Archive for the ‘Universal Transfers’ Category

universal pension inaction in Hong Kong

Friday, January 16th, 2015

HK journalist Tim Hamlett has written an interesting column on this subject. Nothing new, but the arguments are nicely phrased.

Chief Executive Leung Chun-ying announced in his third Policy Address that HK$50 billion would be earmarked for “retirement protection”, and a consultation would be held later on how this protection should be implemented.

Somewhat optimistically, Leung looked forward to “rational and pragmatic discussions with a view to arriving at a community consensus”.

Unfortunately this is a recipe for continuing inaction. ….

Employers will inevitably voice their vigorous opposition to any sort of proper pension scheme, with universal liability to pay and universal rights to receive.

Of course, they will not put it quite like that.

The message will be that universal pension schemes are what ruined the finances of European countries, that any scheme will be a financial millstone because people are living longer, and that such plans are a socialistic blemish on Hong Kong’s tradition of small government, likely to see us demoted in meaningless rankings produced by distant free-market ideologues.

The European point is nonsense. Greece has a pension scheme. However so does Denmark, widely regarded as providing the peak of happiness to which all developed countries should aspire. The demographic problem is genuine, but not insoluble. Most people, given the chance, show a preference for later retirement these days. The tradition of small government should not be an excuse for offering Victorian standards of social welfare.

A more interesting objection is that a universal pension can be claimed by paupers and millionaires alike. Some of the money will go to people who do not need it. The obvious answer to this objection is that because of Hong Kong’s growing wealth gap the millionaires are increasingly outnumbered by the needy. And after all they do pay taxes.

Connoisseurs of social welfare reform will also note that means-tested benefits are cheaper not only because they exclude the rich, but because they exclude large numbers of other people who are too shy, too proud or too disorganized to make a claim, even though they do need the financial support.

Tim Hamlett, “No easy answers to the retirement questions“, China Daily, 16 January 2015.

universal pensions in Myanmar

Friday, January 16th, 2015

The good news is that Myanmar’s universal age pension will be launched in April. The bad news is that it will very likely be restricted to resident citizens aged 100 years and older instead of the initial promise of age 65 and older.

Dr San San Aye [deputy director general of the Department of Social Welfare] told The Myanmar Times in an exclusive interview last week that it [the universal pension] would be restricted initially to people aged over 100 because of insufficient funds. The plan has allocated K1.145 trillion (US$1.17 billion) for the social pension program in 2015-16, including existing civil service pensions.

“The pension amount was originally set in the plan at K25,000 [US$24.50] a month, but if it is limited to those over 100 years then they will almost certainly receive more than that,” she said, declining to state an exact figure.

Retired civil servants will receive the national pension in addition to their civil service pensions, said Dr San San Aye. She said the pension program was initially supposed to focus only on poorer people, but the government decided that the expense and complexity of means-testing made it cheaper and simpler to pay everybody. “Maybe K25,000 is not significant for the rich but it will be a good support for the poor,” she said. ….

Currently, Myanmar spends less than 0.5pc [of its GDP] on social protection and other services, the lowest in the ASEAN region. Almost all of that goes to civil service pensions.

Htoo Thant, “Budget concerns cripple pension expansion“, Myanmar Times, 15 January 2015.

Means-testing, I agree, is complex and costly. In addition, it stigmatises recipients. But elimination of civil service pensioners from the social pension is not complex, costly nor stigmatising.

The age of eligibility should be lowered from 100 to at least 70 or 75, even if it means some loss of universality.

no country for old pensioners

Friday, January 16th, 2015

Hong Kong’s Chief Executive effectively ruled out discussion of universal pensions. It is a sad day for Hong Kong’s elderly population.

Elderly Hongkongers were in despair after Leung Chun-ying’s policy address, describing it as a “slap in the face” for the needy. They criticised the chief executive for announcing few social policies and effectively ruling out pensions for all by saying there were “divergent views” on the issue. ….

In his speech on Wednesday, Leung said HK$50 billion would be “set aside” for retirement protection. But he offered no concrete plan for the money and poured cold water on the idea of a pension without a means test, saying the idea was controversial and questioning whether it would be sustainable.

Au Yeung Kwun-tung, organiser of the Alliance for Universal Pensions, said Leung’s comments showed a disregard for elderly people. “He said a universal pension was not sustainable and was controversial … but the current welfare system for the elderly is just as unsustainable. As for controversial – constitutional reform is controversial, but the government is pushing forward. It’s double standards.”

Jennifer Ngo, “Hong Kong’s elderly reel from CY Leung’s ‘slap in the face’ on pensions“, South China Morning Post, 16 January 2015 (metered paywall).


 

Hong Kong waits for universal pensions – update

Wednesday, January 14th, 2015

A “raucous crowd of about 100 people”, assembled this morning outside the Legislative Council, awaiting the arrival of Chief Executive Leung Chun-ying. The group included members of the Alliance for Universal Pension. There is no news yet on what, if anything, the Chief Executive had to say regarding universal pensions.

