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International Day of Older Persons

ILO report shows progress on global pension coverage but benefits are low

ILO calls on member States to ensure adequate pensions for all.

News | 28 September 2018
© Pascal Böhme
GENEVA (ILO News) – While 68 per cent of older persons around the globe receive a pension, benefits levels remain inadequate, according to an ILO report.

Social Protection for older persons: Key policy trends and statistics 2017-19 shows that significant progress has been made in extending coverage of pension systems in developing countries. Most of these countries achieve universal coverage through a combination of social insurance (providing higher benefits) and basic social assistance.

Developing countries which have achieved universal coverage include Argentina, Belarus, Bolivia, Botswana, Cabo Verde, China, Georgia, Kyrgyzstan, LesothoMaldives, Mauritius, MongoliaNamibia, Seychelles, South Africa, Swaziland, Timor-Leste, Trinidad and Tobago, Ukraine, Uzbekistan and Zanzibar (Tanzania). Other developing countries, including Armenia, Azerbaijan, Brazil, Chile, Kazakhstan, Thailand and Uruguay are close to achieve the goal of universal coverage.

However, the right to social protection of older persons is not yet a reality for most people in low-income countries. In many, less than 20 per cent of those who have reached the legal retirement age receive a pension. In these countries, an important proportion of the elderly still depend heavily on family support.

ILO standards and the United Nations 2030 Agenda, in particular Sustainable Development Goal 1.3, call for the implementation of national social protection systems for all older women and men.

“Our report is a call for action to achieve this important goal,” said Isabel Ortiz, Director of the ILO’s Social Protection Department.

Inadequate pension reforms

In higher income countries, with mature systems of social protection and ageing populations, the main challenge is to maintain a balance between the financial sustainability of pension systems and adequate pensions.

“Recent austerity or fiscal consolidation policies have also affected the adequacy of pension benefits. In several countries these reforms are done with a fiscal objective, without looking sufficiently at their negative social impacts, putting at risk the fulfilment of minimum standards in social security and eroding the social contract. As a result, old age poverty is increasing in a number of OECD countries,” said Ortiz.

The report calls on countries to design social security reforms in a balanced way.

“Countries introducing reforms to their pension systems need to find an optimal balance between sustainability objectives and pension benefits in order to accomplish the purpose of pension systems,” added Fabio Duran-Valverde, Head of Public Finance, Actuarial and Statistical Services at the ILO.

Reversing pension privatizations

A look at pension systems around the world shows that public schemes, based on solidarity and collective financing, are by far the most widespread form of old-age protection globally.

According to the report, pension privatization policies implemented in some 30 countries did not deliver the expected results, as coverage and benefits did not increase, gender inequalities and fiscal positions worsened, while systemic risks were transferred to individuals.

As a result the majority of countries are reversing privatization measures and returning to public solidarity-based systems.

“Pension privatization brought many promises, including higher benefit levels, extension of coverage and lower fiscal costs. Yet, privatized schemes widely underperformed which is the reason why countries are switching back to public systems,” said Ortiz.

The ILO is also launching an online Pension Primer that provides key tools related to pension system design, policy options, benefit adequacy, statistics, video tutorials, country studies and more. A social protection floor calculator allows users to estimate the costs of non-contributory social pensions.