Non-contributory Pension Scheme Research Articles

Another brick on the wall: On the effects of non-contributory pensions on material and subjective well being

Public expenditures on non-contributory pensions are equivalent to at least 1 percent of GDP in several countries in Latin America and is expected to increase. We explore the effect of non-contributory pensions on the well-being of the beneficiary population by studying the Pensiones Alimentarias program established by law in Paraguay, which targets older adults living in poverty. The program improved subjective well-being in 0.48 standard deviations. Households with a beneficiary increased their level of consumption by 44 percent. These effects are consistent with the findings of Bando, Galiani and Gertler (2020) and Galiani, Gertler and Bando (2016) in their studies on the non-contributory pension schemes in Peru and Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in Paraguay are comparable to those found for Peru and Mexico and add to the construction of external validity.

The impact of cash transfers on child outcomes in rural Thailand: Evidence from a social pension reform

Previous studies have identified a causal relationship between pension eligibility for the elderly and an improvement in education-related outcomes of co-residing children. In contrast to the often generous schemes considered before, this study investigates the effects of a non-contributory pension scheme in Thailand that grants much smaller benefits. Our empirical analysis exploits a reform which expanded the scheme from a targeted program to universal coverage. Using a generalized difference-in-difference model, we provide evidence that gaining eligibility for the scheme can affect work status and literacy of children living with eligible pensioners, while not actually raising total net household income. The effect sizes we find for older children in our sample are within the range of those estimated from more generous schemes. Younger children do not benefit from the reform.

The Effects of Noncontributory Pensions on Material and Subjective Well-Being

Public expenditures on non-contributory pensions are equivalent to at least one percent of GDP in several countries in Latin America and is expected to increase. We explore the effect of non-contributory pensions on the well-being of the beneficiary population by studying the Pension 65 program in Peru, which uses a poverty eligibility threshold. We find that the program reduced the average score of beneficiaries on the Geriatric Depression Scale by nine percent and reduced the proportion of older adults doing paid work by four percentage points. Moreover, households with a beneficiary increased their level of consumption by 40 percent. All these effects are consistent with the findings of Galiani, Gertler and Bando (2016) in their study on a non-contributory pension scheme in Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in rural Mexico can be largely generalized to Peru.

An Assessment of Renta Dignidad's Adequacy to Prevent Poverty in Bolivia

The elderly population in developing countries is often left without access to traditional pension plans due to participation in the informal economy. To remedy this, non-contributory pension schemes are being implemented by policy makers worldwide. Bolivia, one of Latin America’s poorest nations, has successfully implemented the non-contributory pension policy Renta Dignidad. This paper analyzes the economic impacts of Renta Dignidad on gender, language, and household specific subsamples of Bolivia’s population.

Another brick on the Wall: On the Effects of Non-Contributory Pensions on Material and Subjective Well Being

Public expenditures on non-contributory pensions are equivalent to at least 1 percent of GDP in several countries in Latin America and is expected to increase. We explore the effect of non-contributory pensions on the well-being of the beneficiary population by studying the Pensiones Alimentarias program established by law in Paraguay, which targets older adults living in poverty. Households with a beneficiary increased their level of consumption by 44 percent. The program improved subjective well-being in 0.48 standard deviations. These effects are consistent with the findings of Bando, Galiani and Gertler (2020) and Galiani, Gertler and Bando (2016) in their studies on the non-contributory pension schemes in Peru and Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in Paraguay are comparable to those found for Peru and Mexico and add to the construction of external validity. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Welfare Effects of a Non-Contributory Old Age Pension: Experimental Evidence for Ekiti State, Nigeria

Many countries in the developing world have implemented non-contributory old-age pensions. Evidence of the impact of such policies on the elderly in Sub-Saharan Africa is scarce, however. In this paper, we provide the first evidence from a randomized evaluation of an unconditional, non-contributory pension scheme targeted at the elderly in Ekiti State, Nigeria. Our findings show that treated beneficiaries self-reported better quality of life, more stable mental health, and better general health. We also provide evidence of spillover effects on labor outcomes and on household expenditure patterns as well as support for demand-side interventions aimed at improving the welfare of elderly poor citizens and other household members.

