Pension protection for women: global challenges and opportunities

Dr Athina Vlachantoni
Centre for Research on Ageing and Centre for Population Change University of Southampton, United Kingdom Email: a.vlachantoni@soton.ac.uk
The views expressed in this presentation are the views of the author and do not necessarily reflect the views or 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 paper and accepts no responsibility for any consequence of their use. The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.

Paper outline • Pension protection in the 21st century • Pension protection: why is it a challenge for women? • Factors affecting income security in lowincome countries • Conclusion: policy responses

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Pension protection in the 21st century

Principles of pension protection
Pension systems generally perform three functions: 1) Consumption-smoothing How do we safeguard consumption across the lifecourse?

2) Insurance against longevity ‘risk’ How do we ensure we don’t outlive our resources?

3) Redistribution (and poverty reduction) How do we target the oldest and the poorest?
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Fig. 1: Income and consumption over the lifecourse
Income

Consumption

Age →

‘Normal’ lifecourse

Insecure lifecourse

Lifecourse In poverty

Source: Adjusted from Barrientos (2004) in Lloyd-Sherlock (ed) Living Longer. Zed Books.

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Fig. 2: Decreasing fertility worldwide
8 7 6 5 4 3 2 1 0
19 70 19 80 19 60 19 50 19 90 20 00 20 10 20 20 20 30 20 40

World More Dev Less Dev Least Dev

Source: World Population Prospects, The 2008 Revision Population Database

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Fig. 3: But significant variations, eg. Asia
7 6 5 Asia 4 3 2 1 0
19 50 -1 19 955 60 -1 19 965 70 -1 19 975 80 -1 19 985 90 -1 20 995 00 -2 20 005 10 -2 20 015 20 -2 20 025 30 -2 20 035 40 -2 04 5

E.Asia S.C.Asia S.E. Asia W. Asia

Source: World Population Prospects, The 2008 Revision Population Database

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‘Ageing, architect of our future’
Fig. 4: Population pyramids in the Philippines: 1980 and 2050 projection

Source: US Census Bureau online at: www.census.org

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Pension protection – why is it a challenge for women in particular?

Women and pensions
Higher life expectancy + Care (children, adults) + Interrupted, part-time, low-paid (formal) employment + Pension design with (dis)incentives to join

= =

Inadequate (individual) pension income Higher poverty risk (for longer)
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Women and pensions
Higher life expectancy + Care (children, adults) + Interrupted, part-time, low-paid (formal) employment + Pension design with (dis)incentives to join + Informal employment which does not yield a pension

= =

Inadequate (individual) pension income Higher poverty risk (for longer)
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Fig. 5: Life expectancy at birth, by sex
Western Asia

S.E. Asia

S.C. Asia

E.Asia

Asia

0

10

20

30

40

50

60

70

80

90

Women

Men
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Source: World Population Prospects, The 2008 Revision Population Database

Fig. 6: Labour market participation, by gender
100 90 80 70 60 50 40 30 20 10 0

Malaysia

Indonesia

Cambodia

Fiji

The Philippines

Singapore

Women

Men
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Source: World Bank Database (2008 data)

Informal employment
• Informal employment comprises between half and three-quarters of all non-agricultural employment in developing countries • Women are over-represented among informal workers: 85% of all women in Sub-Saharan Africa 65% of all women in Asia 58% of all women in L. America

Fig. 7: Informal employment as a proportion of all nonagricultural employment
80 70 60 50 40 30 20 10 0 North Africa Latin America Asia S.Saharan Africa

Source: International Labour Organization (2002)

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Factors affecting income security in old age

• Living arrangements - The majority of older people in developing regions live with their children or grandchildren - (but note the impact of demographic changes) • Intergenerational support -Such support goes in both directions and is an important safety net • Migration patterns -Out migration, older people “left behind” and the importance of remittances
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Fig. 8: Living arrangements of older people (60 and over) in developed and developing countries

Source: UN, 2005

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Fig. 9: Living arrangements of older people (60 and over) in Africa, Asia, L. America and the Caribbean

Source: UN, 2005

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Fig. 10: Proportion of older people living with their children

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Fig. 11: Percentage of Elders Living with An Adult Child, by Region and Gender

Source: Bongaarts and Zimmer 2002

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• Living arrangements - The majority of older people in developing regions live with their children or grandchildren - (but note the impact of demographic changes) • Intergenerational support -Such support goes in both directions and is an important safety net • Migration patterns -Out migration, older people “left behind” and the importance of remittances
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Fig. 12: Proportion of people aged 40 and over providing and receiving support
Globally: …one-third of those in their 40s and 50s and one-quarter of those in their 60s and 70s …have provided practical support to a relative or friend over the previous six months.
Source: The Future of Retirement 2007. HSBC http://www.hsbc.com/1/2/retirement/futur 22 e-of-retirement

• Living arrangements - The majority of older people in developing regions live with their children or grandchildren - (but note the impact of demographic changes) • Intergenerational support -Such support goes in both directions and is an important safety net • Migration patterns -Out migration, older people “left behind” and the importance of remittances
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Migration and remittances
Fig. 13: Top 3 migrant sending countries in the world • Remittances flows sent (diaspora in millions)
40 35 30 25 20 15 10 5 0

by migrants reached $414 million in 2009.

• Of this, about 73% (or $316 million) was sent to low-income countries.
China India The Philippines

Source: World Bank's Migration and Development Brief 12 (April 23, 2010): Outlook for Remittance Flows 2010-11, http://go.worldbank.org/SSW3DDNLQ0

Source: World Migration 2005.
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Policy responses

Pension security in old age
• Contributory -state pension (PAYG/ funded/ hybrid) -occupational pension -personal pension • Non-contributory -means-tested -universal (social pensions) • Other (savings, home ownership, access to health, family support, community support)
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Fig. 14: Social pensions: regions and coverage

Source: Help Age International online at: www.helpage.org (May 2010)

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Examples
Bolivia: Mutual Health Insurance Scheme which covers basic health services for its members, half of whom are informal economy workers excluded from other social security systems. Brazil: Rural Social Insurance Programme which is a state-sponsored social protection programme for those outside the formal sector. The programme is a non-contributory pension and disability programme for the rural poor, instituted by the 1988 Constitution that extended basic pension benefits to the old and disabled in informal rural employment. Japan: The National Pension System provides health and pension insurance for more than 90 per cent of people, including informal workers. Japan does not distinguish between the formal and informal economy or between self-employed workers and those in microenterprises.
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Source: Lund and Srinivas, 2000

Further reading
• Help Age International at: www.helpage.org • Institute of Development Studies at: www.ids.ac.uk • Lloyd-Sherlock, P. (ed.) (2004) Living longer. Ageing, Development and Social Protection. London: Zed Books. • Lund, F. and Srinivas, S. (2000) Learning from experience: a gendered approach to social protection for workers in the informal economy. Paris: ILO. • Mesa-Lago, C. (2002) Myth and reality of pension reform: the Latin American evidence. World Development 30 (8): 1309-1321. • Robalino et al (2005) Pensions in the Middle East and North Africa: Time for change. Washington DC: World Bank. • Yeates, N. and Holden, C. (eds.)(2009) The global social policy reader. Bristol: Policy Press.
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