SOCIAL PROTECTION POLICY PAPERS Social protection for older persons: Key policy trends and statistics Social Protection Department International Labour Office Copyright © International Labour Organization 2014 First published 2014 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. ILO Cataloguing in Publication Data Social protection for older persons : key policy trends and statistics / International Labour Office, Social Protection Department. - Geneva: ILO, 2014 (Social protection policy paper ; No. 11, ISSN: 1020-9581; 1020-959X (web pdf) ) ISBN: 9789221292012; 9789221292029 (web pdf) International Labour Office Social Protection Dept. social protection / older people / ageing population / pension scheme / social security reform / social assistance 02.03.1 The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications and electronic products can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by email: [email protected] Visit our web site: www.ilo.org/publns The editor of the series is the Director of the Social Protection Department, ILO. For more information on the series, or to submit a paper, please contact: Isabel Ortiz, Director Social Protection Department International Labour Organization 4 Route des Morillons CH-1211 Geneva 22 Switzerland Tel. +41.22.799.6226 • Fax:+41.22.799.79.62 Printed in Switzerland Abstract This policy paper: (i) provides a global overview of the organization of pension systems, their coverage and benefits, as well as public expenditures on social security, in 178 countries; (ii) analyses trends and recent policies, e.g. extension of coverage in a large number of low- and middle-income countries; (iii) presents the negative impacts of fiscal consolidation and adjustment measures in a number of higher-income economies; and (iv) calls for the expansion of social protection in pursuit of crisis recovery, inclusive development and social justice. JEL Classification: H55, J26, J39 Keywords: social security and public pensions, retirement policies, public policy Social protection for older persons: Key policy trends and statistics iii Table of contents Page Abstract ........................................................................................................................................... iii Preface ............................................................................................................................................. ix Acknowledgements ......................................................................................................................... xi Executive Summary ........................................................................................................................ xiii 1. Social protection for older persons: Ensuring rights, dignity and income security in later life ............................................................................................ 1 2. The crucial role of pensions in ensuring income security and well-being of older persons ............................................................................................ 2 3. Extent of legal pension coverage .......................................................................................... 11 4. Extent of effective pension coverage .................................................................................... 13 4.1. Income security in old age: A right still unfulfilled for many .................................... 13 4.2. Changes in pension coverage across the world: Progress and regression ................... 16 4.3. Persistent inequalities in access to income security in old age ........................................ 19 5. The adequacy of pensions to provide genuine income security to older persons ................. 23 5.1. Guaranteeing income replacement .............................................................................. 23 5.2. Preventing erosion of the value of pensions over time: Ensuring regular adjustments ...................................................................................... 25 6. Reforming and re-reforming pension systems ...................................................................... 29 7. Fiscal consolidation: implications for the social protection of older persons ....................... 32 8. Ensuring income security for older persons: The continuing challenge ............................... 37 Bibliography .................................................................................................................................... 41 Annexes I. Minimum requirements in ILO Social Security Standards: Overview table ......................... 47 II. Statistical tables ..................................................................................................................... 50 Social protection for older persons: Key policy trends and statistics v List of tables 1. Indexation methods ............................................................................................................... 26 2. Main adjustment measures by region, 2010–13 .................................................................... 32 3. Selected fiscal consolidation measures recently adopted or under discussion in high-income countries ....................................................................................................... 33 A.1. Main requirements: ILO social security standards on income security in old age ................ 48 A.2. Main requirements: ILO social security standards on survivors’ benefits ............................ 49 B.1. Ratification of ILO social security Conventions, by region .................................................. 50 B.2. Overview of national social security systems ....................................................................... 55 B.3. Old-age pensions: Key features of main social security programmes .................................. 69 B.4. Non-contributory pension schemes: Main features and indicators ....................................... 105 B.5. Old-age effective coverage: Active contributors................................................................... 111 B.6. Old-age effective coverage: Old-age pension beneficiaries. Proportion of older women and men (above statutory pensionable age) receiving an old-age pension ........................... 117 B.7. Public social protection expenditure by guarantee, latest available year .............................. 125 List of figures 1. Sources of income of people aged 65 and over, OECD countries ........................................ 2 2. Correlation between greater public pension provision and lower poverty levels, OECD countries .................................................................................................................... 3 3. Overview of old-age pension schemes anchored in national legislation, by type of scheme, 2012/13 .................................................................................................. 5 4. Non-health public social expenditure on pensions and other benefits for older persons, and share of older population (65 and above) in total population, 2010/11 .......................... 6 5. Non-health public social expenditure on pensions and other benefits for older persons, 2010/11 (percentage of GDP) ............................................................................................... 8 6. Long-term care expenditure as a proportion of GDP, 2010 and projections for 2060 .......... 10 7. Old-age pensions: Extent of legal coverage, by region, latest available year ....................... 11 8. Effective pension coverage ratios, by region, latest available year ....................................... 13 9. Old-age pension beneficiaries as a proportion of the population above statutory pensionable age, latest available