Social Protection for Older Persons Social Pensions in Asia Edited by Sri Wening Handayani and Babken Babajanian Social Protection for Older Persons Social Pensions in Asia Edited by Sri Wening Handayani and Babken Babajanian © 2012 Asian Development Bank All rights reserved. Published in 2012. Printed in the Philippines. ISBN 978-92-9092-726-6 (Print), 978-92-9092-727-3 (PDF) Publication Stock No. BKK124774 Cataloging-In-Publication Data Sri Wening Handayani and Babken Babajanian. Social protection for older persons: Social pensions in Asia. Mandaluyong City, Philippines: Asian Development Bank, 2012. 1. Pensions. 2. Older person. I. Asian Development Bank. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB. Note: In this publication, “$” refers to US dollars. Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 www.adb.org For orders, please contact: Department of External Relations Fax +63 2 636 2648 [email protected] Printed on recycled paper Contents Tables, Figures, and Boxes xi Abbreviations xv Foreword xvi Acknowledgments xviii Contributors xix Overview The Challenge of Rapid Aging: Development of Social Pensions in Asia 1 Sri Wening Handayani Introduction 1 Economic Growth and Social Protection 2 Potential Benefits of Social Pensions 2 Structure of the Book 3 Chapter 1 The Political Economy of Social Pension Reform in Asia 11 Katja Hujo and Sarah Cook Abstract 11 Introduction: The Case for Social Pensions and Their Relevance for Asia 11 The Regional Context: Aging, Poverty, and Social Protection in Asia 15 An Analytical Framework: Understanding Policy Reform 17 Explaining the Origins and Evolution of Welfare Regimes 18 Explaining Policy Reform 22 Toward a Political Economy of Social Pension Reform 23 Experiences from Other Regions: The Political Economy of Social Pensions in Latin America and Sub-Saharan Africa 27 Latin America: Origins and Reforms 27 iii iv Contents Sub-Saharan Africa: Origins and Reforms 31 Factors Facilitating or Constraining the Introduction of Social Pensions in Latin America and Sub-Saharan Africa 33 Social Pensions and the Politics of Welfare Policy in Asia 34 Problem Analysis and Reform Strategy: When Are Social Pensions Prioritized? 38 Social Pension Reform: Relevant Actors 39 Variety of Approaches and Outcomes 40 Conclusions 42 References 45 Annex 52 Chapter 2 Social Pensions for the Elderly in Asia: Fiscal Costs and Financing Methods 60 Mukul G. Asher Abstract 60 Introduction 61 Selected Asian Countries’ Financing Experience 63 Determinants of Fiscal Costs 66 Rights-Based versus Discretionary Approaches 66 Targeted (Selective) or Universal (Categorical) Social Pensions 68 Design and Fiscal Costs 71 Projections of Fiscal Costs 73 Enhancing Fiscal Space 75 Conclusions 79 References 80 Chapter 3 The Design and Implementation of Social Pensions for Older Persons in Asia 84 Michael Samson Abstract 84 Introduction 84 Contents v Overview and Impact of Social Pensions in Asia 85 Poverty Reduction 86 Food Security and Nutrition 87 Access to Health Care 87 Human Capital Development 88 Livelihoods and Labor Market Engagement 89 Extended Economic Impact 89 Social Impacts 89 Design Issues with Social Pensions in Asia 90 Targeting versus Universalism 90 Benefit Size 96 Implementation of Social Pensions in Asia 99 Administrative Systems 99 Beneficiary Selection 100 Targeting Errors of Exclusion and Inclusion 101 Challenges with Targeting and Registration Systems 104 Payments Systems 104 Corruption 105 Rights Protection 106 Capacity and Administrative Feasibility 107 The Importance of Management Information Systems 107 The Importance of Monitoring and Evaluation Systems 108 Progressive Realization with Limited Capacity 109 Development Partner Support for Capacity Building and Scaling Up 110 Conclusions, Policy Lessons, and a Road Map Forward 113 Identification of an Appropriate Social Protection Instrument 113 Design 113 Implementation 114 Monitoring and Evaluation 115 References 116 Chapter 4 Gender and Old-Age Pension Protection in Asia 120 Athina Vlachantoni and Jane Falkingham vi Contents Abstract 120 Background and Objectives 120 Gender-Specific Vulnerabilities and Old-Age Social Protection 121 Higher Life Expectancy of Women 121 Rapid Aging 123 Domestic and Informal Care 124 Intergenerational Living Arrangements 125 Old-Age Social Protection and Women