Poverty reduction among older people through pensions

Abstract

Given the ageing of the populations in many Western countries, older people constitute an important group in the analysis of poverty. In this chapter, we examine the poverty incidence among older people across LIS countries, relying on data from the Luxembourg Income Study. The data show that poverty rates are substantially reduced by redistribution via tax/benefit systems (mainly via pension benefits). Furthermore, the data show that old-age poverty rates and the antipoverty effect of pensions vary substantially across countries. Finally, in almost all countries, the poverty rates based on disposable income declined between 1985 and 2013. The reason for this reduction in old-age poverty is the increase of the poverty reducing effect of pension benefits). Interestingly, the trend in the poverty rates of the working age population differs from that of older people; in most countries of our sample, the poverty incidence increased for the working age population. However, it should be noted that in most Western countries, poverty rates for older people are still at a higher level than for the working age population.