United Nations: Increased Pension Coverage Key To Future Global Development

United Nations

The International Labour Organization (ILO), a UN agency, released a report yesterday warning that 48 percent of the world’s population didn’t have access to a retirement benefit of any kind in 2013.

The report, titled Social Protection for older persons: Key policy trends and statistics, said that retirement benefits make “good economic sense” and aid global economic development—but many countries are cutting back on benefits due to austerity measures. From the United Nations:

According to ILO, although more than 45 countries have reached 90 per cent pension coverage and more than 20 developing countries have achieved or nearly achieved universal pension coverage, the trend of fiscal consolidation spurred by austerity has led to a contraction in social protection for older persons with consequent adjustments.

These include cuts in health and other social services, the reduction of benefits and increase in contribution rates and the raising of the retirement age.

“These adjustments are undermining the adequacy of pension and welfare systems and reducing their ability to prevent poverty in old age,” Ms. Ortiz noted.

“The long-term liabilities of austerity take time to show up. Depressed household income levels are leading to lower domestic consumption and slowing down economic recovery. It is alarming that future pensioners will receive lower pensions in at least 14 European countries by 2050,” she added.

Meanwhile, a handful of countries have expanded pension coverage dramatically in recent years. From the UN:

At the same time, a number of countries have registered positive trends in their social protection systems. China, Lesotho, Thailand, Timor-Leste, and Tunisia, for instance, have experienced what the ILO described as “remarkable successes” in the reach of their coverage with gains ranging from 25 to more than 70 per cent of the population.

Pointing to China, in particular, Ms. Ortiz observed that the country had achieved nearly universal coverage of pensions and increased wages while other countries, such as Argentina, Bolivia, Chile, Hungary, Kazakhstan, and Poland, were reversing the earlier privatization of their pension systems as they were too expensive and had not expanded coverage.

“Public social security systems with strong social protection floors are essential for economic recovery, inclusive development and social justice, and therefore must be an integral part of the post-2015 development agenda,” concluded Ms. Ortiz, referring to the new development agenda that will succeed the landmark Millennium Development Goals (MDGs), set to expire in 2015.

Read the full report here.

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