social pensions for the elderly

Charles Knox, an adviser for HelpAge International, wonders why noncontributory age pensions don’t receive the same attention from donors as conditional cash transfers (CCTs) do.

One reason seems to be that “pensions” in developing countries are usually put in a different box to “development”. This … ignores the fact that bad pension reforms can leave countries with huge financial burdens, which have an impact on development.

Another reason may be because it is usually governments themselves, rather than donors, who decide to implement social pensions. And funding almost always comes out of the general government budget. This is in contrast to CCTs, which are usually designed and financed by loans from development banks, especially the World Bank. ….

In spite of the widespread success of social pensions, there is still significant work to do. Many countries struggle with delivery and targeting processes, while few have the resources to properly monitor the impact of programmes. Meanwhile, many of the countries without social pensions are showing interest in building evidence on how they could be put in place.

This means there is significant space for the international community to support their implementation. While some international organisations have already started to support government, there is clearly room for more. Increasing this support would be a way of cementing the success of government-owned and sustainable social protection.

Charles Knox-Vydmanov, “Pensions have a positive impact on development“, Poverty Matters Blog (The Guardian), 2 May 2011.

Mr Knox, in this otherwise thoughtful essay, lumps universal and means-tested pensons together, ignoring the fact that targeting rarely works. Even in developed countries, there is low take-up of targeted benefits. In developing countries, mis-targeting is worse: a large portion of supposedly targeted benefits typically go to the non-poor rather than the poor. Targeting fails because of the stigma of means-tests, in addition to limited access to information and, in some countries, widespread corruption.

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