Archive for the ‘Universal Transfers’ Category

universal pensions and Hong Kong values

Wednesday, May 25th, 2016

Some Hong Kong businessmen are very mean-spirited. Moreover, they fail to understand that means-tested benefits are ‘welfare’, whereas universal benefits are not. Examples of universal benefits in Hong Kong are basic schooling and health care. Both are provided freely to all legal residents regardless of income or wealth.

Prominent members of the Hong Kong business sector have decried universal welfare as going against Hong Kong values during a forum on retirement protection held by the Chamber of Commerce yesterday.

Addressing fellow attendees, including Chief Secretary Carrie Lam, chairman of the Chamber Stephen Ng said, “Welfare which everyone can get is not the Hong Kong spirit.”

SCMP [South China Morning Post] reports that many present at the forum “lamented” that government policies (like minimum wage) had “created hardship” f

US vs UK healthcare

Tuesday, May 17th, 2016

FT journalists Aimee Keane in New York and Hannah Murphy in London compare healthcare systems in the two cities. Their article compares the experiences of one man in each city, aged 28 and 27 respectively, who fall ill and are diagnosed with multiple sclerosis (MS).

Each system has flaws. An important distinction is costs – and who bears them. The New York patient was fortunate to have private insurance through his employer. His diagnosis was speedy (one day), but he had to pay the first $2,000 of the $14,367 bill for a single day of care. The British patient, with access to universal healthcare (NHS), had to wait two months for a diagnosis, but paid nothing out-of-pocket.

In the US, access to affordable medical care is a critical factor. According to the National Multiple Sclerosis Society in the US, 70 per cent of MS patients report “some difficulty” paying for healthcare and 16.4 per cent report “a lot of difficulty”.

The US healthcare system is run largely by the private sector. For those who do not qualify for the government assistance programs designed to help low-income families and the retired, access depends on insurance plans offered by an employer or on, the online insurance marketplace created through the Affordable Care Act of 2010, otherwise known as “Obamacare”.

The Milliman Medical Index, which measures the out-of-pocket cost of healthcare for a typical American family of four, on an average employer-sponsored plan, came up with a figure of $24,671 for 2015. According to Milliman, the actuary that publishes the index, this number has almost tripled since it began tracking these costs in 2001, an increase attributed in part to a spike in prescription drug costs in the US over the past few years.

Aimee Keane and Hannah Murphy, “Managing multiple sclerosis: a transatlantic tale of healthcare in US v UK“, Financial Times, 16 May 2016 (metered paywall).

Keane and Murphy fail to mention that UK residents can use private hospital and clinics, and purchase private insurance, if they desire. Speedy attention is available in the UK – at a price. The UK healthcare system is analogous to the two-tier system in effect almost everywhere for primary and secondary education: ‘free’ government schools operating as an alternative to private schools that charge tuition.

the appeal of targeted social benefits

Friday, May 13th, 2016

British anthropologist Stephen Kidd has written a superb, very concise paper on the history and political economy of ‘poverty targeting’. Here are extracts from the introduction and conclusion of the paper. Click on the link below to access the full paper, which is a joy to read.

It is one of the great paradoxes of social security that neoliberals – the advocates of low taxes and low social spending – can appear as the champions of the “poor” and the underprivileged. …. Neoliberals argue that they are committed to helping the “poor” and make a seemingly logical argument that poverty targeting means that the “poor” can receive a higher value of transfer. ….

So, how is it that those holding a more progressive, social democratic ideology – the natural champions of those living in poverty – argue for social security programmes to be inclusive and universally accessible to all, including the middle class and affluent? Why is it that they appear to oppose the neoliberal argument that the best way to help the “poor” is to target the “poor”? ….

This paper will examine the evidence on the political economy of “targeting.” It will begin by examining the history of social security in developed countries, focusing in particular on the evolution of Poor Relief in 19th Century Europe. It will then examine contemporary tax-financed old age pensions and Poor Relief schemes across developing countries before moving on to a number of particular case studies from the United Kingdom and Mongolia. A further case study from Uganda will examine how an analysis of the political economy of targeting was used to influence the design of a pilot social security scheme in order to generate greater political support for its expansion.


[We have seen that] the design of social security schemes [ultimately] comes down to ideology. Neoliberals prefer to target the “poor” since, as the World Bank (2014) has pointed out, a key motivation for poverty targeting has been a desire to reduce public spending ….

[T]he paradox noted at the beginning of this paper is not, in fact, a paradox. Neoliberals prefer to “target the poor” because they can spend and tax less and fulfil their mission of a small state that delivers disproportionate benefits to elites. Progressive policymakers are committed to more universal and inclusive social policy because this is more effective in creating more equal societies, although it comes at the price of higher spending and taxes. It is not surprising that the most equal nations in the world – the Nordic countries – have the highest taxes and the most universal social benefits.

Stephen Kidd, “The Political Economy of ‘Targeting’ of Social Security Schemes“, Pathways’ Perspectives 19, October 2015. pp. 1-2, 13.

