Social protection for older persons: social pensions in Asia
Sri Wening Handayani - Principal Social Development Specialist, Asian Development Bank, Manila
Babken Babajanian - Research Fellow, Social Protection Programme, Overseas Development Institute, London
Charles Knox-Vydmanov - HelpAge International, London
Rachel Slater - Head of Social Protection Programme, Overseas Development Institute, London
Book Launch - Social Protection for Older Persons: Social Pensions in Asia, 25th September 2012
This event launched the new book, Social Protection for Older Persons: Social Pensions in Asia, published by the Asian Development Bank in July 2012 and provided an excellent opportunity to hear directly from the lead editors, Sri Wening Handayani, Asian Development Bank (ADB) and Babken Babajanian, Overseas Development Institute (ODI) on the main findings of the book and their implications for development policy and practice. The meeting was chaired by ODI’s Rachel Slater and HelpAge International’s Charles Knox-Vydmanov acted as discussant.
2. Meeting opening
The event was opened by HelpAge International’s Director of Programmes and Policy and Deputy Chief Executive, Silvia Stefanoni. Rachel Slater expressed thanks to HelpAge International for hosting the meeting. She introduced the participants and explained the format of the event: an initial presentation of the book and its key findings by Sri Wening Handayani; a follow up presentation by Babken Babajanian on certain key aspects of the findings and policy recommendations; and comments and initial discussion points from Charles Knox-Vydmanov followed by contributions from the floor.
3. Presentation by Sri Wening Handayani (ADB)
Sri began with an introduction to the book and how it came about. The researchers looked into the political economy, financing and implementation of social pensions and provided country case studies from Central Asia and Southeast Asia. The findings of the research had previously been presented at a convention.
The rationale for the book hangs on the fact that most Asian populations are getting older faster than their economies are growing. Older people constitute the larger proportion of the population in Asia, however only 20% have access to a pension. Family support has weakened for older persons and life expectancy is increasing. However, social pensions remain underutilized in Asia.
The research looked at the gendered dimensions of old age and pensions and the fact that few social protection systems take into consideration the diversity of women. However, social pensions have the potential to benefit women to a greater extent. Targeting issues are also discussed including inclusion and exclusion errors and the merits of universal pensions with age as the eligibility criteria.
Political economy aspects are discussed including the capacity of the government (and the level of support), financial constraints and that social pensions must be linked with the national poverty agenda.
A number of questions arise around fiscal space and financing methods: Is there enough money to provide social pensions? Are dependencies being created through social pensions? Social pensions are only one out of many social protection instruments. Two approaches are required when considering the financing of social pensions: (i) reallocation of funds and reducing administrative costs and (ii) avoiding leakage through better design, implementation, and governance.
There are other on-going challenges related to social pensions in Asia including fiscal sustainability, administrative inefficiency and no systematic monitoring and evaluation systems in place.
4. Follow-up presentation by Babken Babajanian (ODI)
Babken focused on some key points of the book and the policy recommendations. One of the most interesting findings in the book was the reasons why national governments implement social pensions. There is a desire to respond to genuine social need but there are also political motives: social pensions are programmes that are well known and visible and thus help politicians to gain visibility. However, there is not necessarily a contradiction between these motives. There may also be attempts to improve the systems and to increase transparency. In Thailand, the social pension programme switched to universal coverage rather than targeting as they realised targeting created favouritism and corruption.
The following policy recommendations emerged from the research. Social pensions are helpful but benefits are often small in value and cannot support all people’s needs – there is still a reliance on families. Many governments felt that it is better to have social pensions as opposed to not having them. In Nepal: although coverage is not yet adequate, the system is there and the only thing needed is to increase the scale and size of benefits. Social Pensions are important, but should not replace contributory systems – these should remain. Social Pensions do not function independently outside the wider Social Protection Systems – they should be part of it.
5. Discussion points from Charles Knox-Vydmanov (HelpAge)
Charles opened by saying that he was really pleased to see the ADB has taken on the issue of social pensions. He was surprised that despite social pensions being available around the world, these are not being assessed (impact evaluation) as much as other social protection measures. Recent estimates are that just over 100 countries in the world have social pensions; and there seems to have been a rapid expansion in recent years (20 new schemes globally since 2002).
Social pensions tend to have high coverage, are wide reaching and are almost entirely funded from national budgets (which does not apply to most other social protection measures). In this context, one key question emerging from the research is what role is there to play for donors and the international community? It may be possible to view social pensions in a fairly technical way – addressing the needs of older people and their families.
Other questions arose related to social cohesion and social contracts and how social pensions fit into wider social protection systems? Charles also pointed out that there is a dualism between formal contributory pension systems and social pensions: pensions have been in place for a long time, but only covering those in the formal sector; in a number of countries this dualism has not yet been overcome. Moving forwards, how can countries better combine and create overlap between contributory and social pensions?
6. Discussion chaired by Rachel Slater (ODI)
Following Charles’ key discussion points Rachel opened the discussion by asking: What is the role of donors and the international community given that social pensions are mostly nationally funded?
· Terry McKinley (SOAS): Most donors will still focus on gender, on targeting poor people and the most vulnerable; discussion on social pensions are still somewhat ambiguous; universal social pensions would include everyone, the poor, the rich and everyone else. Social Pensions should fill in the gap which other forms of social protection do not reach, for example programmes for those in the informal sectors and the very poor targeted by others. Asia will remain with a limited revenue base for some time, so there is the question of decision making around channelling this into social pensions?