As Chief Executive Leung Chun-ying arrived at about 10.50am [2:50 am GMT] — 10 minutes before he is set to deliver his speech, protesters chanted even louder.

More security guards were spread out in the protest zone.

By 10am, a raucous crowd of about 100 people had gathered in the designated protest area outside the Legislative Council, as they awaited the arrival of Leung.

Groups included the Alliance for Universal Pension, Hong Kong Association for Democracy and People’s Livelihood and the Federation of Trade Unions. There were supporters of political parties such as the Civic Party, Democratic Party and Labor Party.

Many groups were chanting over loudspeakers for Leung to announce the establishment of a universal pension in today’s policy address.

CE arrives Legco buidling“, The Standard, Breaking News – Hong Kong, 14 January 2015.

 

 

Hong Kong waits for universal pensions

Tuesday, January 13th, 2015

Hong Kong’s government is holding back on its promise to initiate talks on pension reform, based on a commissioned report that was published last August. Some Hongkongers fear that the government will ignore the report, which promotes universal pensions as a replacement for the means-tested benefits now in place for those aged 65 and older, and the woefully inadequate (though universal) benefits given from age 70 to those who fail to qualify for means-tested benefits.

[Secretary for Labour and Welfare Matthew] Cheung said that the government’s Commission on Poverty had suggested a public consultation on the pension scheme, but the details needed more work. The government would start preparing for the consultation soon.

“The government doesn’t sound very concrete to me,” said Au Yeung Kwun-tung, organiser of the Alliance for Universal Pensions. “What exactly is the next stage? Maybe it would feel the topic was too controversial and would only pay lip service to it.”

Au Yeung fears the government will allow further studies to drag on for the remaining two years of Leung’s term. ….

Pensions have been in the spotlight since August, when Professor Nelson Chow Wing-sun, of the University of Hong Kong, released a study for the commission. Under Chow’s model, every Hongkonger over 65 would get HK$3,000 [US$40] per month. ….

But the government has yet to act on Chow’s report and it is not clear whether the consultation will be based on his study.

Au Yeung said the government should work out a detailed agenda for making a universal pension a reality – since Chow’s report showed the idea was practicable – then consult the public on the blueprint. But he fears the government does not really want a universal pension and was therefore caught off guard by the details of Chow’s report.

“We are concerned that the government will ditch Professor Chow’s report and come up with other excuses,” he said.

Shirley Zhao, “Hong Kong welfare groups want CY Leung to make progress on pensions“, South China Morning Post, 13 January 2015.

new UN case studies of pension reform

Tuesday, November 25th, 2014

From this month’s International Update, published by the Social Security Administration of the United States:

Recently, the United Nations released Reforming Pensions in Developing and Transition Countries—a series of country case studies that updates the global discussion on pension reform. According to the study, since World War II, there have been two significant trends in pension reform:

1.    the introduction of privately managed individual account programs that supplement or replace existing public programs (beginning in the 1980s in more than 30 countries), and

2.   the rapid growth of universal noncontributory pension programs as the preferred public policy tool for alleviating poverty among older populations in both developing and transition countries [emphasis added].

The study finds that despite the ever-changing nature of national pension programs, driven by demographic and fiscal considerations, coverage levels around the world remain extremely low, with only 50 percent of the working population covered in Latin America; 30 percent in Asia, North Africa, and the Caribbean; and less than 15 percent in Sub-Saharan Africa. And, even when populations enjoy a higher level of pension coverage, as in the former republics of the Soviet Union, benefit levels may not be high enough to move older persons above the poverty line.

US Social Security Administration (SSA), “United Nations”, International Update, November 2014. (Scroll down to end.)

The publication referred to is

Reforming Pensions in Developing and Transition Countries, edited by Katja Hujo (Palgrave Macmillan/United Nations Research Institute for Social Development, August 2014).

The full 369-page book can be purchased from eBooks.com for 132.00 Canadian dollars plus tax (or equivalent in other currencies) at eBooks.com. You can preview the first 37 pages, without charge, here.

I am eager to discover how UNRISD defines “universal noncontributory pension programs”. I suspect that they include all noncontributory pensions, universal or not. I will let readers of TdJ know my finding once I obtain access to the full report.

 

Reforming Pensions in Developing and Transition Countries by Katja Hujo

 

universal basic income

Thursday, November 13th, 2014

Timothy Taylor, in his regular column in  the current issue of Journal of Economic Perspectives (Fall 2014 , pp. 227-234) points us to an article that extols the virtues of a policy that promises to end poverty immediately, with administrative efficiency and maintenance of incentives to get up and go to work each morning. The author is Edwin G. Dolan (born 1943), an American economist with an impressive cv.

Are you frustrated by the interminable quest to end poverty in the face of ideological division and widespread cynicism? Why not just cut to the chase, sending everybody in the country a monthly check that covers the rudimentary needs of even the poorest among us? ….