Dr Kidd is Senior Social Policy Specialist at Development Pathways, a consultancy firm based in the United Kingdom. He has more than 30 years experience working in developing countries of Africa, Asia, Latin America, the Caribbean and the Pacific.

old age poverty in Hong Kong

Monday, May 9th, 2016

This is an excellent 25-minute documentary film on pensions, poverty and old age in Hong Kong.

Office workers rush past, oblivious to the army of grey-haired residents toiling in the shadows of Hong Kong’s soaring skyscrapers.

Dragging trolleys laden with waste, they sell whatever they can collect for just a few dollars.

Hong Kong is home to 64 billionaires and has the highest number of Rolls-Royces per capita in the world.

But one in three elderly people lives in poverty – one of the highest senior poverty rates in the developed world.

Drew Ambrose, “Hong Kong: Aged and Abandoned“, AJ101East, Al Jazeera, 5 May 2016.

on the Hong Kong government’s rejection of universal pensions

Monday, May 2nd, 2016

Chief Secretary Carrie Lam delivered a speech two months ago that effectively “killed any hope for a universal pension”. Michael Littlewood, from the University of Auckland’s Retirement Policy and Research Centre, wrote a letter in response, addressed to the editor of a major Hong Kong daily.

Chief Secretary Carrie Lam Cheng Yuet-ngor … said such a [universal pension] scheme would cost HK$22.6 billion a year, raising questions of sustainability and equity, and much has already been done to support the old. She also said the cost was HK$2,395 billion over 50 years. That kind of projection is statistically irrelevant; the annual cost is the only one that matters.

HK$22.6 billion is just about 1 per cent of Hong Kong’s 2015 gross domestic product. So cost, sustainability and equity seem not to be the real issues. Policy inertia and vested interests are the more likely explanations. ….

Poverty amongst the old needs immediate attention [in Hong Kong].

Here is a suggestion – abolish tax breaks for retirement saving. Tax breaks for the compulsory Mandatory Provident Fund seem particularly unnecessary. If they don’t actually work (given that a saver’s tax break is a taxpayer’s tax cost), the amount saved will more than pay for a truly universal pension.

Michael Littlewood, “Hong Kong should abolish tax breaks on MPF to fund universal pension scheme“, South China Morning Post, 1 May 2016.

The Chief Secretary reports to the Legislative Council, and is the most senior principal official of the Government of the Hong Kong Special Administrative Region.

There is much more of interest in the published column. Click on the link above to read the full, ungated letter.

support for universal pensions in the Philippines

Thursday, April 28th, 2016

Negrense senatorial bet [candidate] Neri Colmenares said … he would … like to push for a P1,500 [US$32] social pension for all senior citizens regardless of their status, whether or not they are members of the SSS [Social Security System] or GSIS [Government Service Insurance System], or with children abroad.

At present, the social pension is only P500 [US$10] and those who are SSS or GSIS  pensioners are disqualified, and the cutoff age is 77 years old. Colmenares stressed the original Social Pension Act gives P1,500 per senior citizen per month.

Juancho Gallarde, “Bet batting for pension for barangay officials“, Visayan Daily Star, 27 April 2016.

According to a 2016 report, “The Philippine Social Pension at Four Years: Insights and Recommendations“, written by Charles Knox-Vydmanov and Daniel Horn of HelpAge International in London, with Aura Sevilla of Coalition of Services of the Elderly in Manila, the 2010 Social Pension Act promised pensions to indigent citzens aged 60 and over. “In its initial 2011 implementation, adjusting to fiscal constraints, coverage was limited to those aged 77 and over. However, in 2015, this was expanded to those aged 65 and over.”

There is no mention in Mr Gallarde’s article of any change in age of eligibility, so apparently it continues to be 77 years. It is not clear how Mr Colmenares would finance a universal pension, since he promises also to fight for lower income taxes.

universal pensions in Lesotho?

Saturday, April 23rd, 2016

Lesotho, a small country completely surrounded by South Africa, in November 2004 began to provide its citizens aged 70 and older with a non-contributory Old Age Pension. The OAP was pension-tested, but not tested against other family income or assets.

OAP monthly benefits have increased over time, and are now equal to 40 US dollars (37% of per capita GDP). For a county as poor as Lesotho, this is a very generous pension. The age of eligibility, however, remains 70 years.

Lesotho’s Old Age Pension from the beginning excluded existing pensioners, so was not universal. I was very pleased to see a recent note, published by the ILO, with the title “Lesotho: Universal Old Age Pension”. Is it possible that Lesotho has removed the pension test for its social pension?

The Old Age Pension (OAP) is a tax-based scheme for all older persons . ….

With more than 4 per cent of its population above the age of 70, Lesotho has a larger share of older people than many countries in sub-Saharan Africa. All citizens of Lesotho over 70 years of age are entitled to a monthly pension benefit of 550 Lesotho Maloti (LSL), equivalent to US$40. The OAP was introduced to lift older persons out of poverty and is the largest regular cash transfer in Lesotho, covering about 83,000 persons (4.5 per cent of the population). While coverage of eligible persons is approximately 100 per cent, it is estimated that many more benefit indirectly .

