Aging without security: Asia's experiences on introducing social pension

By Social Protection Team on Thu, 25 July 2013

Written by Sri Wening Handayani, Principal Social Development Specialist 

There is a saying if you live in Asia and don’t work in public service, you will stop working only when you die.  According to the United Nations (UN 2008), many of the poor are older persons living in rural areas due to low and insufficient lifetime earnings. This is increasingly a problem in the context of persistent poverty and demographic change like rapid aging. Globally, nearly 80% of the elderly have no access to pension benefits. Thus, social protection of the elderly is increasingly an urgent necessity in many developing countries, particularly in Asia where coverage rates of contributory pension insurance schemes are low. 

In the absence of adequate social protection programs, the elderly continue to work or rely on family or community support. There are indications that the existing family and informal support mechanisms might be changing in the face of urbanization, industrialization, and socio-cultural changes in the region.  As the younger cohorts migrate and leave their families in search for better livelihood opportunities, older persons are often left without regular care and income. The demographic and social trends affecting families in Asia clearly expose the vulnerability of older people who rely on informal relationships for social safety net.

The picture of growing old for poor and vulnerable people in Asia, however, is not so bleak. One instrument for tackling old-age poverty is social pensions. In contrast to contributory pension schemes or tax-financed schemes for relatively privileged groups such as civil servants, both of which are earnings-related, social pensions are flat rate benefits financed out of general revenues, which aim to reduce poverty and secure a minimum income for elderly.

In recent years, there have been a number of innovative initiatives aimed at expanding social protection for older people in many countries in Asia such as Bangladesh, India, Indonesia, Nepal, Thailand and Viet Nam. The non-contributory social pension intends to bridge the coverage gap to those outside the contributory system.  The social pension schemes in Asia have enormous significance for two reasons. First, they provide social safety net, in particular income security to millions of older persons, and help reduce poverty and vulnerability to social risk. Second, they represent a “state-society contract” that recognizes the need of older people, establishes their social entitlement, and institutes administrative and financial arrangements for offering them societal support.

Qualitative assessment of the impact of social pension in several countries such as Bangladesh, Nepal, Thailand and Viet Nam shows that social pensions contribute significantly to basic needs expenditures of older persons, including cost of food, health care, and expenses associated with social and ceremonial activities.  Some respondents mention that the receipt of the allowance was associated with beneficiaries’ improved well-being and self-esteem.

But the benefit size of social pensions in these four countries is not large enough to meet all the basic needs of the recipients. The monthly allowance is ranging from $3.60 in Bangladesh or one-fifth of the country poverty line to $9.50 in Viet Nam, which constitutes only 60% of the national minimum living standard. Despite the positive contribution of social pensions to older people’s livelihood, they must undoubtedly continue to rely on support from their children, extended families and communities. And as evidence from Viet Nam suggests, many older people are often compelled to work in agriculture to supplement their pensions.