DRAFT

ASSESSING THE ECONOMIC WELL-BEING OF

ELDERLY PERSONS IN SOUTH ASIA1

S Irudaya Rajan2

INTRODUCTION

The ageing of populations is one of the successful outcomes of demographic transition, in

particular, mortality transition. The developed countries of the world have already
experienced the process of ageing and its consequences and have developed policies and
programmes to avert crisis in not only providing economic and social security but also
promoting economic growth. Developing economies such as the countries of South Asia
are also well on their way to having a similar ageing population. However, they are either
prepared to face the consequences or to manage the growing numbers of the elderly
through appropriate policies of welfare and social protection. Although the proportion of
the elderly who are 60 years of age3 and above would seem to be relatively low in the
biggest populous giants of the world such as China and India, in terms of absolute
numbers, they have much more elderly persons than many other regions (countries) of the
world because of their huge population bases. The recent spurt in empirical studies
related to the elderly in the developing world is attributed not only to increasing numbers
but also to deteriorating living conditions of the elderly accentuated in part by rapid
modernisation and urbanisation as well as internal and international migration. The
projected increase of the elderly populations in both absolute and relative terms is, in
many developing countries, a subject of growing concern for demographers, planners,
policymakers, actuarial experts and pension economists. It has been, indeed, a matter of
grave concern for countries such as India, Sri Lanka and Bangladesh, Pakistan and Nepal.
(Treas and Logue, 1986; World Bank, 1994, 2000; 2001; Government of India, 1999,
2001; Alam, 2006; Irudaya Rajan, Mishra, and Sarma, 1999; Irudaya Rajan, 2008; Leibig
and Irudaya Rajan, 2003; Irudaya Rajan, Risseeuw and Perera, 2008).

Within this broad context, the present article examines the social protection and security
measures available for both informal and formal sections of elderly persons in the South
Asian economies.

1
In this paper, South Asia refers to the following seven countries: India, Pakistan,
Bangladesh, Nepal, Sri Lanka, Bhutan and Maldives
2
Professor, Centre for Development Studies, Kerala, India
3
Throughout the paper, elderly persons are defined as sixty years of age and above.
DEMOGRAPHIC SETTING

Until recently, high levels of fertility and mortality marked South Asian populations. In
the late 1950s, fertility across South Asia was uniformly high – ranging from the total
fertility rate of 6.7 per women in Bangladesh to 5.7 per women in Sri Lanka. However,
by 2005, Bangladesh, India, and Sri Lanka had attained fertility rates which were lower
than those in Nepal, Pakistan, Bhutan and Maldives. Fertility in Sri Lanka has already
fallen to the replacement level (Table 1), and all other countries in South Asia are
expected to reach that level by 2045–50. As of now, population growth rate in South Asia
is about 1.52 per cent per annum, with the lowest growth rate of 0.9 per cent reported for
Sri Lanka.

Table 1: Fertility, Mortality and Population Growth in South Asia, 1950-2050

Year South Asia India Pakistan Bangladesh Nepal Sri Lanka Bhutan Maldives
Total Fertility Rate (number per woman)
1955-60 6.00 5.97 6.60 6.70 6.06 5.70 5.45 5.61
2000-05 3.10 3.07 4.27 3.25 3.71 1.97 3.34 3.63
2045-50 1.85 1.85 2.10 1.94 2.02 1.85 1.82 1.79
Population Growth Rate (per cent)
1955-60 1.96 2.00 2.15 1.94 1.49 2.47 1.34 1.83
2000-05 1.52 1.55 2.04 1.91 2.10 0.88 1.89 1.73
2045-50 0.31 0.32 0.84 0.62 0.86 - 0.19 0.77 0.71
Expectation of Life at Birth – Males and Females
1955-60-M 35.4 39.4 44.8 38.3 36.8 54.2 34.8 43.8
1955-60-F 35.0 38.0 42.1 36.7 35.5 52.3 35.5 42.1
2000-05-M 60.7 61.7 62.7 61.8 60.9 71.3 55.9 60.7
2000-05-F 62.7 64.7 63.1 63.4 61.7 76.7 58.7 61.1
2045-50-M 70.8 73.8 74.1 73.8 73.5 78.0 68.5 74.1
2045-50-F 72.1 78.1 76.7 77.8 77.2 83.0 70.2 76.7

The decrease in mortality is reflected in the increasing life expectancy at birth, with Sri
Lanka in the lead. In the 1950s, all the South Asian countries had shorter life spans for
women than for men (the opposite of global mortality norms) for a variety of reasons
ranging from discrimination against girl children to high maternal mortality rates (Razavi,
2000). By 2005, female life expectancy at birth almost equaled or exceeded that of males
in all South Asian countries. By 2050, females are expected to outlive males in all the
countries of South Asia, with the difference expected to be about 5 years in Sri Lanka.

Increasing life expectancy implies increasing numbers of older people and old people living
longer lives than their earlier cohorts (Irudaya Rajan and Mishra, 1995). Available statistics
indicate that in Sri Lanka in 2005, men aged 60 were expected to live another 19 years, and
those aged 70 years another 13 years; the corresponding figures for women were 21 and 14
years respectively (Perera, Gunawardena and Gunatilaka, 2008). Increased rates of survival
beyond 60 years of age have many implications for the financial burden of pensions and
social assistance payments and well-being of elderly persons in South Asia. Health care
financing for the elderly by individuals and respective families and insurance companies
needs special mention.

Figure 1: Age Pyramids for South Asia, 1950, 2000 and 2050

1950 2000

Male Female Male Female

20.000 10.000 0.000 10.000 20.000 15.000 5. 000 5. 000 15.000

Percentage of Population Percentage of Population

2050

Male Female

10.000 0.000 10.000

Percentage of Population

Though India is expected to have the largest population of elderly persons in 2050 among
the South Asian countries under discussion, Bangladesh will see the fastest growth rate of
the elderly population: the number of the elderly is expected to increase nearly sevenfold in
Bangladesh in the next 50 years, but only fourfold in India and fivefold in Sri Lanka. By
2050, one in five people in Bangladesh and India will be an elderly person as against one in
four in Sri Lanka. All countries already have more elderly women than elderly men, with the
excess ranging from 5 to 9 additional percentage points than of men. Thus the feminisation
of aging is also evident in South Asia. Finally, whereas in the next 25 years the annual
growth rate of the general population in South Asia is expected to be around 1 to 1.5 per
cent; that of the elderly is likely to be much higher: India’s elderly population is likely to
grow by 9 per cent a year.

The aging of the population in South Asia will thus proceed faster than in other developing
countries. Moreover, the transition from high to low fertility is expected to narrow the base
of the age pyramid and broaden it at the top. In addition, improvements in life expectancy at
all ages will result in the survival of more old persons, thus intensifying the aging process.
Population pyramids for South Asia show a broad base, indicative of a young and
growing population (see Figure 1). The corresponding pyramids for 2050 for South Asia
exhibit a more columnar shape, indicating that the population has grown older. The
pattern for Sri Lanka in 2050 suggests that the absolute total population may begin to
decline (Sudha and Irudaya Rajan, 2002). The future age pyramids in the South Asian
countries (Figure 1) will typically replicate those observed in industrial countries today.

A variety of indicators are in use for the assessment of the speed of aging, including the
median age (the age that divides the population into equal halves) and the aged-dependency
ratio (the ratio of the population above 60 years of age to the population aged 15–59 years).
The median age for every country in South Asia will have risen beyond 30 years by 2050; it
will be the highest in Bangladesh. The aged-dependency ratio will rise in all the other
countries also, and is expected to vary from 15 to 49 per cent in Sri Lanka in the next 50
years. The index of aging, defined as the ratio of persons over 60 to those below 14 years,
was around 7 and 3 in Bangladesh and Sri Lanka, respectively, in 2001 and the rates are
expected to fall to 1 or lower in 2050 (in other words, for every child, there would be one
old person).

Another index used to assess the speed of population aging is the time it takes for the
share of the elderly in the population to rise from 7 per cent to 14 per cent. In the
countries which were the earliest to undergo industrialisation, the time taken for this
doubling to happen was more than 100 years (120 years in France, for example). The
same doubling took only 90 years in later-developing Sweden, 80 years in Australia and
70 years in the United States. In contrast, this doubling will take place in Sri Lanka
within a period of 20 years.

The economic well-being of the elderly is intimately linked to their educational

background because education enables better adaptability to changing socioeconomic
conditions. Yet, overall literacy is low in much of South Asia (except Sri Lanka), and the
literacy gap between the younger and the older generations has not yet begun to narrow.
The rural elderly are especially disadvantaged in this respect. Elderly women are the most
illiterate subgroup. South Asia’s elderly persons are expected to be become more literate
persons in the future, and therefore, be more demanding.

The marital status of the elderly is also important because the married elderly fare better
than the single elderly in many respects. It is commonly observed that the ratio of
widowed men to widowed women is much lower in extreme old age than at younger
ages. Reasons cited include the longer life span of women compared to men and the
general tendency for women to marry men older than them (Gulati and Irudaya Rajan,
1999). Widowers are also more likely to remarry than widows. In India, according to the
2001 Census, 14.98 per cent of the elderly males were widowers compared to 50.06 per
cent widows among elderly women.

SOCIO-ECONOMIC SETTING

As a prelude to assessing policies and programmes of pensions and social security as well
as well-being of the elderly in the seven South Asian countries, we summarise their
economic scenario in Table 2. The economic base is important for suggesting the
appropriate comprehensive pension and social security programmes for the elderly to
ensure its economic viability and sustainability. The most important features that bind
these South Asian countries together are that they are adjacent to one other and most of
them had once been under British rule. There is much in common among them, socially,
culturally, and economically, apart from the fact that all of them are developing
economies. All are densely populated, although in this context, India leads the rest. In
2005, India had a population of 1.1 billion, Sri Lanka 20 million, and Pakistan 160
million.