Prior to the OAP’s introduction, only war veterans and civil servants received a pension, covering less than 3 per cent of older persons in Lesotho. ….

The Pensions Unit … transfers funds to around 300 payment points across the country on a monthly basis. ….

On a few occasions, remote payment points were served by helicopter because of weak road infrastructure. The national army provides security at service points and while transferring the money. ….

Although OAP utilizes existing structures and government actors, the administrative costs are estimated to be quite high at around 20 per cent.

Thea Westphal, “Lesotho: Universal Old Age Pension“, International Labour Office (ILO), Country Note Series (March 2016).

After much searching, I was unable to confirm removal of the pension test. Lesotho’s social pension scheme most probably is still a universal minimum pension. It is close to universal only because few older people have any other type of pension. The implicit coverage, reported in the ILO note, of 112.5% (4.5/4) of age-qualified residents might reflect an underestimate of the population aged 70 and older, inclusion of persons younger than 70 as eligible beneficiaries, or – more likely – some combination of both errors.

I was surprised to learn that the administrative costs – at 20% of benefits – are so high. This might be due to the high cost of delivering cash payments to pensioners, especially those who live in remote areas of the country.

Earlier TdJ blogs on Lesotho are posted here.

universal pensions commence in Zanzibar

Monday, April 18th, 2016

Zanzibar’s universal pension scheme is now fully operational. Thought du Jour covered this historic event before, here and here. Sarah Gillam writes that older people in Zanzibar welcome the initiative, but would like to see the age of eligibility reduced to 60 years, and elimination of fees that older people must pay to access healthcare.

Older men and women in Zanzibar will have a government-funded universal pension for the first time today (15 April), the first of its kind in east Africa.

Anyone over the age of 70 will receive a monthly non-contributory pension of Tsh 20,000 (US$9).

Mama Ghanima Othman Juma, 67, [a representative of Zanzibar’s older people] …  urged the government to consider lowering the pension age to 60 and called for the effective implementation of free healthcare, with older people given priority. ….

Although Zanzibar health policy states that older people should receive free healthcare, this policy has not been effectively implemented and therefore requires older people to pay fees when they attend a clinic or hospital.

Sarah Gillam, “Zanzibar’s new universal pension the first of its kind in east Africa“, HelpAge e-Newsletter, 14 April 2016.

See also this blog:

Amleset Tewodros, “Zanzibar: Celebrating a new pension and the life of Bi Kidude“, HelpAge Blog, 15 April 2016.

The legendary Fatuma binti Baraka (c.1910s – 17 April 2013), a native of Zanzibar, was known also as Bi Kidude. She performed as a member of the Shikamo Jazz band of older musicians from Dar es Salaam, the capital of Tanzania.

Hong Kong government snubs universal pensions

Monday, April 11th, 2016

It is clear that universal pensions are not on the agenda of the government of Hong Kong, even though they were recommended in the Chow Report commissioned by government more than two years ago.

The chief secretary attracted more boos than cheers at a public consultation forum as she tried to defend the government position on retirement protection. ….

[Carrie Lam Cheng Yuet-ngor] said the government has never promised to introduce universal pensions, and emphasized that it has the responsibility to point out the great financial burden such a scheme would impose on the people.

Ten members of the Reclaiming Social Work Movement held up their left palms on which was written the Chinese character for “crooked” suggesting Lam was not truthful. ….

The six-month consultation on retirement protection, being conducted by the Commission on Poverty, will end on June 21.

Adeline Mak, “Lam jeered on universal pension snub“, The Standard, 11 April 2016.

Zanzibar’s new universal pension

Wednesday, March 30th, 2016

Zanzibar’s universal pension scheme is commencing just three weeks later than promised last year. Beneficiaries (residents aged 70 years and older) are expected to number 24,000. The monthly pension is 20,000 Tanzanian shillings (equivalent to US$9.14 at the current exchange rate). The semi-autonomous region of Zanzibar contains less than 3% of Tanzania’s total population.

Arrangements for the much awaited programme are at the final stage.

“We have been working around the clock to ensure that the eligible senior persons start pocketing the cash beginning the last week of April, as approved by the government last year,” said Mr Salum Rashid Mohamed, the head of the Social Protection Unit in the ministry of empowerment and social welfare.

He said that his office, in collaboration with local authorities (community and district leaders), have been identifying and registering the elderly in all areas of Zanzibar so that “No elder is left out in the new scheme.”

“We are now finalising verification of the names/list. But the exercise is continuous, whenever a person attains 70 years of age, he/she will be included in the list upon verification,” said Mr Mohamed emphasizing that the universal pension is for all senior citizens regardless of whether he or she was a civil servant or not.

He said … the universal pension will be a top up for the elderly [civil servants] already receiving their retirement benefits.

Issa Yussuf, “Universal pension out soon“, Tanzania Daily News, 30 March 2016.