The concept goes by many names: unconditional basic income, basic income guarantee, demo-grant. I prefer “universal basic income,” or UBI for short. Whatever you call it, though, the feature that distinguishes a UBI from other sorts of social safety nets is its universality. Unlike other income-support programs, it is not means-tested. Instead, a UBI would provide subsistence-level grants to everyone, regardless of need, earned income, age or job status. …

Hardly anyone sees a UBI as a perfect safety net. It offends conservatives by offering something for nothing. And it raises serious questions for progressives who worry there is more to poverty than a lack of income—that a UBI would not do enough to transform the culture of poverty that weighs down the underclass. But it has pragmatic advocates (including me) who believe that a UBI offers a better compromise than do other income-support programs among the mutually incompatible criteria of effectiveness in reducing poverty, maintenance of work incentives, administrative efficiency and accurate targeting.

A big worry, of course, is that a UBI would end up as budget-buster or require a raid on private wealth to finance it. However, as shown, it need be nothing of the sort—provided it were part of a bargain in which other antipoverty efforts (save medical care) were abandoned, and middle-income earners traded in a hodgepodge of tax breaks for the universal basic income grant.

The most encouraging sign is that the liveliest debates over a UBI today are taking place within, rather than between, the main ideological camps. At a time when macroeconomic forces and the politics of big money are leading to ever- greater inequality, perhaps America is still capable of finding common ground for a pragmatic antipoverty effort.

Ed Dolan, “The Pragmatic Case for a Universal Basic Income”, Milken Institute Review, Third Quarter 2014, pp. 14-23.

This is a universal age pension, with a qualifying age of 18 or even zero rather than 65 or 70. None of the links above are gated. Enjoy!

universal pensions in Iceland?

Wednesday, November 12th, 2014

The US Social Security Administration (SSA) has published, since 1937, very useful periodic reports on “Social Security Programs Throughout the World“. I often consult these volumes for information on specific countries. For the first time, I decided to use these reports to examine changes, over time, in the number of countries with universal pensions.

The SSA consistently describes Iceland’s basic old-age pension as a “universal pension”. In an article published in World Development (January 2007) p. 38, I classified Iceland as a country with “recovery-conditioned” basic pensions, i.e. pensions that are clawed back from other income that otherwise qualified applicants declare. This is a form of income-testing, so such a pension is clearly not universal. It is subject to an income test, in addition to the usual age and residence tests.

Nonetheless, nearly all sources, including the Government of Iceland, describe the pension as ‘universal’, most often with no explanation.

The ILO (International labour Organisation) follows the crowd in describing Iceland’s non-contributory pension as “universal”. But the ILO helpfully provides detailed information:

8. National basic pension – Old age pension

No means-test

Determining factors in old-age pension are duration of residence in Iceland and income. Pension rights are calculated pro rata according to periods of residence, minimum is 3 years and maximum 40 years. Old-age pension for a single person after 40 years of residence: Full basic old-age pension (grunnlífeyrir) for a single person after 40 years of residence is ISK 297.972 (Euro 3,401) per year. Reduced when annual capital or income from work criterion exceeds ISK 2.056.404 (Euro 23.475) and withdrawn when it exceeds ISK 3.049.644 (Euro 34.813).

ILO, “Iceland – Overview of schemes – 8. National basic pension – Old age pension“, accessed 12 November 2014.

An income test exists, so it is not true that there is “no means test” for this pension. The annual €3,401 benefit (€285 a month) is clawed back from annual income in excess of €23,475 (€1,956 a month) at the rate of 30%. This is a very small pension for such a high-income country as Iceland (the figures are for 2010), and it is clawed back from those who have other pension income and/or continue to be gainfully employed in old age. I would like to know what proportion of older persons in Iceland are affected by the clawback, but such information is not readily available.

I conclude that the pension is not universal, and fail to understand why it is described as such. For age pensions, the term ‘universal’ is frequently used as a synonym for ‘non-contributory’. This is a constant source of confusion, for it becomes difficult, if not impossible, to distinguish means-tested pensions (which are very common) from  universal minimum pensions (which are less comon) and truly universal pensions (which are quite rare).

That concludes my rant of the day. I am upset because loose use of the term ‘universal’ makes my work more difficult.

Hong Kong MUST Stand Up

Friday, November 7th, 2014

The long-awaited book of essays drafted by proponents of a universal pension is now on sale in Hong Kong bookstores. It was published by Alliance for Universal Pension, an umbrella group (no pun intended) of more than 80 Hong Kong NGOs. The book is 332 pages long. Only three essays are in English. The rest are in Chinese, with no translation, so I have not read them.

My contribution (“Hong Kong Report Calls for Universal Pension”) appears on pp. 1-3.

You can download a scan of the covers, and my three page introduction, by clicking the link below.

Larry Willmore, “Hong Kong Report Calls for Universal Pension”, in Hong Kong MUST Stand Up (Alliance for Universal Pension, Hong Kong, 2014), pp. 1-3

 

 

Cover Stand Up_Page_1_Image_0001

improving public healthcare in Pakistan

Sunday, October 19th, 2014

BBC News brings us the heartwarming story of one man’s struggle to provide free, world-class care to millions of Pakistan’s kidney patients. (more…)