Table 2: Socio- economic and demographic indicators for South Asian Countries, 2007

Indicators Bangladesh India Nepal Pakistan Sri Lanka Bhutan Maldives

A: GDP, Pop. And Labour Force

Population: 2007 in cores 15.9 110.5 2.7 15.9 19.6 0.0068 4 lac
Population density (people per sq. km) 1198 373 193 206 307 2 8
IMR 64 64 70 85 19 98 115
LFPR Total: 2006 (%) 71.9 60.8 66.3 60.7 59.1 55.1 65.5
GDP in USD billion 618 911 8 126 26 0.9 1.2
GDP Growth: annual (2003-07) 6.6 9.2 2.8 6.9 7.4 6.5 5.7
Unemployment, total (% of total labor force) 4.3 5.3 .-- 7.7 7.6 ..-- 9.3
Percentage of workers in the informal sector 58.9 62.0 78.0 76.0 65.8 75.8 74.0
Vulnerable employment, total (% of total employment) 63.1 52.1 .. 59.3 39.1 .. ..
B: Poverty Situation
Population below $ 1 a day 36.0 34.7 37.7 13.4 7.6 47.7 57.7
Gini Index 31.8 32.5 36.7 33.0 33.2 36.7 36.7
C: Vulnerability Assessment
Pension Contributors (by state)(% of Lab Force) 3.5 10.6 - 3.5 28.8 - -
Private Health Exp to total health exp. (%) 2006 74.8 78.7 72.8 65.1 51.3 78.2 78.2
Public Expenditure On Health (% of GDP) 2006 0.8 1.3 1.4 1.1 1.8 0.2 0.2
Public Expenditure on Pension (% of GDP) 1.06 1.9 2.02 0.9 2.4 0.02 0.02
HDR rank 2008 BY UNDP 147 132 145 139 104 131 99
Literacy rates 48.0 61.0 49.0 50.0 90.7 47.0 96.0
Sources: UNFPA (2004); United Nations (2005); World Bank (2008); ILO (2002)
Vulnerable employment is a classification by ILO on employment in sectors with high
risk
Although none of these countries can be portrayed as fast growing economies, their
record of growth in recent years has been fairly impressive. Currently, India’s GDP
growth rate is close to 9 per cent; Bangladesh, Bhutan and Pakistan registered rates of
growth of about 6 per cent and the lowest economic growth is reported for Nepal. The
agricultural sector is important in all these countries, contributing 52.1 per cent of GDP in
Sri Lanka, 48.9 per cent in India, and 51.0 per cent in Bangladesh. All these countries are
also characterised by balance of payments deficits, amounting to 3.8 per cent of GDP in
Sri Lanka and 1.2 per cent in India. Sri Lanka has been experiencing not only a large
external deficit but also a large government budget deficit (9.8 per cent of GDP)
compared with the corresponding deficits in India and Bangladesh (5.1 per cent and 6.1
per cent, respectively).

In the Maldives, 57.7 per cent of the population lives on an income of less than $1 a day;
the comparable proportions are 7.6 per cent in Sri Lanka and 47.7 per cent for Bhutan.
Income inequality is similar in these economies, with Gini coefficients of 36.7 per cent
for Nepal, Bhutan and Maldives and 31.8 per cent for Bangladesh. Of the countries in
South Asia, Sri Lanka appears to have the most developed pension system: 28.8 per cent
of the labour force and 20.8 per cent of the working-age population are contributors to
pension schemes. The corresponding percentages are far lower in the other countries, the
pension system being the least developed in Bangladesh.

ECONOMIC CONDITIONS OF ELDERLY PERSONS

Economic Dependency
The dependency ratio refers to the ratio of population above 60 years of age to the
population in working ages (15-59 years). Table 3 provides three types of old age
dependency ratios for all the South Asian countries for the period 2005-50.

Table 3: Aged Dependency Burden (Working Age Population to 100 Older

Dependents) in South Asia, 2005-2050

Bangladesh India Nepal Pakistan Sri Lanka Bhutan Maldives South Asia
Indicators 2005
60+/15-59 9.6 13.2 10.4 10.4 16.4 10.2 9.9 12.2
65+/15-64 6.0 8.0 6.0 7.0 11.0 5.9 6.7 8.0
80+/50-59 6.4 10.1 6.7 8.5 11.9 6.6 8.1 10.1
2025
60+/15-59 14.4 19.0 12.7 13.4 29.5 12.5 12.7 19.2
65+/15-64 9.0 12.0 8.0 8.0 19 7.8 7.6 12
80+/50-59 7.1 13.0 8.1 10.5 16.9 7.9 9.9 13
2050
60+/1 5-59 26.9 33.9 22.4 24.7 54.2 21.95 23.47 33.9
65+/15-64 17.0 22.0 14.0 15.0 38 13.72 14.25 22
80+/50-59 15.5 24.9 12.0 15.9 48.4 11.76 15.11 24.9
Source: Population Division of the Department of Economic and Social Affairs of the
United Nations Secretariat, World Population Prospects: The 2008 Revision,
The highest old age dependency ratio was reported for Sri Lanka, followed by India, and
the lowest was reported for Bangladesh. However, this index does not reflect the real
economic dependency because neither does all the population in the age group of 15-59
work, nor are all above the age of 60 years, dependants. Based on the available
information, it is established that a significant proportion of elderly continue to work and
therefore the stated dependency ratio needs to be revised by considering only the non-
workers who are above 60 years of age.

Table 4: Economic Dependency among Elderly in South Asia

Bangladesh India Nepal Pakistan Sri Lanka Bhutan Maldives

Not dependent 23.8 30.6 36.4 24.7 30.7 36.4 24.9
Partially dependent 15.6 16.6 18.6 17.1 17.9 19.6 17.1
Fully dependent 60.6 52.8 45.0 58.2 51.4 44.0 58.0
For India NSS 60th round, other nations ILO figures in labour stat

However, in recent years, the elderly were asked to describe the state of their economic
dependence in the field surveys conducted in South Asia using the following three
categories: not dependant, partially dependant and fully dependant. According to the
information provided in the Table 4, about 45 per cent were fully dependent on their
spouse, children and grandchildren for their daily needs in terms of food, shelter and
clothing in Nepal and Bhutan. The highest economic dependency was reported for
Pakistan, Bangladesh and Nepal. We presume that the fully dependant elderly need
economic support in old age as they are obviously below the poverty line and not able to
generate income on their own. They should be integrated into existing poverty alleviation
and social security programmes

Employment and Unemployment

Analysis of labour force participation rates among the elderly is important for
understanding their economic status, given the inadequacies of the social security systems
in South Asia. The predominantly rural character of the population, coupled with
insufficient opportunities for paid employment, compels people to prolong their working
lives as long as is physically possible. In general, in South Asia, the elderly continue to
work beyond 60 years of age. For instance, three in every five elderly men in India
continue to work in old age because of poverty and insufficient income security (Irudaya
Rajan, 2005; 2008) According to the latest Indian census, one-third of the elderly males
continue to work even beyond 80 years of age. The presence of elderly workers in
agriculture has been on the increase over time: almost 80 per cent of the elderly workers
in India work in the agricultural sector. Whereas about 62 per cent of elderly males
worked as cultivators, 70 per cent of the female elderly worked as agricultural labourers.
In one of the group discussion conducted by the author among the rural elderly, we were
told, “for us only one retirement, not from work, but from the world” (Irudaya Rajan,
Mishra and Sarma, 1999). Against this background, we present the work participation
among elderly in different groups for South Asian countries. In all countries in South
Asia, one out of two elderly continue to work and earn their livelihood after reaching 60
years; however, in Nepal and Bhutan, two out of three elderly continue to work.
Moreover, even at the age of eighty and above, one out of five elderly in both Nepal and
Bhutan continue to work.

Table 5: Work Participation Rates among Elderly in South Asia, 2008

:
Bangladesh India Nepal Pakistan Sri Lanka Bhutan Maldives
60+ 54.7 55.5 64.4 56.0 60.3 61.2 53.2
70+ 29.7 33.6 43 29.3 36.5 40.9 27.8
80+ 12.7 16.3 23.7 12.5 18.2 22.5 11.9
ILO compiled information in KLIM

Table 6: Unemployment Rate among Elderly in South Asia, 2008

Bangladesh India Nepal Pakistan Sri Lanka Bhutan Maldives

60+ 0.96 0.98 1.14 0.99 1.06 1.14 0.99
70+ 0.52 0.59 0.76 0.52 0.64 0.76 0.52
80+ 0.22 0.29 0.42 0.22 0.32 0.42 0.22
ILO compiled information in KLIM

Surprisingly, unemployment rate among the elderly is very low in all countries in South
Asia. One should evaluate the work participation rate among elderly in the context of
inadequate social security and assistance programmes in South Asia. In richer countries,
the elderly could afford to retire early because of the availability of pension schemes or
social security programs. Such programmes are often found lacking in poor countries
(Kinsella and Velkoff, 2001) Cross-national differences in the levels of labour force
participation rates are associated with societal wealth: countries with high gross national
product tend to have much lower labour force participation rates among the elderly than
in low income countries (Clark, York and Anker, 1997).

Living Arrangements

The overall reduction in general and infant mortality rates and the steady increase in the
average age at death have resulted in the growth of the elderly population all around the
world. The conventional living patterns among the elderly have undergone drastic
changes following the reduction in fertility and increase in life expectancy. For instance,
in India, the traditional practice has been for old people to live with their children. Living
with children need not necessarily be with the intention of receiving support; often, the
rest of the family also benefits from this arrangement. For example, when the younger
women of the household go to work, their children are usually taken care of by the
grandparents. In fact, the United Nations (2003) in its announcement of the theme for
international day for older persons addresses healthy old people as a resource for their
families, societies and the economy as a whole.
The term ‘living arrangement’ is used to refer to the household structure (Palloni, 2001,
Irudaya Rajan, Mishra and Sarma, (1995) which explains living arrangements in terms of
the type of family in which the elderly live, the headship they enjoy, the place they live in
and the people they live with, the kind of relationship they maintain with their kith and
kin, and, on the whole, the extent to which they adjust to the changing environment.
Living arrangement is an important component of analysis of the welfare of any specific
group. The elderly, being less able to remain independent, need the care and support of
others in several respects. Taking care of the elderly refers usually to emotional support;
on the other hand, the support given to the elderly should encompass financial and
material support as well. Emotional support is expected from the families or from
intimate persons; financial and material support envisages a joint effort on the part of the
immediate family and society. The care and support enjoyed by the elderly are linked to
the places of their residence.