Organizing old age pensions for India’s unorganized workers: A case study of a sector-driven approach

Abstract About 88 percent of India’s total labor force is composed of informal (officially labeled “unorganized”) workers. As many as 388 million such workers lack old age income security by way of a pension system. The Atal Pension Yojana (APY) is the latest contributory, national-level old age pension scheme for unorganized workers, with an entry age of 18–40 years. In other words, all current unorganized workers above the age of 40 are excluded. How could a national pension system viably guarantee equal pension benefits to all current unorganized workers? This paper considers how such a system might work by offering a case study of a non-contributory pension scheme for building and other construction workers in Karnataka State, India. The results indicate that this state-level pension scheme, fully funded by sector-specific receipts, is financially viable and sustainable with high levels of coverage and adequacy. The robustness of these results is shown via sensitivity analyses of discount rates, inflation rates, and growth rates of specific purpose tax collections. Additional analyses outline the scenarios under which pension benefits could be extended to all informal workers in the sector studied.

Organizing Old Age Pensions for India's Informal Workers: A Case Study of a Sector-Driven Approach

About 88 percent of India’s total labor force is composed of informal (officially labeled “unorganized”) workers. As many as 388 million such workers lack old age income security by way of a pension system. The Atal Pension Yojana (APY) is the latest contributory, national-level old age pension scheme for unorganized workers, with an entry age of 18–40 years. In other words, all current unorganized workers above the age of 40 are excluded. How could a national pension system viably guarantee equal pension benefits to all current unorganized workers? This paper considers how such a system might work by offering a case study of a non-contributory pension scheme for building and other construction workers in Karnataka State, India. The results indicate that this state-level pension scheme, fully funded by sector-specific receipts, is financially viable and sustainable with high levels of coverage and adequacy. The robustness of these results is shown via sensitivity analyses of discount rates, inflation rates, and growth rates of specific purpose tax collections. Additional analyses outline the scenarios under which pension benefits could be extended to all informal workers in the sector studied.

Non-Contributory Pensions and Savings: Evidence from Argentina

This paper examines the effects of Argentina's Plan de Inclusion Previsional (PIP), which changed the pension system in a way that generated a new noncontributory pillar, produced a huge expansion in pension coverage between 2005 and 2008 and a transfer of a vast amount of resources to households. Using a difference in differences methodology it is found that the PIP policy has reduced the incentives to work and to be in the labor force of those workers directly affected by the policy, mostly women of retirement age, but also some younger workers. The policy increases consumption of food and non-durable goods and health expenditure by beneficiary households. At the same time, the policy reduced incentives to save. Thus, the overall effect of the noncontributory pension scheme implies a substantial reduction in national savings.

The Effects of Non-Contributory Pensions on Material and Subjective Well Being

Public expenditures on non-contributory pensions are equivalent to at least 1 percent of GDP in several countries in Latin America and is expected to increase. We explore the effect of non-contributory pensions on the well-being of the beneficiary population by studying the Pension 65 program in Peru, which uses a poverty eligibility threshold. We find that the program reduced the average score of beneficiaries on the Geriatric Depression Scale by nine percent and reduced the proportion of older adults doing paid work by four percentage points. Moreover, households with a beneficiary increased their level of consumption by 40 percent. All these effects are consistent with the findings of Galiani, Gertler and Bando (2016) in their study on a non-contributory pension scheme in Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in rural Mexico can be largely generalized to Peru.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

The Emergence of Redistributive Pensions in the Developing World

In recent decades, redistributive pension schemes have seen a remarkable surge in developing countries, particularly in the form of so-called social or non-contributory pension schemes. We note that many of these redistributive schemes target the rural elderly and correlate with higher urban population density, and weaker social norms about parent-children relationships. We use this stylized evidence to motivate a political economy model for a Beveridgean social security system which shows trade-offs between four different segments in the population: the (poorer) rural old and young, and the (richer) urban old and young. We show under which conditions governments will install a pension system and increase its generosity as the share of the urban population rises, productivity differentials between urban and rural workers widen, or if the social norm erodes. We conclude that the role of the rural-urban divide in shaping redistribution merits more scholarly attention, as in many developing countries the gap between cities and the countryside widens.