· Sri Wening Handayani (ADB): The role of the donor could be capacity development and using technical assistance; sharing knowledge; Government ownership is very important and there are questions about sustainability of donor programmes, once funding ends;
· Babken Babajanian (ODI): Encouraging debate and dialogue is key through bringing governments and donors together. Governments will need support in terms of technical assistance and expertise.
· Rachel Slater (ODI): Those with expertise do not necessarily push for social pensions; the kind of technical support countries should get could stem from a particular line of why or why not to get social pensions.
· Babken Babajanian (ODI): It depends on the interface between government capacity and donor interests.
· Sylvia Stefanoni (HelpAge): There are existing social investments and donors could also play a role in providing information on what works and supporting evaluation.
The next discussion point related to pensions reducing poverty amongst the elderly and how social pensions are understood within broader social protection systems?
· Nick Mathers (ODI): There seems to be quite a lot of domestic political appetite for social pensions so what could be learned from that? What could this mean for donors role in promoting other social protection instruments? How can other instruments be made more political?
· Rachel Slater (ODI): There are potentially contradictory justifications for pensions: older people need support because of their age related vulnerabilities; the other justification would be because families of the elderly could be poor and they share pensions.
· Ingo W Outes (Oxford University): What is the distinction between rural and urban? Most of these policies focus on rural areas; understanding the social network, for example families, is crucial to understand where social pensions should go; should rural or urban areas be targeted?
· Andrea McPherson (HelpAge): Quite often social protection is a big aid debate: those working on issues for older people often have to combine older persons’ issues with other issues, to create double wins and get greater support.
· Babken Babajanian (ODI): Intra-household income distribution is important (for example, does family support stop if someone receives a social pension?); in Bangladesh, social pensions were shared with other members of the family, however how far and to what extent is not clear. The extent to which older persons are better off after receiving social pensions is not clear either.
· Charles Knox-Vydmanov (HelpAge): There is a need for increasing awareness of ageing in general; do pensions crowd out other benefits? Older persons may not be poor, but if they do not have their own income it could also have impacts as older persons may not want to receive anything from the family and they may keep a substantial part of their pensions.
· Sri Wening Handayani (ADB): The size of the benefit people receive is often very small; the issue of transfers within a household is important; dignity for older people includes to be acknowledged and to have an income; intentions from the government to provide some sense of security is key.
· Terry McKinley (SOAS): We may be too wrapped up in the targeting mentality?
· Rachel Slater (ODI): The term universal hardly ever means universal; rather it involces age-cohort targeting.
· Shaheen Akter (Consultant): Small proportions of older persons do get benefits; distributional benefits? Spill-over effects of older people receiving benefits?
· Ingo W Outes (Oxford University): There is an overlap with other programmes – evaluation of what the impact of pensions is, but also pensions and other measures; what about crowding out?
· Rebecca Holmes (ODI): Reflecting on the discussions on targeting and who gains in the household; households are diverse and they are not always nuclear families. This relates to the integrated systems discussion – what does this look like, being able to reach different members of households? Does it always have to involve cash?
· Babken Babajanian (ODI): Once an integrated system is in place that responds to different vulnerabilities you can build in diversity of different households and thus be able to respond to the needs of different households. Social pensions are a good way to help older persons and it is generally agreed to be better to have them than not to have them. However, it is good to be prudent and to allocate scarce government resources in a careful way.
· Sri Wening Handayani (ADB): Some countries have tried to create an integrated system, expanding the pension scheme into rural areas; however implementation is a big problem. Social protection is not covering the informal sector – to reach this is a huge challenge. There are still experiments and it is important to look at what works in what country – there is no single formula that will work for all countries.
The third discussion point was around dualism: Formal contributory systems and non-contributory systems – what are the options for better integration?
· Andrea McPherson (HelpAge): What are the strengths of some systems and what could the link to contributory aspects be? Using innovation to better integrate is a good idea.
· Sylvia Stefanoni (HelpAge): Social pensions are always going to be a small contribution not an income, thus only a component of household needs.
· Babken Babajanian (ODI): Contributory systems require economic growth – the informal sector remains large and this excludes large numbers from pensions.
7. Final questions, comments and close
· Sri Wening Handayani (ADB): in Asia there is a lot of innovation, also from the charity and not-for-profit sector; there are many initiatives in which the government does not play a large role, for example micro-insurance. The informal economy is the largest sector in Asia; the role of social pensions for the poorest remains very important; nevertheless, dualism and multi-systems are key.
· (HelpAge): in relation to political will there aren’t that many countries with social pensions. What is stopping greater political support? What is stopping more countries taking these steps?
· Babken Babajanian (ODI): It is very difficult to pin this issue down. Extensive qualitative interviews would be required with policy makers. However, different reasons overlap; it is not one single factor that determines policy.
· Sri Wening Handayani (ADB): International Financial Institutions find this a very challenging issue – the ageing population in Asia has become a great issue.
· Rachel Slater (ODI): Thanks and bye.
This event launches a new book, Social Protection for Older Persons: Social Pensions in Asia, published by the Asian Development Bank in July 2012. This will be an excellent opportunity for you to hear directly from the lead editors, Sri Wening Handayani, Asian Development Bank (ADB) and Babken Babajanian, Overseas Development Institute (ODI) on the main findings of the book and their implications for development policy and practice.