There are several living patterns among the elderly such as living with spouse, living with
children and living in old age-homes. Living alone or with spouse is the most stable
living arrangement for people who are very old; yet, for the oldest-old, living with a child
or a grandchild, is the most stable arrangement (Wilmoth, 1998). Researchers have put in
a lot of effort to investigate the determinants of specific living arrangements. Living
arrangements are influenced by a variety of factors including the number and availability
of children and other relatives, kinship patterns of the society, location of household,
marital status, financial status, availability of services and physical and mental well-being
of the elderly (Scaffer, 1999, Kan, Park and Chang, 2001). Furthermore, attitude towards
and perceptions about the living place is another important component that decides where
the elderly should live (Chen, 1998).

Table 7: Living Arrangements among Elderly in South Asia

Bangladesh India Nepal Pakistan Sri Lanka Bhutan Maldives

Living alone 4.07 2.86 2.72 1.70 4.33 2.72 1.80
With spouse only 5.65 7.01 6.51 8.27 6.00 6.51 8.17
With spouse, children and grand children 42.05 51.01 49.86 59.15 42.62 49.86 59.15
With children and grand children 46.83 37.86 38.81 30.13 45.97 38.81 30.13
With other relatives 1.38 1.23 2.04 0.75 1.06 2.04 0.75
With non-relatives 0.02 0.03 0.07 0.01 0.02 0.07 0.01
For India NSS 60th round, other nations measure DHS survey

The effects of living arrangement on the physical and psychological well-being of the
elderly have also been examined by researchers. Changes in living arrangements, family
structure and mode of retirement are seen to adversely affect the old (D’Souza, 1989).
Leaving the parental home for education and employment results in elderly parents
having to live alone at home until the children return home (Gaymu, 2003). It is widely
known that the erosion of the traditional practice of the elderly living with children or
relatives reduces the well-being of the older population (Palloni, 2001). The overall well-
being of the elderly consists of their physical, mental and social well-being. However,
that it is not necessarily so as shown by the experience of industrialised nations where
government-fostered systems exist to meet the economic and social needs of the elderly.
All South Asian countries report that about 90 per cent of elderly either live with spouse,
children and grandchildren or live without spouse with children and grandchildren.
Living alone is relatively high in both Sri Lanka and Bangladesh while Pakistan and the
Maldives have the lowest proportion of elderly in this category

Ownership of Property and Assets in Old age

To assess the levels of poverty and dependency among the elderly, the author has used
data on ownership of assets including landed property. In India, this information is
classified into four major categories: owning and participating in financial asset
management, owning but not participating in financial asset management, not owning but
participating in financial asset management and neither owning nor participating in
financial asset management. The same questions were also canvassed to assess the
ownership and management of properties. According to the information collected, around
60 per cent of rural and urban females and around 30 per cent of rural and urban males in
India did not own any valuable assets. They are the ones who need social assistance
including the benefits of poverty alleviation programmes. Marked differences exist
regarding ownership and assets between males and females, between rural and urban
areas and among the major states of India (Irudaya Rajan, 2008). Comparable data for the
South Asian countries are presented in Table 8. Ownership of assets and property
declines with age.

Table 8: Ownership of Property and Assets among Elderly in South Asia

Bangladesh India Nepal Pakistan Sri Lanka Bhutan Maldives
60+ 22.97 23.31 27.05 23.52 25.33 25.70 22.34
70+ 12.47 14.11 18.06 12.31 15.33 17.16 11.69
80+ 5.33 6.85 9.95 5.25 7.64 9.45 4.99

Throughout the South Asian region, about one out of four elderly continue to own
property and assets and it declines to one of out of twenty persons at the age of 80 years.
Only in Nepal and Bhutan, one out of ten elderly persons continue to hold assets even at
the age of 80.

HEALTH CONDITIONS AMONG THE ELDERLY

Health care of the elderly is a major concern of a society as old people are more prone to
morbidity than young age groups. It is often claimed that aging is accompanied by
multiple illnesses and physical ailments. Besides physical illnesses, the aged are more
likely to be victims of poor mental health, which arises from senility, neurosis and the
extent of life satisfaction. The health status of the aged therefore should occupy a central
place in any study of the elderly population. Most primary surveys have reported that the
elderly in India in general and the aged population in the rural areas in particular have
serious health problems.
Using the existing data from the World Health Organization and Helpage International,
we have compiled two indicators: disease prevalence and treatment among the elderly. In
Sri Lanka, one of out two elderly was reported as having some disease; however, only
one out of three elderly persons received treatment. Both of these indicators are very low
in the case of Bhutan and the Maldives.

Table 9: Disease Prevalence (Per cent) and Treatment among Elderly in South Asia

Country elderly with disease elderly being treated

Bangladesh 42.3 28.8
India 44.3 30.1
Nepal 23.0 15.6
Pakistan 29.2 19.9
Sri Lanka 48.9 33.2
Bhutan 9.5 6.5
Maldives 10.5 7.1
Source: disease prevalence compiled from various WHO reports and being treated from
various country reports of Helpage internationals in 2007.

On the basis of the above observations, it may be concluded that some definite health
intervention measures are necessary to cater to the specific diseases associated with old age.
For this purpose, the establishment of special geriatric wards within the public sector health
facilities and concessions in private hospitals through identity cards for the poor elderly are
essential. This vulnerable section of the society, like any other economically backward
section of the population, needs to be provided subsidised or concessional health care
facilities. There should be special wards set apart for treating elderly people in the general
hospitals throughout South Asia. Needless to say, there should also be separate counters for
elderly patients so that they do not have to stand or wait in long lines along with other
patients.

Besides, most of South Asia's elderly being economically dependent, the cost of their
medical treatment is often a burden on the household, especially in respect of poor
households. Apparently, for this reason, many of the elderly ignore their ailments unless
they become too acute. Thus there is a great need for an appropriate insurance scheme for
enabling the elderly to meet their medical expenses. Evidently, such schemes should be
made compulsory for all gainfully employed workers.

PENSION AND SOCIAL SECURITY PROGRAMMES IN SOUTH ASIA

In recent years, concern for social security has been greatly influencing policy in
industrial as well as in developing countries. The International Labour Organization
(1942) has defined social security as “the protection which society provides for its
members, through a series of public measures, against economic and social distress [that]
otherwise would be caused by the stoppage or substantial reduction of earnings resulting
from sickness, maternity, employment injury, unemployment, invalidity, old age and
 death.” Sir William Beveridge, father of the U.K. social security system, defined social
security as “security of an income to take the place of earnings when they are interrupted
by unemployment, sickness, or accident; to provide for retirement benefit, to provide
against loss of support by the death of either person and to meet exceptional expenditure
such as those connected with birth, death and marriage” (Beveridge, 1943).

Table 10: Social Security in South Asia

Groups To Which Applicable

Contingency The general poor or
Public Employees Private sector
the unorganized sector
Medical Care Free treatment in public Free treatment in public Treatment in public
hospitals, reimbursement hospitals, reimbursement hospitals. Free supply
of drugs to a certain of cost of drugs to a of drugs to some
amount certain amount extent
Sickness Medical leave on full pay Sickness leave on full pay Nil
Benefit
Maternity Maternity leave on full Maternity benefits under Financial assistance to
Benefit pay existing act poor women
(example, India)
Unemployme Retrenchment benefits Retrenchment benefits Public employment
nt Benefit under Renewal Fund for under existing Act in the gene- ration schemes,
employees of public sector respective country in self employment
enterprises South Asia schemes
Employment Ex-gratia relief Benefits under existing Assistance from
Injury Act in the respective welfare funds (India)
Benefit country in South Asia
Invalidity Ex-gratia relief Benefits under existing Pensions for
Benefit Act in the respective physically
country in South Asia handicapped (India)
Old-age Pension and gratuity or Contributory Provident Old-age pensions for
benefit contributory provident Fund and Gratuity destitute, poor and
fund and gratuity widows (example,
Bangladesh)
Survivor Subsidised group Deposit-linked insurance, Subsidized life
benefit insurance in the event of Contributory Provident insurance and accident
death while in service; Fund and Gratuity, insurance to the
family pensions in the survivors (for
event of death after example, India)
retirement
Source: Guhan, 1994; Van Ginneken, 1998.

According to Pierre Laroque, former president of the National Social Security Fund in
France, social security, although sometimes assimilated into social insurance, is a
basically new development. It represents a guarantee by the whole community to all its
members of the maintenance of their standard of living or at least tolerable living
conditions by means of a redistribution of income based on national solidarity (Laroque,
1969). Leal de Araujo (1972) views social security systems as supplementary
mechanisms or economic agents for redistribution of income.

Table 10 summarises the various social security measures available in South Asia for
public employees, private sector workers, and the poor in general, such as medical care,
sickness benefit, maternity benefit, unemployment benefit, employment injury, invalidity
benefit, old age benefit, and survivor benefit.