Non-contributory pensions

The creation of non-contributory pension schemes is becoming increasingly common as countries struggle to reduce poverty. Drawing on data from Mexico's Adultos Mayores Program (Older Adults Program) – a cash transfer scheme aimed at rural adults over 70years of age – we evaluate the effects of this program on the well-being of the beneficiary population. Exploiting a quasi-experimental design whereby the program relies on exogenous geographical and age cutoffs to identify its target group, we find that the mental health of elderly adults in the program is significantly improved, as their score on the Geriatric Depression Scale decreases by 12%. We also find that the proportion of treated individuals doing paid work is reduced by 20%, with most of these people switching from their former activities to work in family businesses; treated households show higher levels of consumption expenditures (on average, an increase of 23%). Very importantly, we also rule out significant anticipation effects that might have been associated with the program transfers. Thus, overall, we find that non-contributory pension schemes targeting the poor in developing countries can improve the well-being of poor older adults without having any indirect impact (through potential anticipation effects) on the earnings or savings of future program participants.

Challenges and Prospects of Contributory Pension Scheme in Nigeria

The pension plan in Nigeria was first established by the 1951 Ordinance, a legislation of the colonial government aimed at providing pension for public servants at their retirement. The instrumentality of pension as an instrument of providing for workers during old age or other debilitating circumstances that leads to reduced or absence of financial supply has continued from then till date, but with various modifications and reforms. The previous pension plans were of the defined benefit (DB) scheme, that is, they were entirely funded by the government through yearly budgeting. But, they soon became unfunded due to the competition of numerous programmes and projects of the government at all levels, coupled with endemic corruption in the system. The effects of these were the delayed and the non-payment of pension benefits to the retirees, especially those of the public sector; many of whom got frustrated and died. The private sector at that time did not fare better, as most of them did not make any provision for pension plans, except some who paid certain amount as severance pay. This article examines the Nigeria's new contributory pension scheme enacted by the 2004 Pension Act, with the view of identifying its associated challenges and prospects. The most recent Pension Act 2014 was also examined. However, it was found out that the contributory pension scheme was more advantageous than the non-contributory pension scheme, otherwise referred to as the DB scheme, although, with certain recommendations given on the optimal utility of the new scheme.

Non-Contributory Pension Scheme and Welfare of Retired Civil Servants in Ebonyi State, Nigeria

The challenges pensioners experience in the non-contributory pension scheme before accessing their retirement benefits are enormous in Nigeria. Delays in the payment of pensions and gratuities, coupled with frustrations during screening exercises have negative implications on pensioners’ welfare. These challenges necessitated the introduction of contributory pension scheme in 2004. This study examined the influence of the non-contributory pension scheme on post retirement life of civil servants in Ebonyi State. Multi-stage sampling technique was used to administer questionnaire to 365 respondents. In-depth interviews were conducted with three key respondents. There was a significant association between monthly pension’s distribution of retirees’ and meeting their welfare needs. The majority of the respondents indicated that the pension provided under the non-contributory pension scheme was not adequate in meeting retirees’ welfare needs. Also, there was a significant association between monthly pensions and retirees’ household size. Indepth interviews revealed inadequate preparations for retirement by pensioners, delay in payment of retirement benefits, embezzlement of pension funds, corrupt practices among pension managers and governments’ unwillingness to review pensions as challenges confronting the non-contributory pension scheme. The provisions of the non-contributory pension scheme were inadequate in meeting retirees’ welfare needs in Ebonyi State. The study therefore recommended the adoption of the 2004 Pension scheme so as to overcome the challenges inherent in the management of noncontributory pension scheme in Ebonyi State, Nigeria.

