`Universal pension of USD 1 a day will reduce old age poverty’

from Zee News

United Nations, June 20: Noting that 1.2 billion of the world's older people would be living without a social safety net in 2050, a UN report has urged developing nations, including India, to consider a pension offering benefits equivalent to extreme poverty line of USD one a day.

The report by United Nations Economic and Social Affairs emphasises that pension systems in developing nations are significantly underdeveloped and an estimated 342 million older people in these countries currently lacked adequate income security.

Countries that have well developed pension systems are also countries that have lower poverty rates of older people, while those countries that do not have well developed pension systems have high poverty rates of older people, and these people are sometimes forced to work beyond their working life.

While the report does not advocate a one-size-fits-all solution, it stresses that future pension systems should aim at universal access, be equitable and ensure enough benefits to avoid old-age poverty.

The authors of the report had conducted an exercise to determine the possibility of creating a basic pension system in poor countries equivalent to the absolute-poverty line.

The findings indicated that it was possible, spending less than one per cent of national income, to fund a pension system for relatively poor countries that would guarantee the absence of extreme poverty in old age.

Addressing a press conference yesterday, Josi Antonio Ocampo, Under-Secretary-General for economic and social affairs, said "The department proposed very strongly that we should go in the direction of universalising basic pension equivalent to the poverty line for older people."

"It is unlikely that the growing dependency of economies around the world on a shrinking worker base could be solved through increased fertility and migration," Ocampo said.

Rather, the problem must be tackled through a mix of solutions that should include increasing women's participation in the labour force, lengthening the working life and improving worker satisfaction -- all of which should be aimed at improving labour productivity, he stressed.

He said it is quite clear that, if there is no increase in labour productivity in rapidly ageing societies, there will actually be a slowdown in economic growth that will affect everyone, a fact that is particularly true of such industrialised countries as Germany, Italy, Japan and the US.

The ageing population would put undue pressure on the developing countries which will host 80 per cent of the older people but do not have established social security and pensions systems and healthcare facilities are inadequate.

The report, whose release coincided with the fifth anniversary of the Madrid International Plan of Action on Ageing, notes the "profound impact" ageing has on economic and social development.

The report estimates that the number of people 60 years and older will sharply increase from 670 million in 2005 to two billion by 2050 and the nations would have to fix their healthcare systems if the older people are to remain economically active and continue to contribute to the society.

At the same time, it emphasises that ageing is not the most important factor in driving up the future cost of healthcare. Rather, rising costs can be attributed to inefficiencies in the delivery of health services, the introduction of new medical technologies, and price increases of pharmaceuticals and health insurance policies.