Table 11: Social Security Contingencies covered and types of schemes in South Asia

Employment
Scheme
Injury Sickness Old age Invalidity Survivorship
Bangladesh EL EL SI NA NA
Bhutan EL NA EL/NPF NA NA
India EL/SI EL/SI NPF/SI NPF/SI NPF/SI
Maldives EL NA SI/NPF NPF NA
Nepal EL EL NPF NPF NPF
Pakistan EL/SI EL/SI SI SI SI
Sri Lanka EL NA NPF NPF NPF
Source: Source: www.socialprotectionasia.org and various national websites
(EL = Employers Liability, SI = Social Insurance, NPF = National Provident Fund)

The social security contingencies covered in South Asia are far from satisfactory. Not
only is the number of workers covered under these schemes small, the benefits are also
limited. The information provided in Table 11 shows that India and Pakistan are the only
countries in the region which do cover all the contingencies recognised by the ILO
Convention.

Social protection schemes may be classified into four types on the basis of their
characteristics (Table 12).

Table 12: Basic Features of Major Social Security Schemes

Entitlement
Type of Scheme Sources of funding Coverage
criteria
Social Assistance Public revenue Persons in designated categories Means test
who have low incomes
Social Insurance Contribution from Members of insurance scheme Contribution
employee, employer record
Employer liability Employer Employed in designated Employment
categories criteria
Social allowances Public revenues Persons in designated categories Domicile
Source: ILO, 1979; United States, 1980; 1982; Midgley, 1984.
Before discussing the case of each of the seven countries independently, let us assess the
status of civil and private pensions among all countries together. The highest civil
pension coverage was found in Sri Lanka with 14.9 per cent, while both Bhutan and the
Maldives reported the lowest at 3 percent. On the other hand, only 3 per cent of the
elderly were covered by private pensions in India as against 0.7 per cent in Pakistan.

Table 13: Elderly Covered both Civil and Private Pensions in South Asia, 2007

Civil Pension Private Pensions Number of

Coverage (per cent) Coverage (per cent) providers of private
pensions
Bangladesh 12.9 1.8 8
India 13.5 3.2 22
Nepal 7.0 0.8 4
Pakistan 8.9 0.7 7
Sri Lanka 14.9 1.2 12
Bhutan 2.9 NA NA
Maldives 3.2 NA NA
ILO compiled information in KLIM; World bank 2007

INDIA

The Directive Principles of the Indian Constitution in Article 39 provide for an adequate
means of livelihood and insist on the health and strength of workers not being abused;
Article 41 expects the State to grant the right to work and public assistance in the case of
unemployment, old age, sickness and disability; Article 47 reinforces that the primary
duty of the State is to raise the standard of living of its population. As regards the
maintenance of the aged persons without means, the Hindu Adoption and Maintenance
Act 1956 provides that subject to the provision of Section 20, a Hindu is bound during
his\her lifetime to maintain his\her children or aged or infirm parents. Section 21 of the
Act says that the dependents include father and mother; Section 22 says that each person
who has a claim on the property of a person has the duty to maintain him/her.

According to Section 125 of the Code of Criminal Procedure, if any person who has
sufficient means, refuses to maintain his wife, children or parents who are unable to
maintain themselves, the magistrate may fix a monthly allowance at the rate of not less
than Rs. 500. If the person concerned refuses to comply with such an order without any
sufficient cause the court can sentence him\her to imprisonment up to one month or till
the payment is made.

In the context of growing violence against elderly persons in India, the Ministry of Law
and Justice, Government of India, recently introduced a new act entitled ‘Maintenance
and Welfare of Parents and Senior Citizens Act 2007’. The Act extends to the whole of
India except the State of Jammu and Kashmir and also applies to the citizens of India
residing outside India. According to the Act, “the obligation of the children or relative, as
 the case may be, to maintain a senior citizen extends to the needs of such citizen so that
senior citizen may lead a normal life”. Acting on the complaint from the senior citizen,
the tribunal may, “during the pendency of the proceeding regarding monthly allowance
for the maintenance, order such children or relative to make a monthly allowance”
Similarly, “if the children or relative so ordered fail, without sufficient cause to comply
with the order or they are liable to imprisonment for a term which may extend to one
month or until payment if sooner made whichever is earlier”

Table 14: Existing Models of Social Security in India

Administrative/Financial
Model Nature of benefit Beneficiaries
Arrangement
Employer’s Workmen’s comp Workers in the Employers manage and pay
liability Maternity benefit organized sector exclusively
Gratuity
Retrenchment
Social Insurance Work injury Workers in the Administered by Employee’s
Medical care organised sector and State Insurance Corporation
Sickness, some workers in the and Central Board of
maternity benefits unorganised sector Trustees; Financed out of
Old-age benefit contributions from
Invalidity benefit employers, employees and
Survivors’ benefit state governments
Provident Fund

Social assistance
Medical care Mine, Beedi, Cine, Administered departmentally
(a) Welfare
Education construction, handloom, Financed by special levies in
funds of central
Housing cashew workers and the form of cesses
government/state
Water supply other unorganized sector Administered by autonomous
government suchOld-age benefit workers boards Financed by
as Kerala Survivors’ benefit contributions from
Marriage and employers, workers and
funeral allowances others.
(b) Subsidized Survivors’ benefit Vulnerable groups of Administered by LIC and
insurance Invalidity benefit workers such as GIC and Financed by
agricultural workers, contributions from central
handloom workers, etc. and state governments
(c) Other forms Old-age benefit Persons outside the job Administered departmentally
of social Maternity benefit market and below the Financed from general
assistance Survivors’ benefit poverty line, destitutes, revenues
Assistance fororphans, deserted and
employment, divorced women,
Training and widows, disabled
Education. persons, SCs, STs,
OBCs.
Source: Subrahmanya and Jhabvala (2000); Kannan (2002)
The submission of the Adarkar Report on August 15, 1944 for introducing a social
security scheme in India is a landmark development. According to Adarkar, any social
security scheme should possess the following eight features: it should be (a) compulsory;
(b) contributory; (c) simple to administer; (d) possible to implement with minimum
trouble; (e) have scope for expansion and extension; (f) be financially sound and viable;
(g) lead to minimal disputes, and (h) be flexible.

A complete review of various legislations on social security in India since Independence

with details of contributory and non-contributory schemes, types of pensions schemes,
role of the Life Insurance Corporation of India as well as the provident funds, is available
(Irudaya Rajan, Mishra and Sarma, 1999; Irudaya Rajan, 2002; Irudaya Rajan, Perera and
Begum, 2005; for an earlier case study on India, Williamson and Pampel, 1993).

In the earlier section, we summarised the various social security measures available in
South Asia for public employees, private sector workers, and the poor in general, in areas
such as medical care, sickness benefit, maternity benefit, unemployment benefit,
employment injury benefit, invalidity benefit, old-age benefit and survivor benefits. Most
of them are applicable to India. Table 14 outlines the existing models of social security in
India as presented by Subrahmanya and Jhabvala (2000).

Civil Pensions in India

Civil servants in India are eligible to receive other pension benefits such as provident
funds. The pension coverage under the banner of state-sponsored pension system
becomes more extensive if pension schemes under EPFO, which are partially funded
either by the State or Central Government, are included. In all the States, pension
schemes cover all State Government employees. In the case of employees of grant-in-aid
institutions (GIA), pension schemes differ across the States. GIA institutions, which are
mostly educational institutions, are fully covered by government pensions in some States.

For example, in West Bengal, the number of pensioners belonging to direct State
Government service is more or less equal to the number of pensioners belonging to GIA
institutions and local bodies. As a result of increased coverage and with rise in longevity,
there has been a phenomenal growth in the number of pensioners in India. Table 15
provides the coverage of the government pension system in India under civil pensions
both at the Centre and the States. In 2006, there were 94 lakh government pensioners
under the Centre and State Governments taken together. The total number was around 52
lakh in 1991 and nearly 60 lakh in 1996. There occurred a sharp increase in the number
of pensioners in India under both the States and the Centre.

Though different formal social security schemes are available for the elderly, the major
one consists of pensions. There are mainly two types of pension schemes: a defined
benefit pension scheme for civil servants and schemes administered by the Employees'
Provident Fund Organization (EPFO). Both appear to be suffering from structural and
financial crises (Goswami, 2001). Such skewed coverage of the existing benefit schemes
favouring the organised workforce during a period of informal employment, is on the
rise. With the growing pension liability of the government, state finances are getting
progressively weak. The majority of other retirement savings schemes like provident
funds predominantly cover workers in the organised sector (Prasad, 2005).

Table 15: Civil Service Pensioners in India, 1991-2006

Central government State government the Government the

Years
the pensioners pensioners pensioners
1990-91 2594237 2568737 5162974
1991-92 2638184 2611933 5250117
1992-93 2716390 2689361 5405751
1993-94 2797200 2769367 5566566
1994-95 2880821 2852156 5732977
1995-96 2967202 2937677 5904879
1996-97 3105234 3074336 6179570
1997-98 3376717 3343118 6719835
1998-99 3430868 3396730 6827597
1999-00 3829218 3250000 7079218
2000-01 3938806 3365400 7304206
2001-02 4046396 3525000 7571396
2002-03 4152682 3855456 8008138
2003-04 4256062 4214228 8470290
2004-05 4403171 4554123 8957294
2005-06 4545213 4898737 9443949
Source: Calculated from Central Statistical Organization abstracts; Irudaya Rajan and
Prasad, 2008.