Non-Contributory Pensions

The creation of non-contributory pension schemes is becoming increasingly common as countries struggle to reduce poverty. Drawing on data from Mexico’s Adultos Mayores Program (Older Adults Program) -- a cash transfer scheme aimed at rural adults over 70 years of age -- we evaluate the effects of this program on the well-being of the beneficiary population. Exploiting a quasi-experimental design whereby the program relies on exogenous geographical and age cutoffs to identify its target group, we find that the mental health of elderly adults in the program is significantly improved, as their score on the Geriatric Depression Scale decreases by 12%. We also find that the proportion of treated individuals doing paid work is reduced by 20%, with most of these people switching from their former activities to work in family businesses; treated households show higher levels of consumption expenditures (on average, an increase of 23%). Very importantly, we also rule out significant anticipation effects that might have been associated with the program transfers. Thus, overall, we find that non-contributory pension schemes target to the poor in developing countries can improve the well-being of poor older adults without having any indirect impact (through potential anticipation effects) on the earnings or savings of future program participants.

Evaluating social protection programs in Tajikistan

At independence, Tajikistan inherited an extensive social protection system that included a range of cash and non-cash benefits. While the economy is well into its transition from a centrally planned to a market-oriented economy, its social welfare policies still adhere to the methods and approaches of the Soviet period. This is true for social protection, which has both social insurance and social assistance components, and for which benefits are effectively non-contributory in nature in that no contributions are collected from employees. In this paper, we examine the performance of the country's social protection system—essentially public transfers for the elderly and disabled—in terms of reducing poverty, with the aim of identifying its key problems. Since the government provides such public transfers mainly as pensions (i.e., old-age pension, disabled pension, and survivors pension), it merits an in-depth analysis of whether or not these transfer programs reach the intended beneficiaries; that is, how well do they target the intended beneficiaries? Using data from the Living Standards Measurement Survey conducted in 2007, we find that only 43% of poor households are receiving transfers from the government, while 33% of non-poor households receive transfers. This study argues for applying a targeted approach to public transfer programs, including non-contributory pension schemes aimed at the most vulnerable populations.

Evaluating Social Protection Programs in Tajikistan

Following independence from the former Soviet Union, Tajikistan inherited an extensive social protection system that included a range of cash and noncash benefits. While the economy is well into its transition from a centrally planned to a market-oriented economy, its social welfare policies still adhere to the methods and approaches of the Soviet period. This is true for social protection, which has both social insurance and social assistance components, and for which benefits are effectively noncontributory in nature in that no contributions are collected from employees. In this paper, we examine the performance of the country’s social protection system – essentially public transfers for the elderly and disabled – in terms of reducing poverty, with the aim of identifying its key problems. Since the government provides such public transfers mainly as pensions (i.e., old-age pension, disabled pension, and survivors pension), it merits an in-depth analysis of whether or not these transfer programs reach the intended beneficiaries; that is, how well do they target the intended beneficiaries? Using data from the Living Standards Measurement Survey conducted in 2007, the study finds that only 43% of poor households are receiving transfers from the government, while 33% of nonpoor households receive transfers. This study argues for applying a targeted approach to public transfer programs, including noncontributory pension schemes aimed at the most vulnerable populations.