in the Labor Market 126 Women in the Formal Labor Market 126 Women in the Informal Labor Market 129 The Role of Social Pensions in Providing Old-Age Protection for Women 131 References 134 Chapter 5 Providing Social Security in Old Age: The International Labour Organization View 137 Krzysztof Hagemejer and Valérie Schmitt Abstract 137 The Objectives and Standards of Pension Systems 137 Access to Old-Age Pensions 140 Universal Pension as Part of the Social Protection Floor 144 Policy Options for Pension Protection 146 The Cost of Basic Social Protection 149 References 151 Chapter 6 Development of the Old-Age Allowance System in Thailand: Challenges and Policy Implications 153 Worawet Suwanrada and Dharmapriya Wesumperuma Abstract 153 Introduction 153 Contents vii Old-Age Pension System 154 Public Officials’ Pension Scheme 155 Old-Age Benefits under the Social Security Fund 155 Introducing Universal Social Pensions 158 Coverage and Financing 159 Economic, Social, and Institutional Impacts of the Social Pension 161 Income Poverty Reduction 161 Social Impact 163 Institutional Impacts 164 Implications for Policy and Practice 165 Thailand 165 Other Asian Countries 166 References 167 Chapter 7 Social Pensions in Viet Nam: Status and Recommendations for Policy Responses 168 Giang Thanh Long and Dharmapriya Wesumperuma Abstract 168 Introduction 168 Aging, Income Insecurity, and Old-Age Pension 169 Main Features of the Social Pension Scheme 172 Impacts of the Social Pension Scheme 173 Income Poverty Reduction 173 Participation in the Labor Force 175 Access to Health Care 175 Supporting Other Household Members 176 Current Issues in Design and Implementation 176 Identifying Beneficiaries 176 Benefit Delivery 178 Administrative Capacity for Outreach, Implementation, and Monitoring 179 Scaling Up Social Pensions: Potential Poverty Impacts and Fiscal Costs 180 Implications for Policy and Practice 182 viii Contents Promoting and Strengthening the Role of Social Pension in Reducing Old-Age Poverty 182 Implications for Other Developing Countries 183 References 184 Chapter 8 Overview of the Old Age Allowance Programme in Bangladesh 187 Sharifa Begum and Dharmapriya Wesumperuma Abstract 187 Introduction 187 Safety Net Programs in Bangladesh 189 Main Features of the Old Age Allowance Program 193 Program Administration 193 Beneficiary Selection 194 Selection Criteria 195 Allowance Delivery 196 Grievance Procedures 196 Coverage 197 Impacts of the Program 198 Food 198 Health Care 199 Psychosocial Well-Being 200 Economic Security 201 Social Impact 201 Design and Implementation Issues 202 Benefit Size 202 Candidate Selection 203 Benefit Delivery 204 Administrative Challenges 205 Potential for Scaling Up 206 Implications for Policy and Practice 207 Strengthening and Scaling Up the Old Age Allowance Programme 207 Lessons for Other Asian Countries 210 References 212 Contents ix Chapter 9 Nepal’s Senior Citizens’ Allowance: A Model of Universalism in a Low-Income Country Context 214 Michael Samson Abstract 214 Introduction 215 Background 216 Rationale 218 Features 219 Benefits 219 Coverage 220 Impacts on Individual and Household Well-Being 223 Income Poverty Reduction 223 Increasing Access to Basic Services and Health Care 226 Supporting Other Household Members 227 Issues Related to “Stigma” 229 Opportunities and Challenges in Design and Implementation 230 Institutional Arrangements 230 Targeting Effectiveness, and Errors of Inclusion and Exclusion 233 Accountability and the Extent of Capture and Corruption 236 Administrative Capacity for Outreach, Implementation, and Monitoring 236 Financing, Fiscal Cost, and Affordability 237 Implications for Policy and Practice 241 Strengthening and Scaling Up the Social Pension Scheme in Nepal 241 Drawing Lessons for Other Asian Countries 243 References 244 Chapter 10 Social Protection for Older People in Central Asia and the South Caucasus 246 Jane Falkingham and Athina Vlachantoni Abstract 246 Introduction 246 x Contents The Inheritance: Soviet Old-Age Pensions in Brief 249 Demographic and Socioeconomic Trends 251 Demographic Trends 251 Socioeconomic Trends 254 Trends in Pension Provision, 1990s to 2000s 259 Case Studies 265 Kazakhstan 266 The Kyrgyz Republic 268 Armenia 269 Tajikistan: Public versus Private Transfers 271 Policy Implications and Conclusions 274 References