Table 16 provides a bird’s eye view of the coverage of the pensions of EPFO schemes by
States for the year 2006. Kerala leads the states with 18 per cent coverage of its elderly
population through pensions, followed by West Bengal and Tamil Nadu with 13 per cent
each. Bihar, Uttar Pradesh, Rajasthan, and Orissa stand below the national average, and
the misery of the elderly in these states is intensive. The pension system on an average
covers 12 per cent of the total old age population who had earlier spent their working
lives for the formal sector. The remaining population (about 90 per cent), whose work
centered around the unorganised sector, has no access to any formal system of old age
income security. This skewed coverage is likely to intensify further with growth of the
informal sector since the size of the formal workforce has remained more or less stagnant
according to CSO estimates. This situation shows how the pension system is caught in a
“structural crisis” with limited coverage through the pension system of the total elderly
population. This structural crisis is likely to deepen in future as the process of population
ageing is underway in India.
Table 16: Percentage of Elderly Covered under the Formal Pension System, 2006

States Civil service pensions Civil service pensions (centre) Total

(state) EPFO and other schemes
Andhra Pradesh 8.2 4.1 12.3
Assam 8.9 2.8 11.7
Bihar 6.0 6.0 12.0
Gujarat 8.4 5.1 13.5
Haryana 8.6 4.5 13.2
Karnataka 8.2 5.9 14.1
Kerala 12.1 7.3 19.4
Madhya Pradesh 7.0 5.1 12.1
Maharashtra 8.1 5.4 13.5
Orissa 6.7 4.5 11.2
Punjab 6.5 5.7 12.1
Rajasthan 5.9 5.1 11.0
Tamil Nadu 8.6 6.2 14.9
Uttar Pradesh 5.6 6.0 11.6
West Bengal 8.1 6.8 14.9
India 5.9 6.8 12.7
Note: Computed by the researcher by using CSO statistics on pension coverage
contained in the Handbook of Statistical Abstract, 2006 and information on the aged
population based on the 2001 census (more details, Irudaya Rajan and Prasad, 2008)

National Social Assistance Scheme

Until August 1995, India did not have any government-managed social assistance
programme for its poor citizens. The announcement, on August 15, 1995, of a National
Social Assistance Scheme (NSAS) was a significant step towards fulfillment of the
Directive Principles enshrined in Article 42 of the Indian Constitution, which talks about
public assistance for the elderly. On March 19, 1999, the Government of India also
announced another social assistance scheme called `Annapurna' for its elderly poor.

The National Social Assistance Scheme introduced on August 15, 1995 had three
components: National Old Age Pension Scheme (NOAPS), National Family Benefit
Scheme (NFBS) and National Maternal Benefit Scheme (NMBS). Among these three
schemes, NOAPS is meant for the elderly poor. This is a centrally sponsored programme
with 100 per cent central assistance to the States and Union Territories in accordance
with the norms, guidelines and conditions laid down by the Central Government. The
Ministry of Rural Development, Government of India, manages the scheme.
The following criteria strictly apply in the implementation of the NOAPS: (a) The age of
the applicant (male or female) shall be 65 years or higher; (b) The applicant must be a
destitute having little or no regular means of subsistence from his/her own sources of
income or through financial support from members of his/her household or other sources.
In order to determine destitution, the criteria, if any, currently in force in the State/Union
Territory are to be followed. The Government of India reserves the right to review these
criteria and suggest appropriate revised criteria; (c) The amount of old-age pension will
be Rs. 75 per month under this scheme; (d) The ceiling on the total number of old age
pensions for purposes of claiming central assistance will be specified for the States and
Union Territories from time to time; (e) The benefit under NOAPS should be disbursed in
not less than two instalments in a year and, if possible, the benefit may be disbursed in
more instalments as per the direction of the State Government. In 2006, the Prime
Minister of India announced the enhancement of NOAPS to Rs. 200 from then existing
rate of Rs. 75 per month.

The village panchayats and the municipalities report every instance of death of
pensioners immediately after the event to the appropriate sanctioning authority. The
sanctioning authority shall ensure that payments are promptly stopped. The sanctioning
authority shall have the right to stop/recover payments of any pension amount sanctioned
on the basis of false or mistaken information about eligibility (Irudaya Rajan, 2001).

During the year 1995-96, the numerical ceiling was 5.4 million elderly (i.e., 50 per cent
of the population below the poverty line in the age group of 65 years and above) and the
qualifying amount was Rs. 48020 lakhs for all-India. Later, in 1998-99, both the
numerical ceiling and the permissible amount were raised – numerical ceiling is now 6.9
million and the qualifying amount is Rs. 61929 lakh.

The National Old Age Pension was renamed the Indira Gandhi National Old Age Pension
Scheme with effect from November 19, 2007 to include all persons over 65 years of age
falling under Below Poverty Line (BPL) category as against 50 per cent of BPL elderly
determined when it was first introduced on August 15, 1995. In 1995, the numerical
ceiling was 5.4 million, which was increased to 6.9 million in 1999 and as of 2008, it is
targeted to reach 15.7 million poor elderly in India. In his budget speech in 2008, the
Finance Minister of India allocated Rs. 2392 crores for effective implementation of this
scheme.

Annapurna Scheme

On March 19, 1999, the Government of India announced another social assistance
scheme called Annapurna for the elderly destitutes who have no one to take care of them.
Under this scheme, an elderly destitute will be provided with 10 kilograms of rice or
wheat per month free of cost through the existing public distribution system. This scheme
aims at covering destitutes who are otherwise eligible for old age pension under the
National Old Age Pension Scheme. The Government allotted a sum of Rs. 100 crore for
the first year of its implementation; it is expected that this scheme will benefit around 6.6
lakh elderly destitutes. The Ministry of Rural Development implements it with the
assistance of the Ministry of Food and Civil Supplies.

New Iinitative:
Social Security For Unorganised Workers

An important term of reference of the National Commission for Enterprises in the

Unorganised Sector (NCEUS) set up by the Government of India, has been to review the
social security system available for the labour force in the informal sector and to make
recommendations for expanding their coverage. Since the focus of the report was on
social security for the informal workers, it identified two sets of social security problems
of workers in the unorganised/informal sector. The first category is believed to arise out
of deficiency or capability deprivation in terms of inadequate employment, low earnings,
low health and educational status that are related to the generalised deprivation of the
poorer sections of the population, while the second arises out of adversity in the sense of
an absence of adequate fall-back mechanisms (safety nets) to meet contingencies such as
ill health, accident, death and old age. The issue of adversity has not been sufficiently
addressed. This issue falls under the category of protective social security initiatives,
which forms the focus of the report.

Before the National Commission for Enterprises in the Unorganised Sector, the two
earlier National Commissions, viz., the National Commission on Rural Labour (1991)
and the Second National Commission on Labour (2002) emphasised the importance of
social security and made a number of recommendations. The specific recommendations
made keeping in mind the social security needs of the older persons in the two
commissions are discussed below. The National Commssion on Rural Labour
recommended old age pension at Rs. 100/- per month to all males and females above the
age of 60 years subject to income limits prescribed, while the Second National
Commission on Labour proposed a pension based on a savings-linked scheme, as part of
old age benefits. The National Advisory Council drafted an Unorganised Sector Workers’
Social Security Bill, which among other things, recommends an old age benefit scheme
including pension but with contribution from the workers (NCEUS, 2006).

This Commission’s recommendations improve upon the earlier proposal by

recommending an old age pension for all the BPL workers above the age of 60 years. The
Commission has proposed old age security as one of the elements of the National
Minimum Social Security. The Commission recommends non-contributory old age
pension of Rs. 200/- per month for all BPL (people below poverty line) unorganised
workers. As regards non-BPL workers, the Commission recommends a scheme of
contributory provident fund wherein at the age of 60 years, the worker has the option of
withdrawing the accumulated amount in his credit or of purchasing an annuity for life
with the accumulated amount. An added feature for the non-BPL workers is that in the
scheme, the provident fund is coupled with unemployment relief by permitting the
worker to withdraw a half or a quarter of his contribution, depending on the period of
unemployment, subject to a lock-in period of ten years. The commission has drafted a bill
titled ‘The Unorganised Sector Workers’ Social Security (Draft) Bill, 2005’ incorporating
the above mentioned features.

Two types of old age security are suggested. These are:

Provident Fund to all APL workers (who are required to contribute to the national social
security scheme), with unemployment insurance where necessary, andmonthly old age
pension to all poor (BPL) old aged (60+) workers.
For APL workers, the premium earmarked for old age pension (i.e., Rs. 565/- per worker
per annum) is to be used for the Provident Fund. The lump sum that can be given to the
workers on attaining the age of 60 years will depend on the yield and the age at entry.
While this scheme will be contributory in nature with the worker, employers and
government contributing Re. 1/- per day or Rs. 365/- per annum, in practice, it will
involve contributions of the workers and the government at Re. 1/- and Rs. 2/- per day,
respectively. This is because only 17 per cent of the informal workers (in the non-
agricultural sector) have identifiable employers and their contribution will have to be paid
by the government and recovered through tax/cess. Meanwhile the BPL workers shall be
provided an old age pension. The cost of the pension shall be borne by the Central
Government and shall substitute the contribution of the Government towards their PF
contribution (Rs. 565/ worker/year).

National Policy on Older Persons 1999

This policy was formulated by the Ministry of Social Justice and Empowerment,
Government of India and adopted on February 13, 1999, the Year of Elderly Persons.
Among other things, the policy visualises that “the state will extend support for financial
security, healthcare, shelter, welfare and other needs of older persons, provide protection
against abuse and exploitation, make available opportunities for the development of the
potential and provide services so that they can improve the quality of their lives”. The
policy views the life cycle as a continuous one of which the post-60 phase of life is an
integral part. It does not view the age of 60 years as the cut-off point for beginning a life
of dependency. It considers 60+ as a phase when the individual should have the chances
and opportunities to lead an active, creative, productive and satisfying life. An important
thrust is, therefore, an active and productive involvement of older persons and not just
their care alone.

There are several principal areas of interventions and action strategies suggested in the
document in relation to financial security. Employees of government and quasi-
government bodies and industrial workers desire better returns from accumulations in
provident funds, through prudent and safe investment of funds. It will be ensured that
settlement of pensions, provident fund, gratuity and other retirement benefits is made
promptly. Widows will be given special consideration in the matter of settlement of
benefits accruing to them on demise of husband.

Pension is a much sought after income security. The base of pension coverage needs to be
considerably expanded and it would be necessary to facilitate the establishment of
pension schemes both in the private and the public sectors for self-employed and salaried
persons in non-government employment with provision for employees also to contribute.

