UNRISD (the United Nations Research Institute for Social Development) has just released a new publication on pension reform in developing and transitional countries. The 368-page volume contains nine chapters of case studies written by various scholars, plus an introduction and conclusion authored by Katja Hujo. So far I have read only the introduction and conclusion, plus chapter 9 (a superb case study of Bolivia).
The book contains a wealth of information, and I will blog on some of the case studies as I read them. First, though, I would like to complain that the book pays little attention to universal pensions, concentrating on social assistance (means-tested) pensions and on contributory pensions.
I would like to remind TdJ readers of the definition of “universal pension” – at least the definition that I use!
Age and residence/citizenship are the only tests for this pension. It is not necessary to actually retire from work to receive the pension. Benefits might be taxable as income, but only at normal rates, without surcharges to recover them.
Larry Willmore, “Types of Social Pensions“, 22 April 2012.
The UNRISD publication uses a broad definition of “universal”, which includes pension-tested schemes. (See p. 18 of the introduction.) If a social pension is given only to those without a contributory pension (or too small a pension), by definition it excludes part of the elderly population, so is not universal.
The most comprehensive treatment of universal pensions (without using the term!) is in the first sentence of last paragraph of p. 18:
Most countries have social pensions that target the elderly poor, but some countries have implemented non-contributory pension programmes covering all citizens and residents in the country – as in Bolivia, Nepal, Mauritius, New Zealand and Brazil (rural sector).
A number of examples of universal pensions in developing countries could (and should) have been added to this list: most notably rural Mexico, Mexico City, Namibia and Botswana, but also Guyana, Samoa, Brunei and Kosovo. Regrettably, there is no case study of Mauritius, a country with a long and successful history of universal pensions (from 1958). More regrettably, there is almost no mention of Mauritius in the rest of the book, and the sentence above is the only mention of New Zealand. Neither Mauritius nor New Zealand are listed in the book’s extensive index.
The paragraph at the bottom of p. 18 concludes with arguments for and against universal schemes:
As with other social transfers and services, opinions diverge on the pros and cons of targeted versus universal social provisioning. As Chapters 9 [on Bolivia] and 10 [on Argentina and Chile] explore in more detail, there are strong arguments in favour of universal schemes in countries with widespread poverty, weak administrative systems and where there is a need to strengthen social cohesion, a sense of citizenship and social solidarity. On the other hand, international financial institutions (IFIs) tend to favour the introduction of means-tested targeted transfers because they hold that these schemes are less costly and more effective in terms of poverty reduction.
Support for a universal pension is at best tepid. Strong arguments exist for universal pensions even in countries like New Zealand and Mauritius, which do not have widespread poverty nor weak administrative systems. It is a pity that the case for universal pensions was not articulated better.
Neither Argentina nor Chile have universal pensions, so I am eager to learn in what way these case studies are relevant for policymakers contemplating introduction of universal pensions. Katja Hujo (editor) is co-author, with Mariana Rulli, of chapter 10.
Below is the full reference for this publication, and the link to a site where you can download it. All quotes above are from the introduction, which can be downloaded as a free “sample chapter”. The complete book (hardcover, 368 pages) is available from Palgrave for the high price of 115 US$ plus shipping.
Katja Hujo (editor), Reforming Pensions in Developing and Transition Countries (Palgrave Macmillan, 2014).
The study of pensions in Bolivia (Chapter 9) is the best I have seen. It was written by Peter Lloyd-Sherlock (University of East Anglia) and Kepa Artaraz (University of Brighton). I will blog on it shortly.