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Analyzing non-contributory social pension programs

Author

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  • Prasetyono, Pipin

Abstract

Due to higher life expectancy and declining fertility which cause an accelerated demographic transition, there was an increasing trend in population ages of 65 and above, as a percentage of total population in the last three decades, from 5.88 percent in 1985 to 8.27 percent in 2015. In 1994, the World Bank suggested three pillars of old age security programs which are non-contributory (basic pension), contributory (forced savings) and voluntary savings to provide help the old as well as helping the broader economy. By examining Australia’s experience in implementing pension programs, this paper attempts to (1) identify the advantages and disadvantages of non-contributory pension programs, and (2) provide an empirical comparison between universal and mean-tested pension programs. This paper argues that a non-contributory, means-tested retirement scheme, as has been implemented by Australia, would better support the old-age population by better targeting the beneficiaries, relatively low cost, and enhancing fairness among beneficiaries.

Suggested Citation

  • Prasetyono, Pipin, 2017. "Analyzing non-contributory social pension programs," MPRA Paper 97670, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:97670
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    File URL: https://mpra.ub.uni-muenchen.de/97670/1/MPRA_paper_97670.pdf
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    References listed on IDEAS

    as
    1. Yu-Wei Hu & Fiona Stewart, 2009. "Pension Coverage and Informal Sector Workers: International Experiences," OECD Working Papers on Insurance and Private Pensions 31, OECD Publishing.
    2. Julie Agnew, 2013. "Australia’s Retirement System: Strengths, Weaknesses, and Reforms," Issues in Brief ib2013-5, Center for Retirement Research.
    3. Willmore, Larry, 2007. "Universal Pensions for Developing Countries," World Development, Elsevier, vol. 35(1), pages 24-51, January.
    4. Jessica K. M. Johnson & John B. Williamson, 2006. "Do universal non‐contributory old‐age pensions make sense for rural areas in low‐income countries?," International Social Security Review, John Wiley & Sons, vol. 59(4), pages 47-65, October.
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    More about this item

    Keywords

    pension; retirement;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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