Pre-retirement counseling programs will be promoted and assisted. Employment in

income-generating activities after superannuation should be the choice of the individual
organisations that provide career guidance training and orientation and support services
will be assisted. Programs of non-governmental organisations for generating income of
old persons will be encouraged. Age-related discrimination in the matter of entitlement to
credit marketing and other facilities will be removed. Structural adjustment policies may
affect the older workers in some sectors adversely, especially those in the household or
small-scale industry. Measures will be taken to protect their interests.

The policy is being debated, revised and implemented in some parts from time to time.
The extension of National Old Age Pension to all poor elderly and The Maintenance and
Welfare of Parents and Senior Citizens Act 2007 are some its achievements.

BANGLADESH

Old Age Allowance Programme in Bangladesh

The Old Age Allowance Programme, launched in fiscal year 1997/98 and later
incorporated in the Fifth Five-Year Plan of the country (for the period 1997 –2002), is
designed to help the country’s poor elderly population. Under the scheme, ten very poor
elderly persons from each ward of a union throughout the country, are allowed a monthly
allowance of Taka 100 each. As of 2006, 1.6 million poor elderly persons from 40,311
wards of 4,479 unions were recipients of the Old Age Allowance. (Mahmood, Begum
and Islam, 2008). A total of Taka 500 million Taka (Taka is worth US$ 1/57) is allocated
out of the revenue budget of the government annually to the Department of Social
Services, Ministry of Social Welfare, for implementation of the Old Age Allowance
Programme. An elaborate set of committees and sub-committees stretching from the
national to the Thana/Upazilla, Union, and Ward levels has been entrusted with the
responsibility to identify eligible elderly persons under the Programme (Paul-Majumder
and Begum, 2001; Government of Bangladesh, 1999).

SRI LANKA

There are two major challenges facing the existing pension system in Sri Lanka: 1)
coverage is low, with around 85 per cent to 90 per cent of older people unable to access a
regular pension; 2) many among those who can even access a pension, find that the
actual level of the benefit they receive is well below the poverty line.

The pension system in Sri Lanka is built essentially around a number of non-contributory
and contributory schemes covering both those working in the formal sector and a small
proportion of those in the informal sector labour force. The main pension and pseudo-
pension schemes are described below.
The Public Service Pension Scheme (PSPS)
The PSPS is a non-contributory benefit financed from general government revenues,
currently at a fiscal cost of 2 per cent of GDP. It is provided to former civil servants. A
full pension is payable from age 55 (men) or age 50 (women) and must be taken latest by
age 60. The pension is based on final salary (85-90 per cent replacement after 30 years of
service) and not taxable, but it is not indexed for inflation. There is no explicit spousal
allowance, though widows (widowers) receive a survivor’s pension following the death
of their spouse. There is a separate, contributory Widows, Widowers and Orphans
Pension Scheme that provides benefits to survivors of public sector workers who die in
service.

The Employees’ Provident Fund (EPF)

The EPF is much larger than the PSPS but it provides only lump sum payments, not a
retirement pension. The government requires that contributions equal to 20 per cent of
wages (8 per cen from workers and 12 per cent from employers) be credited to a notional
account of the worker and invested almost solely in government securities and loans. The
accumulated funds can be withdrawn on retirement, which can be as early as age 55 for
men and age 50 for women. The scheme covers most workers in the formal sector who
do not participate in the PSPS. At the end of 2006, the EPF had 11.3 million member
accounts, of which 2.0 million were active (Central Bank of Sri Lanka, 2006). There are
also several small Approved Private Provident Funds (APPFs) and Private Contributory
Pension Schemes created by enterprises that opted out of the EPF.

Informal sector contributory pension schemes

The 4.7 million workers in Sri Lanka’s informal sector are potentially covered by a large
number of contributory pension schemes, but they do not perform particularly well. All
the schemes are voluntary, and neither benefits nor contributions are indexed.

The oldest and largest scheme is the Farmers’ Pension Scheme was begun in 1987 and
administered by the Agricultural and Agrarian Insurance Board (AAIB). The scheme has
over 680,000 accounts but due to poor record-keeping, it is not known how many are
active. Contributions are collected in half-yearly instalments and the size of the pension
at age 60 depends on the age when membership begins. The required contributions are
small, ranging from 84 instalments of 130 rupees for someone joining at age 18 to ten
instalments of 690 rupees for someone joining at age 55.

Universal pension for Sri Lanka

The other voluntary schemes for workers in the informal sector are much smaller. The
Fishermen’s Pension Scheme, which began in 1990 and is also administered by the
AAIB, has about 48,000 accounts. The Self-Employed Persons Pension Scheme that
dates back to 1996 has 70,000 accounts and is administered by the Social Security Board
(SSB). In 2006, the SSB launched five new schemes for the self-employed, for a total of
six: “Sahana” (the original scheme), “Thilina”, “Isuru”, “Sarana”, “Surakuma”, and
“Dhanalakshmi”. In addition to these schemes, the SSB introduced various programmes
that target different types of workers:

Migrant Workers (“Sesatha” - introduced in 2007)

Indigenous medical doctors (2005)
Small and Medium Entrepreneurs (“Kam Diriya” - 2006)
Artists (“Saraswathi” 2008)
Senior Citizens (2007)
Journalists (“Prathishta”- 2007)
Small-scale tea producers (“Randalu”)
Hand Loom Manufacturers- (“Ransalu”- 2004)
Beauticians (“Rusiru”)
No information is available on enrolment in these programmes but affiliates, for the
moment, are believed to be small.
At present, the schemes can afford to pay benefits to pensioners because the ratio of
pensioners to contributors is small. However, as this balance shifts and the number of
pensioners increases, it is likely that the schemes will find that they have insufficient
funds to pay pensions. The government may then be asked to step in to cover the gap.

Public Assistance in Sri Lanka

Provision for Public Assistance, first introduced under the Poor Law Relief Ordinance of
1939, has continued since then. At present, this programme is handled by the Provincial
Department of Social Services. Currently, payments under Public Assistance are made to
households which have a monthly income of less than Rs.300 and are headed by persons
who are disabled, old or widowed. The rate of payment is determined by the size of each
household – a household with a single person receives Rs. 100 per month and one with
four or more members receives a maximum of Rs. 300 per month. However, it appears
that some Provincial Councils have raised the ceiling in recent years. The total number of
recipients of Public Assistance during 2007 was 443,505. (Perera, Gunawardena and
Gunatilaka, 2008).

Table 17: Payment of Public Assistance in Sri Lanka, 2007

Province No. of Beneficiaries
Western 108954
Central 56709
Southern 42490
North-eastern 87007
North-western 52373
North-Central 22701
Uva 34819
Sabaragamuwa 38451
Total 443505
Source: Provincial Secretaries and Provincial Directors of Social Services
MALDIVES
A new pension system is being implemented in the Maldives that is intended to provide
coverage to all Maldivians. The system has been designed based on best practices from
other pension systems around the world, and it is intended to provide both a minimum
amount of money to all Maldivians at pensionable age to alleviate poverty and to help
working people to save money to spend in their retirement years. The new pension system
was established by the “Pension Act”, which was passed by the Majilis on April 29,
2009, and ratified on May 13, 2009.
The Pension Act establishes two types of pensions:
x Old-age Basic Pension
x Maldives Retirement Pension Scheme
The newly created Maldives Pension Administration Office (called the Pension
Office) is responsible for administering both of the new pension schemes.

The Old-age Basic Pension is a lifetime pension benefit that is paid to all Maldivian
citizens who are resident in the Maldives and who are 65 years of age or older. The basic
amount is paid monthly and the same for everyone, except that itis reduced by an amount
equaling 50 per cent of any other retirement pension income that a person may receive
(such as the Maldives Retirement Pension).

The Maldives Retirement Pension Scheme is a defined contribution pension scheme that
is fully funded by the contributions of employers and employees. All employees in the
public sector, as well as workers in the private formal sector are covered by the scheme.
Workers in the informal sector (e.g., self-employed) may join the scheme on a voluntary
basis. Participants will range in age from 16 years to 65 years. Once you reach pension
age, the money in your account will be converted into a monthly payment (note that small
account balances may be paid as a lump sum). The amount of the monthly payment will
depend upon the amount of money in your account and your life expectancy. It is
calculated on the basis of accrual basis and is monitored by Maldives Pension
Administration Office. Both the systems cover almost 50,000 beneficiaries.

BHUTAN
Bhutan offers only limited coverage in the old age pension system. The system
historically covered Royal workers retired from civil service). It is a lump sum payment
by the state and only a few are eligible to receive it.

On March 30, 2000, the Royal Government created the National Pension and Provident
Fund (NPPF) of Bhutan as an autonomous organisation responsible for the management
and administration of the Civil and the Armed Forces old age retirement plans in Bhutan.
The organisation functions under the direction and supervision of the National Pension
Board consisting of members representing various stakeholders. Independent Committees
such the Government Working Committee and the Investment Advisory Management
Committee support the National Pension Board for providing supervision, guidance and
advice on the operation of the National Pension and Provident Fund scheme.
The Government Employee's Provident Fund administered by the Royal Insurance
Corporation of Bhutan and effective since 1976, has been taken over and restructured
and replaced by the National Pension and Provident Fund Plan. The latter constitutes a
two-tiered old age protection plan with the objective to provide a monthly income as well
as a lump sum payment to the members on retirement. Tier 1 covers the National Pension
Plan, which is a partially funded Pay-As-You-Go system-defined benefit scheme. It is an
old age security protection scheme that obtains contributions during the working period
and provides benefits after retirement to its members and their spouses. Tier 2 covers the
National Provident Fund Plan, which is a fully funded defined contribution scheme.
Under the scheme, members receive lump sum payments of accumulated balances upon
retirement. Currently, the members of the National Pension and Provident Fund Plan are
civil servants, employees of Government owned corporations and joint-sector companies.
In addition, the armed forces of the Kingdom are covered under a separate scheme. There
are plans for the old age retirement schemes to be gradually expanded to include sectors
other than the civil servants and the corporations. Members contribute a minimum of 8
per cent of his/her monthly salary to the NPPFP. The employer, on behalf of an
employee, makes a matching contribution to the NPPFP.