Intermittent preventive treatment of malaria during Pathways to homelessness among older people in Rio de Janeiro, Brazil

Introduction Brazil's rapid development has led to profound social and economic stresses. With a Gini index of 60.7 it is one of the world's most unequal countries; the poorest 20% share just 2% of the nation's income. A third of the population lives in extreme poverty, unemployment is high and a quarter of all jobs are in the informal sector. Ten million people are aged 65 and over in Brazil, comprising 6% of the population. (1) Recent governments have sought to improve the lot of older people through progressive non-contributory pension schemes covering both rural and urban populations. Nevertheless, as in many developing countries, older people remain largely dependent upon family support, particularly in the event of the onset of disability. (2) There are no reliable estimates of the number of homeless persons in Brazil. The United Nations Centre for Human Settlements has defined homelessness (2000) in broad terms as a condition of detachment from society characterized by the lack of the affiliative bonds that link people into their social structures. Homelessness carries implications of belonging nowhere rather than simply having nowhere to sleep. Homelessness can thus encompass those living in insecure circumstances as well as hostel dwellers and those forced to sleep without shelter. In Brazil, rural poverty, rural-to-urban migration and income inequality are all likely to contribute to homelessness. The discourse on homelessness in Brazil is currently dominated by the landless rural poor and the plight of street children; the large numbers of urban street-dwellers are given relatively little attention. We investigated pathways into homelessness for older people through a survey of all older residents of public hostels in Rio de Janeiro. Setting and participants Rio de Janeiro has two statutory institutions providing board and lodging for homeless people. Most of the elderly are housed by the Fundacao Leao XIII funded by the state government. Applications for admission may be made by outreach programmes, directly by individuals or by referral from general hospitals. At the time of this survey, they lodged 802 people (567 men and 235 women), of whom 112 (13.9%) were aged 65 years or over. Narratives from open-ended interviews revealed that many of these older hostel residents were isolated, and that they had lived on the margins of society for much of their lives. Typically, they had migrated into Rio from the rural areas of the state or from Brazil's north many years previously. They had lost contact with their families of origin, and most had failed to establish settled ties in Rio. Few had married, and most who had married were divorced. Many had worked in the years leading up to becoming homeless, but in the informal sector. Loss of employment was critical for many participants: some had accommodation that was tied to their work and when they lost their work they lost their home; others simply could not afford to support themselves when their income was gone. The onset of impairment and disability was an important precipitant of homelessness, both because of the consequent loss of employment and income, and because family support was not forthcoming. Discussion The insecurities experienced by older people living in low- and middle-income countries with limited pension and social welfare provision are well recognized. However, this is to our knowledge the first systematic study of indigent older people from Latin America, and one of the first such studies from any developing country. …

Pension reforms in urban China and Hong Kong

This study of recent pension reforms in Hong Kong and urban China particularly addressed three questions. What are the causes of the pension reforms in these two economies? What are their key features? What difficulties have been faced by the Hong Kong and Beijing governments during their implementation? As well as enhancing our understanding of the pension schemes in these two countries, the paper makes a contribution to the debate on whether government welfare reforms in responses to economic globalisation are converging on one pattern, an ideal mix of pension schemes. This paper shows that both convergent and path-dependent processes explain the forms of the measures introduced by the Hong Kong and Beijing governments. They have responded not only to the challenges brought by economic globalisation but also to the legacy of previous policies. Moreover, the welfare effectiveness of the new schemes has been undermined both by the two governments' non-welfare policies, particularly to promote economic growth, and by the constraints created by the previous welfare measures. The paper also argues that to develop only a non-contributory comprehensive pension scheme is not the solution to the problem of how best to provide old-age income security, but that this welfare goal principle should be more strongly upheld in pensions reforms.

Does a Universal Non-Contributory Pension Scheme Make Sense for Rural China?

Rapid economic growth in China during the past 25 years has been accompanied by increasing economic inequality. China's old-age social security system has long been restricted to urban areas, leaving the 70 per cent of the population living in rural areas with little or no coverage. The lack of social security for elderly people in rural areas poses a threat to social stability and raises social justice concerns. This study is based in part on interviews conducted in rural northeastern China. It also draws on evidence from Chinese government documents, newspapers, and reports on relevant programs in other developing countries. For rural China we propose a variant of the universal non-contributory old-age pension model that takes into consideration rural–urban differences in cost of living. The proposed model would reduce the level of poverty in rural areas as well as the degree of income inequality between rural and urban areas while simultaneously promoting social and political stability.