In the first programme there are conditions, in the second there are none. In the first he must get the money through his daughter, in the second he gets it directly. In the first programme she loses her income if she leaves the household, in the second she only loses it if she moves to a location with over 30,000 inhabitants.
Pablo Yanes, “Mexico’s Targeted and Conditional Transfers: Between Oportunidades and Rights“, Economic and Political Weekly 46:21 (21 May 2011), pp. 49-54 (ungated link).
Please read the full essay, but skip the political boilerplate on the first page, unless the “crisis of the Fordist-Keynesian model” interests you. The remaining five pages are very informative and, mercifully, ignore the Fordist-Keynsian model.
Mr Yanes, in May 2011, was director of the Social Evaluation Council of Mexico City. He now heads the Social Development Unit of ECLAC’s office in Mexico. ECLAC (Cepal in Spanish) is the United Nations Economic Commission for Latin American and the Caribbean, with headquarters in Santiago, Chile.
Much has changed since Mr Yanes wrote this essay. In 2012 the outgoing president of Mexico, from a centre-right party (the PAN), unexpectedly ended the geographic test for 70 y Más pensions, but added a pension test. This means that every Mexican resident who satisfies the age test has a right to a pension: either contributory (social security) or noncontributory (70 y Más). Since about 30% of Mexico’s senior citizens receive a contributory pension, noncontributory pensions will go to the remaining 70%. This is universality of a sort, one that I refer to as a “universal minimum pension” to distinguish it from a true universal pension, which has no test other than age and residence. This type of social pension has been in effect in Sweden since 1913 and in Lesotho since 2004.
This year, the incoming president, from the traditional, centrist party (PRI), lowered the age of entitlement to 65 years, converting “70 y Más” into “65 y Más“. By the end of 2013 an estimated 5.54 million Mexican senior citizens – 70% of the 65+ age group – will be receiving “65 y Más” pensions. Those excluded have earned the right to contributory, earnings-related pensions that are always larger than the modest “65 y Más” pension. The original “70 y Más” scheme was initiated in Congress by members of the centre-left PRD, and received support from some of the PRI, and even PAN congressmen. Mexico’s universal minimum pension has the backing of all three major parties, so unpaid workers such as housewives, and workers in the informal sector, can be very confident that they will receive at least a basic pension in their old age.
Recipients of old age benefits from Oportunidades fell from 820,000 at the end of 2006 to 219,000 in 2007, and further, reaching 37,000 at the end of 2012. By the end of this year, if not sooner, all remaining senior citizens in Oportunidades will have transferred to 65 y Más. The transition to unconditional old age benefits will then be complete. I suspect that this surprises Mr Yanes as much as it does me.