NEPAL

Universal Allowance for Senior Citizens in Nepal

On December 26, 1994, Prime Minister Manmohan Adhikari announced a universal flat
pension of Rs.100 to all persons of at least 75 years of age . Five districts from the five
development regions of Nepal were selected on a pilot basis and the first disbursement of
the Old-age Allowance Program (OAP) was made on July 2, 1995 for a six-month period
from January to June. The implementation of the pilot plan was carried out by the
Ministry of Education and Sports and distributed at the grass-roots level by Village
Development Committees (VDCs). During the financial year 1995-96, OAP was
implemented by the Home Ministry and extended to cover the entire country. During
1995-96, an amount of Rs. 2800 million was released for the implementation of the
programme. Since 1996-97, the Ministry of Local Development administers the OAP and
the allowances are distributed by the ward offices in the urban areas and Village
Development Committees in the rural areas (see Figure 2).

When the Nepali Congress came to power in 1996, it introduced two additional social
security programmes, namely, the Helpless Widows Allowance for widows above the age
of 60 years4 and the Disabled Pension5, each paying Rs. 100 per month to eligible
persons. In addition, a lump sum of Rs.2,000 was made available to elderly persons who

4
All Nepalese widows with the following mean-tested criteria are eligible for this allowance:
widows who have crossed 60 years of age and do not have any economic sources, widows who
do not get any care from the family and widows who do not get the pension of their late
husbands.
5
Disabled Pension is payable to disabled Nepalese citizens having the following physical
infirmities and at least sixteen years of age: blind, who do not have both hands or who have hands
but do not work, who do not have both legs or who have legs but do not work.
were over 100 years of age (Shrestha and Satyal, 2008). During the International Year of
Elderly Persons (1999), the ruling Nepali Congress raised the Old-age allowance from
Rs.100 to Rs.150 per month per person and in 2006, it was increased to Rs. 200. In the
fiscal year 2008/09, the Nepal Government reduced the age threshold for older people
from 75 years to 70 years for the universal pension. It took away 0.23 per cent of the
GDP in 2007.

Figure 2: Administrative structure for implementation of OAP

Ministry of Local Government

Development

District Development
Committee (75)

Municipalities in Village Development

Urban Areas (58) Committee in Rural Areas
(3914)

All Nepalese men and women who have completed 75 years of age, are eligible for Old-
age allowance. According to the directives issued by the Ministry of Local Development,
the eligibility for Old-age allowance is determined strictly on the basis of the age
mentioned in the Nepalese Citizenship certificate6. A Social Security Programme
Identity Card is issued persons who are above 75 years of age.

Information on the number of beneficiaries of the three social security programmes for
the year 2001-2002 is presented in Table 18. The total number of beneficiaries exceeded
400 thousand or about 1.8 per cent of the total population.

The disability allowance reaches a very limited number of persons, being effectively
rationed on a district-wise basis. The widow’s pension has a much larger coverage and a
much greater impact. We estimate that roughly one-third of women over 60 of age
receive this benefit. While no data on the percentage of women that are widows are

6
When the programme was announced in 1994 and implemented in 1995 throughout the
Kingdom, some of the elderly eligible for the allowance did not have Nepalese identity
certificates. The government suggested that the elderly should apply for citizenship certificates
with supporting documents to prove place of birth, father’s name, current address and date of
birth. The Election Commission of Nepal had issued an identity card for voting in elections.
Among other things, the election identity card included information on age thus enabling some to
acquire a Nepalese Citizenship certificate. Most of elderly had their horoscopes containing
information on the accurate date of birth. The government allowed the elderly to use their
horoscopes to apply for the Nepalese Citizenship card.
 applicable by age, it appears that this benefit is received by a large proportion of Nepali
widows and that the means-test is not imposed very rigidly.

Table 18: Benefit levels and recipients, 2001-2002

Annual Monthly
Number of Amount
Program allowance allowance
beneficiaries Released
per person per person
(1) (2) (3) (4) (5)
Old age Allowance Program * 191953 348264000 1814 151
Helpless Widows Assistance # 227694 226760600 995 83
Disabled Pension @ 3667 4400400 1200 100
Source: Unpublished data from the Ministry of Local Development, Katmandu, Nepal.
Notes: * Rupees 1800 annually; # Rupees 1200 annually; @ Rupees 1200 annually.

The number of old age allowance recipients was relatively stable until 2001. In the past
two fiscal years, the number of recipients increased by ten percent annually. This may
have to do partly with the difficulties many elderly persons experienced initially in
establishing their citizenship and date of birth along with delays caused by ignorance
about the programmes, particularly among persons living in rural areas. By 2004, the
number of recipients reporting eligible for the OAP rose to 211,343 as shown in Table
19. As of 2006, the reported number of beneficiaries was 245,174 (Irudaya Rajan and
Palacios, 2008).

Table 19: Old age Allowance Program Beneficiaries, 1996-2004

Statutory
Implied Statutory
Annual benefit in
Monthly benefit as
Number of Amount allowance real terms
Year allowance % of per
beneficiaries Released per (index,
per capita
person$ 1996 =
beneficiary$ income
100)
(1) (2) (3) (4) (5) (6) (7)
1995-96 # 280,000,000 # #
1996-97 * 161608 280,000,000 1733 144 100.0 10.1%
1997-98 * 171469 350,000,000 2041 170 96.1 9.2%
1998-99 * 175608 400,000,000 2278 190 87.4 8.8%
1999-2000 175540 309,705,600 1764 147 121.9 11.8%
2000-01 173529 296,469,700 1708 142 119.0 10.9%
2001-02 191953 348,264,000 1814 151 115.9 10.3%
2002-03 195449 351,808,000 1800 150 112.9 10.3%
2003-04 211343 380,417,000 1800 150 n.a. n.a.
Source: Unpublished data from the Ministry of Local Development, Nepal. Since 1999-
2000, the Ministry has compiled the number of beneficiaries separately for the old age
allowances. Earlier, the Ministry used to provide the same one figure for all the three
programmes.
* Estimated using the 1999-2000 ratio of old age allowance beneficiaries to total
beneficiaries.
The 2001 Census reports 295,459 persons as being 75 years old or above. Since age is
the only criterion for receipt of the OAP, in principle, all these individuals would be
eligible. This results in a coverage rate of about 65 per cent in 2001, and after adjusting
for the two years to 2003, of about two-thirds of the persons over 75 years of age in 2003
(Irudaya Rajan, 2002).

Census data generally tend to over-report the number of individuals at ages ending with
zero or five. This tendency is seen in Figure 3 below in which the single year age cohorts
between age 50 and 90 according to census data are illustrated. The census line is seen to
jump at every five-year age interval. In contrast, the smooth line is generated by the
World Bank’s population division based on UN estimates where a set of regional life
tables is used to smooth out the single year cohort distributions. The smooth line is for
2002 estimates; nevertheless it shows clearly how the potential over-reporting at the age
of 75 could result in estimates based on lower coverage. Based on the smoothed data and
adjusting the 2002 data to 2003 results in a figure of about 275 thousand persons over 75
years of age in 2003, yielding a ratio of recipients to age-eligible persons of 77 per cent.
(Palacios and Irudaya Rajan, 2004) The remaining difference could be explained by
several factors including a lack of take up among the highest income elderly, delays in
the processing of applications after persons reach 75 years of age, and continued
difficulties in producing proof of age. For example, if a one-year delay is assumed
between the time a person reaches the eligibility age of 75 years and his/her initial receipt
of the pension, the coverage ratio would rise to almost 90 per cent. On the other hand,
the ward-level results shown below show that at least in some areas, the 75-year-old
cohort does receive the benefit; in some cases, even persons below this ‘official age’
receive it. In summary, the coverage is not universal even according to our best
estimates; but after taking into account lags in information and registration and based on
recent growth trends, the coverage may soon reach 80 per cent of the target population.
This indicates a high level of coverage, given the difficulty of reaching many areas of the
country and assuming that some of the elderly rich do not bother to apply.

Figure 3: Single age cohort reported distribution from Nepal 2001 census
400000

350000

300000

250000

200000

150000

100000

50000

0
50 55 60 65 70 75 80 85 90 95

Source: Nepal Census 2001 and World Bank population database.

The high degree of coverage has been affordable for two reasons. First, the benefits are
low (roughly 10 per cent of income per capita) and their real values are not indexed.7
Second, the target population represents less than two per cent of the total population.

Table 20 shows the amounts annually spent by the government even since the inception
of the scheme. Following the 50 per cent increase in the old-age allowances in 1999,
OAP spending has fallen as a share of both government spending and of GDP which
were both growing rapidly in nominal terms. The lack of adjustment of benefit levels
through some type of indexation more than compensated for the growth in the number of
beneficiaries and resulted in a decline in the spending ratios. This fact is reflected in
Table 20 that shows that since 1999, the real value of the OAP benefit has fallen by
almost ten per cent. Moreover, it has fallen from about 12 per cent of income per capita
in 1999 to 10 per cent in 2003.

Table 20: Trends in Expenditure (in Million) on OAP in Nepal

Expenditure on Total regular

As share of As share of
Old age spending of
Year Government GDP
Allowance central
spending (percent)
Programme Government
1995-96 280 21,561.9 1.30% 0.12%
1996-97 280 24,181.1 1.16% 0.11%
1997-98 350 27,174.4 1.29% 0.12%
1998-99 400 31,047.7 1.29% 0.12%
1999-2000 310 34,523.3 0.90% 0.09%
2000-01 296 42,769.2 0.69% 0.07%
2001-02 348 48,590.1 0.72% 0.08%
2002-03 352 57,445,0 0.61% n.a.
2003-04 380 60,600.0 0.58% n.a.
Source: Irudaya Rajan and Palacios, 2008.

