Pensions still not giving security to the old Pensions seem not to be having the desired impact on older people. IFE ADEDAPO writes on the effect of reforms of the system on people of pensionable age Social protection system has been found to contribute to several Millennium Development Goals outcomes, accelerating advancements in education and achieving better health and more equitable gender outcomes. However, a secure life at old age remains uncertain for more than three-quarters of people in sub-Saharan Africa despite extensive pension coverage in this region. According to a report by the International Labour Organisation on Monday, the high proportion of people in the informal employment in sub-Saharan Africa has limited the number of people who participate in the contributory pension scheme. As a result, a majority of the world’s older women and men have no income security, have no right to retire and have to continue working as long as they can – often badly paid and left in precarious conditions, it stressed. It noted that although the overall progress of the contributory pension had been recorded in some countries, the coverage had not been sufficient. It stated that the active contributors to the pension scheme in Nigeria were 5.3 per cent as of 2010. The report titled ‘Social protection for older persons: Key policy trends and statistics” read in part,”Despite an impressive extension of pension coverage to many countries, significant inequalities persist. In sub-Saharan Africa, 16.9 per cent people receive an old-age pension which would provide them with a certain level of income security during old age. “Owing to the high proportion of informal employment in sub-Saharan Africa, only 8.4 per cent of the labour force contributes to pension insurance and earns rights to a contributory pension,” it stated. The report added, “Although effective pension coverage ratio has not been achieved, significant progress has been achieved in recent years. Whereas in 2000, only 34 countries reached high coverage of more than 90 per cent of the population above statutory pensionable age, 45 countries fell into this category in 2010 to 2012.” Fiscal consolidation policies adopted from 2010, the report noted, had affected older persons around the world, and may further constrain pension policies in the future. These policies, which are prevalent in developing countries include phasing out or eliminating subsidies; cutting or capping wage bills; increasing taxes on consumption; rationalising social protection benefits; and introducing reforms to health-care systems aimed at cost containment and increasing taxes on consumption, it said. ILO warned that these measures, if taken without considering its negative impact, would bar vulnerable populations from receiving benefits or critical assistance. It stated, “Older persons are also affected by other policy options that relate strongly to the social protection of populations: phasing out or eliminating subsidies; cutting or capping wage bills; increasing taxes on consumption; rationalising and more narrowly targeting social assistance and other social protection benefits; and introducing reforms to health-care systems aimed at cost containment. These fiscal consolidation strategies are not limited to Europe, and, in fact, are prevalent in developing countries. “Many governments are also considering revenue-side measures that can have adverse impacts on vulnerable populations, mainly the introduction or extension of consumption taxes such as Value Added Tax on basic products that are disproportionately consumed by poor households. All of the different adjustment approaches pose potentially serious consequences for vulnerable populations.” The labour organisation added that more countries had started expanding their contributory pensions to those who were not currently covered but potentially have sufficient contributory capacity to participate. To ensure income security for older people, ILO suggested that various options that had been effective in other countries could be emulated. It listed such measures supported by the United Nations and international financial institutions as re-allocating public expenditures, increasing tax revenues, reducing debt or debt servicing, adopting a more accommodative macroeconomic framework and fighting illicit financial flows and increasing social security contributions/revenues. It read in part, “Many countries are also expanding non-contributory provisions in the form of so-called social pensions, available either universally to all who reach a certain age threshold or to those who have insufficient pension or other income, which provide at least a modest regular income to older persons.” “Establishing a pension system is a long-term commitment, and long-term balances between future benefit costs and available means of financing have to be regularly monitored. If people live longer but pensionable age is not proportionally adjusted (that is, if the duration of retirement and of the period during which pensions are received increases relative to the duration of economic activity and of contributory period), the costs of pensions will unavoidably increase unless benefit levels are cut. “However, support for pension financing, the ensuing policy choices, and the corresponding fiscal space may erode over time if coverage and benefits cease to be perceived as adequate and just, or if governance and delivery fail, it added. ILO observed that social protection contributed indispensably to political and social stability, adding that well-designed social protection systems, in particular social protection floors defined and developed in line with ILO Recommendation No. 202, can strengthen social contracts, enhance social inclusion and contribute to more equitable societies. Copyright PUNCH.All rights reserved. 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Posted on: Wed, 01 Oct 2014 00:31:25 +0000
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