Money may not be the sole reason for happiness, but income security in old age is a key concern to current and future retirees. The good news is that pension income security saw significant gains in 2014, HelpAge International reports.
credits this to a global shift away from contributory to social pensions in low- and middle-income countries. While the former often requires retirees to have formal jobs and make regular contributions, social pensions are tax-paid and therefore include workers in the informal sector. The number of countries offering social pensions has doubled from around 50 to more than 100 since 1990, according to the AgeWatch Index. Global AgeWatch Index 2014
International Day of Happiness
In 2012, the UN General Assembly proclaimed 20th March the
International Day of Happiness. In doing so, it recognized “the relevance of happiness and well-being as universal goals and aspirations in the lives of human beings around the world and the importance of their recognition in public policy objectives.”
As evidence of social pensions’ benefits, the report points to Mexico. Despite having been launched more than 70 years ago, Mexico’s contributory pension system covers only a fourth of its elderly population. Its non-contributory Pension Program for the Elderly, however, has been expanded to cover nine out of 10 Mexicans aged 65+ over the past decade.
Pension policy in low- and middle-income countries has focused on strengthening contributory pensions along the lines of the OECD. However, extensive coverage requires a large, formalized workforce – typically missing in low- and middle-income countries.
Another example the
Global AgeWatch Index points to is China’s Rural Social Pension. When introduced in 2009, retirement coverage in China was immediately extended to 133 million older persons, one fifth of the world’s population aged 60 or older.
A recent report by non-governmental organization Oxfam International,
, projects that in 2016 – next year – 1% of the richest elite will control half of global wealth. Social pensions can be a tool for addressing such inequalities, Wealth: Having it all and wanting more HelpAge International points out. In the European Union, pension systems do more to reduce inequality than all other forms of benefit systems combined, according to Oxfam.
Among the 96 countries ranked in the Global AgeWatch Index, Norway was the best to grow old in while Sweden dropped to second best. Overall, the top 20 positions are dominated by the developed world. Life for the elderly is most difficult in the Palestinian territories, Mozambique and Afghanistan.
A RISING TIDE DOES NOT LIFT ALL BOATS
To improve the situation of older citizens in these and other poorly ranked countries, societies need to become active. Economic growth alone is not enough as it does not necessarily improve retirement provisioning, the AgeWatch Index found. Nigeria and Indonesia experienced GDP per capita growth of 7.3% and 5.8% in 2013, yet both rank in the bottom third of the index (85 and 71, respectively).
The Global AgeWatch Index ranks countries according to the four parameters it has identified as being key to providing for the well-being of its older citizens; namely, income, personal health, capability and an enabling environment.
Mexico, however, is among the top thirty despite GDP per capita growth of only 1.1% in 2013. These figures suggest that adequate retirement income is not a matter of economic prosperity. Rather, “specific policies must be put in place to address the specific challenges of demographic changes,” the report states.
And they are more urgent than ever. By 2050, the United Nations predicts that there will be nearly as many people aged 60 or over (2.02 billion) as children under 15 (2.03 billion), with 4.8 billion people of working age expected to pick up the retirement bill.
Yet providing older citizens with a basic pension income is less costly than many think. Research conducted by
HelpAge and funded by the German Federal Ministry of Economic Cooperation and Development reports that, among the 50 countries studied, the cost of a universal pension for all people over 65 at a level equal to 20% of average income would range from 0.4 % of GDP in Burkina Faso to 1.8 % in China.
There is also a cost benefit. In low- and middle-income countries, the expectations people have about old age can influence choices they make early on in life. One of the reasons China introduced the Rural Social Pension was to free up savings and boost domestic consumption. Additionally, private savings become more and more of a necessity to top up retirement income.
Money may not buy happiness, but it can buy an older person a certain amount of independence, dignity and peace of mind.