In sum, the first seven years of the OAP witnessed a steady growth in the number of
beneficiaries, reaching a figure by 2003 that is probably equivalent to more than three-
fourths of the population over the age of 75 years. This is quite a high proportion of the
target population, especially in a country where it is often difficult to reach large parts of
the territory. Spending has remained relatively low and erratic. This is because the
amount of pension per person is relatively low and accounts only for a small proportion
of income per capita – around one tenth – and because the eligible population represents
only around 1.3 per cent of the total population. Although this proportion would rise in
the future, spending on pensions would increase significantly only to the extent that the
benefit levels rise in par with the growth of incomes.

7
In 2002, the old age allowance was equivalent to two and half days’ wages of an agricultural
labourer in Nepal (at the rate of Rs. 60 per day) and could purchase approximately 10 kilograms
of rice or wheat.
PAKISTAN

In Pakistan, the coverage of workers through social security and pension schemes is
limited even though a number of such programmes are in place. For workers employed in
the informal sector, civil society organisations such as mosques, financial institutions,
non-governmental organisations and private philanthropists, are involved in the
distribution of social services besides, of course, government institutions. There is
however no umbrella institution to coordinate the work of the various agencies in social
service activities. The social safety nets are biased in favour of workers in the urban
formal sector, while the majority of the population living in rural areas is employed in the
informal sector. This urban bias is the main hurdle in the fair distribution of benefits to
deserving people.

The social protection strategies opted by the government are designed through rural
development and employment generation programmes rather than through direct
transfers. Among them are the village aid programmes, rural works programmes, people
works programmes, construction of dams and irrigation networks, and provision of
education, health and other social services.8 Other programmes such as Zakat
distribution, food rationing and provision of subsidies to consumers and small producers
were also initiated by different regimes to protect the marginalised sections. These
programmes are meant for wide coverage of the poor; but owing to insufficient allocation
of funds and mismanagement of available resources, the coverage has been limited to a
small segment of the vulnerable groups. The best safety net is, however, the strong social
system in the country in which families, tribes and communities seek refuge for
protection of their poor kinsfolk.

Social Security Legislation in Pakistan

The Social Security Scheme was launched on March 1, 1967 under the West Pakistan
Employee’s Social Security Ordinance of 1965 with the assistance of the International
Labour Organization. The Social Security Scheme, which covers establishments
employing five workers or more, provides medical care facilities and cash benefits to the
secured workers and their dependants. Secured workers are entitled to cash benefits in the
event of sickness, employment injury, maternity and disablement pension, whereas
dependants are entitled to survivors’ pension and death grant. Workers drawing wages of
up to Rs. 3,000 per month or Rs. 120 per day and employed in registered establishments
are liable to be covered under the scheme in accordance with the provisions of the Social
Security Ordinance.

Employees covered contribute 7 per cent of their wages towards the Scheme and the
payment is made for insurable workers. During 1999-2000, the Punjab Employees Social

8
The food-based safety nets were implemented in the country during the 1950s. In the 1960s,
the rural works programme was implemented through food aid (received from United States
under PL 480 program), construction of rural infrastructure and creation of lean-season
employment in the rural areas. These programmes were designed for development purposes but
acted as safety nets for vulnerable groups.
Security Institution (PESSI) and Sindh Employees Social Security Institution (SESSI)
paid more than one billion rupees to about 700 thousand workers and 4,000 thousand of
their dependants. The details of the scheme are given in Table 21.

Table 21: Workers Covered under PESSI and SESSI and Cash Flow Position

PESSI SESSI NWFP ESSI BESSI

Registered
27,667 13,400
Establishment (Nos)
Workers covered 5,17,766 1,94,400
Dependants covered 31,06,596 9,72,000
PESSI SESSI NWFP ESSI BESSI
Million Million Million Million
% % % %
Rs Rs Rs Rs
A RECEIPTS
Social security
contribution 922.3 78.3 400.4 89.5 59.1 91.6 23.6 91.8
Profit from investment 251.3 21.4 40.1 9 4.7 7.3 2.1 8.2
Others 3.6 0.3 6.8 1.5 0.7 0.1 - -
Total 1177.2 100 447.3 100 64.5 100 25.7 100
B. PAYMENTS 645.3 57 315 71.9 30.4 68.5 27.7 93.6
Mecial care 78.2 7 27 6.1 2.4 5.4 0.4 1.4
Cash benefit to workers 125 17 83 19 6.1 13.7 1.5 5
Advances to employees 277.5 25 13 3 5.5 12.4 - -
Misc. includ. Admn.
Expenses 1127 100 438 100 44.4 100 29.6 100
Not available or negligible.
Source: PESSI (Punjab), SESSI (Sindh, ESSI (NWFP and BESSI (Balochistan)
Employees Social Security Institutions.

A number of other social security schemes, which provide benefits to workers in the
form of cash or kind under different laws, exist in Pakistan. The laws that govern
these schemes are the following:
x The Workmen’s Compensation Act, 1923.
x The Sindh Maternity Benefit Act, 1929.
x The Bombay Maternity Benefit Act 1929.
x The Punjab Maternity Benefit Act, 1943.
x The West Pakistan Maternity Benefit Ordinance, 1958.
x The Provincial Employees Social Security Ordinance, 1965.
x The West Pakistan Industrial and Commercial Employment (Standing Orders)
Ordinance, 1968.
x Workers’ Share in Companies Profits Act, 1968.
 x Workers’ Welfare Fund, 1969.
x Workers’ Children Education Scheme, 1972.
x The Employees Old-Age Benefits Act, 1976

The Employees Old Age Benefits Institution (EOBI), 1976

This scheme was launched in July 1976 for the benefit of workers employed by industrial
and commercial enterprises with ten or more employees, irrespective of their economic
status. The maximum wage limit for payment of contribution and payment of benefits is
Rs. 3000 per month. Under this scheme, the employees are entitled to Old age pension,
Invalidity pension (for causes other than work injury or occupational diseases),
Survivor’s pension and Old age grant (given to persons not entitled to a pension).

The EOBI scheme operates on a partially funded basis. Half the fund comes from the
contribution of employers (5 per cent of their payroll) and the other half comes from the
government by matching the contribution of employers. According to the existing rules,
employers pay mandatory contributions of 5 per cent of the first Rs.3,000 of employee’s
wages per month. The government had been contributing an amount equivalent to the
grant until July 1995, but withdrew it thereafter. Old age pensions accrue at the rate of 2
per cent of the final-year wage (maximum of Rs.3,000 p.m.), subject to a minimum of
Rs.630 per month (recently increased to Rs.700 per month). Survivor’s pension (for
spouses on death after retirement and on death during service after 36 months of joining
the scheme), invalidity pension, and old-age grants are also provided. These benefits
could be transferred, but only between covered establishments. Normally workers
become eligible to draw pension after reaching the age of 60 years in the case of males
and 55 years in the case of females, provided they complete 15 years as covered service.

Table 22: EOBI Beneficiaries, 2006-07

Disbursement of Pension Number of
(Million Rs.) Percentage Share Beneficiaries
Payment of old-age pension 827 78.8 172658
Payment of survivors pension 196 19.6 65312
Payment of invalidity pension 10 0.9 6658
Payment of old age grant 8 0.7 4658
Total 1041 100 249286

Source: Annual reports of EOBI.

Under the EOBI, the number of registered employers (establishments having 10 or more
employees) up to March 2002 was around 43 thousand. The number of insured persons
registered by the end March 2002 was around 1.5 million. In 2006-07, about 249
thousand persons benefited from the Scheme (Table 22).
Gaps and Options

On the basis of the seven country studies presented here, we recommend the following
guidelines for a comprehensive coverage of pension and social security for elderly
persons so that they may receive sustained financial security:
x All governments in South Asia should gradually shift from defined-benefit
pension schemes to defined-contribution schemes so that the government’s
liability on paying pensions would decline in due course. However, the shift
should be guided by the following considerations: first, there should be no change
in the government’s policy toward current pensioners, and they must be permitted
to receive their pensions uninterrupted for the rest of their lives; second, the
current employees of the government should be given the option to shift from the
existing defined-benefit scheme to a defined-contribution scheme; they may even
be given incentives to do so; third, it should be obligatory for new government
employees to join the defined-contribution scheme.
x Contributory provident funds suffer from several limitations, two of which are
particularly noteworthy: frequent withdrawals from the fund, and the one-time
payment at the time of retirement. Evidence from Sri Lanka makes a strong case
for converting the existing provident funds into defined-contribution pension
schemes so that the elderly continue to receive a monthly income.
x Countries in South Asia should raise the official retirement age in view of the
rising life expectancy.
x Most of the existing insurance companies provide life insurance coverage. All
insurance companies and other mutual funds should introduce pension plans
(insurance against old age) so that many of the better-off workers in the informal
sector can join the private pension plans and provide for their old age.
x Social assistance programmes such as old age allowance programmes, public
assistance programmes and other programmes such as Annapurna should
continue until all informal sector workers are brought under the social security
safety net during their working years. It is high time that universal pension
programmes be introduced for all elderly persons above age of 70 as has been
done in the case of Nepal. Strict auditing of the programme beneficiaries is
required to avoid leakages. Governments in Asia should focus on poverty and
starvation in old age among the elderly, especially elderly females and widows.
x Assistance in maintaining the poor and the destitute elderly in old-age homes
should continue, and government and nongovernmental organisations should join
together to provide food, clothing, and shelter to the elderly poor so that
destitution among the elderly can be eradicated from South Asia.
x Governments in South Asia should learn from each other’s experience. Social
security programmes introduced for fishermen, farmers, and the self-employed in
Sri Lanka should be replicated on a larger scale in all countries in South Asia for
different categories of informal sector workers.
x Collective care in old age is another concept widely practised in the state of
Kerala. The Kerala Model of Welfare Fund of social security for the informal
sector may be initiated in other states in India and in other countries in South Asia
so that collective care mechanisms would provide financial security in old age.
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