While social security institutions worldwide have implemented social pensions, in recent decades they have been particularly prevalent in the Americas. This article highlights recent policy reforms affecting social pensions in Chile, Ecuador, Jamaica and Mexico, and provides an overview of increases to social pensions in the region.

The Context

Population ageing is a global phenomenon, and is particularly true in the Americas. In 2022, Latin America was home to 88.6 million people aged 60 or older, representing 13.4 per cent of the total population—a figure which is expected to reach 16.5 per cent by 2030 (ECLAC, 2022). The picture in North America is similar. In the United States, the decade from 2010 to 2020 saw the largest‑ever increase in the population aged 65 or older in both absolute and relative terms (U.S. Census Bureau, 2023), and in Canada, people aged 65 or older represented nearly a fifth of all Canadians (19.0 per cent) in 2021, up from 16.9 per cent in 2016 (Statistics Canada, 2022).

Illustrative image (internet)

Old-age poverty and income insecurity, already a concern for many governments across the Americas, will continue to demand the attention of policymakers as population ageing accelerates. Informality, labour market inequalities, and changes in employment patterns have meant that many people reach retirement age with little or no access to an adequate contributory pension or retirement savings. In Latin America, recent data indicates that only 51.9 per cent of people over 65 receive a pension and 34.5 per cent have no income at all from either labour-related earnings or a pension (ILO, 2022).

To address the income security needs of an ageing population, many governments in the region have implemented reforms to close the pension coverage gap. In addition to efforts at strengthening coverage and providing guaranteed minimums under contributory systems, governments have introduced social pensions that provide benefits regardless of contribution history (ISSA, 2021). Such programmes generally take the form of universal benefits that cover all, or nearly all, of the population, pension-tested benefits that reach all those not receiving a contributory pension, or poverty-targeted programmes aimed at those who fall below a given income threshold. In doing so, they complement the contributory pillars of social security systems (see Figure 1 below).

Figure 1: Social pensions within a stylized Multi-Pillar Pension System

Source: author, based on ILO 

Usually financed from general revenues, social pensions can reduce poverty and narrow inequality by ensuring a minimum standard of living to individuals without sufficient income in old age (either because they were not fully integrated into formal employment during their working lives or because of other barriers to labour force participation). Governments in the Americas have implemented a wide range of social pension programmes as outlined in Table 1 (see below).

Across the region, recent reforms have sought to expand coverage of social pensions, increase the adequacy of benefits, and ensure the right to social protection among older persons. New social pensions were introduced in Chile and Jamaica, reflecting a trend towards the expansion of coverage. Mexico took steps to ensure the longevity of its programme by enshrining the right to a social pension in its Constitution. Canada, Cuba, Ecuador, Guatemala, Guyana, Suriname, and the United States of America have increased benefit amounts, seeking to provide a minimum standard of living for pensioners. These cases are described below.

Chile introduces near-universal old-age social pension

In January 2022, Chile adopted Law No. 21,419 establishing a new, near-universal old-age social pension (Pensión Garantizada Universal; PGU) for legal residents aged 65 or older. It includes all individuals except those in the richest 10 per cent of the population. The reform replaces the country’s previous solidarity top-up (Aporte Previsional Solidario de Vejez) and solidarity social pension (Pensión Básica Solidaria de Vejez), which respectively targeted older persons in low‑income households and those in the poorest 60 per cent of the population. In doing so, it significantly expanded the number of individuals receiving old-age social pensions.

Under the new programme, which was fully implemented in August 2022, all legal residents aged 65 or older and living in households assessed to be in the bottom 90 per cent of the country’s income distribution are eligible to receive a social pension provided they have lived in Chile for at least 20 years after reaching the age of 20 (including at least four of the five years immediately prior to claiming the benefit). As of February 2023, individuals with a contributory pension of less than 702,101 Chilean pesos (CLP) a month (808 United States dollars – USD) qualify for the maximum benefit of 206,173 CLP a month (237 USD). Individuals with a contributory pension of less than 1,114,466 CLP a month (1,240 USD) receive a proportionally-reduced benefit. In addition, eligible survivors of social pension recipients receive a funeral grant to cover burial expenses.

By expanding coverage to a greater share of the older population, the PGU aims to address old‑age poverty and lift the incomes of all pensioners above the national poverty line. Early analyses of the impact of the new programme have indicated that pension replacement rates in Chile are higher than the OECD average for both men and women as a result of the reform (Perspectivas, 2022).  

For a concise summary of the reform, see Social Security Administration, 2022.

Ecuador introduces more generous social pensions to combat poverty

In July 2019, Ecuador implemented Decree 804, which introduced two new social pensions: the My Best Years Pension for older persons (Pensión Mis Mejores Años) and the Lifetime Pension for persons with disabilities (Pensión Toda Una Vida). Both programmes aim to guarantee a basic standard of living by doubling benefit amounts for older persons and persons with disabilities living in poverty or extreme poverty, as compared to Ecuador’s previous old-age and disability social pensions.

Under the earlier programmes, Ecuadorians aged 65 or older, or those younger than age 65 with disability of at least 40 per cent, who were assessed as living in poverty or extreme poverty and who did not qualify for a contributory old-age or disability pension received a flat-rate benefit of 50 USD a month. Through the new social pensions, individuals who meet the above criteria receive an increased flat-rate benefit of 100 USD a month. Rural residents and unpaid care workers participating in special contributory programmes are also eligible for social pension benefits.  The 2019 law also established special contingency benefits for individuals in poverty and extreme poverty to offset costs incurred from unexpected events, such as natural disasters or the death of a family member.

The government reports that a total of 301,059 older adults received the My Best Years Pension as of March 2023 (MIES, 2023), directly reducing old-age poverty by ensuring an income above Ecuador’s national per capita poverty line of 89.29 USD a month (INEC, 2023).

Jamaica launches social pension for vulnerable adults aged 75 or older

In July 2021, Jamaica launched a new tax-financed social pension, which provides a guaranteed income to vulnerable resident citizens aged 75 or older. The new initiative is intended to complement the existing social insurance system and the Programme of Advancement through Health and Education (PATH), which provides income support to adults aged 60 or older (as well as to other vulnerable groups). The new programme is part of the government’s wider efforts to reform social assistance benefits.

To qualify for social pension benefits, individuals must not be receiving another pension or any other source of income, must not reside in a public institutional care facility, and must be assessed as vulnerable. Eligible beneficiaries receive 6,800 Jamaican dollars (JMD) (44 USD), paid every two months. The government is actively working on outreach efforts to facilitate access to hard‑to‑reach individuals, as well as re-examining criteria to assess vulnerability to ensure that eligible beneficiaries are not unduly excluded from the programme. As of March 2023, 12,362 Jamaicans were enrolled in the programme (JIS, 2023).

At the time of the launch of the new programme, 42 per cent of individuals aged 60 or older did not receive a pension or social assistance benefits, and only 47 per cent of the employed population was actively contributing to the National Insurance Scheme (JIS, 2021). The social pensions programme therefore has important potential to reduce old-age poverty and income insecurity in the country by providing a minimum standard of living to the most vulnerable.

Mexico enshrines constitutional right to universal social pension

In 2020, Mexico elevated the Older Adult Welfare Pension (Programa de Pensión para el Bienestar de las Personas Adultas Mayores) to constitutional status, establishing the right to an old-age social pension for all citizens and encouraging its continuation into the future.

The universal social pension, created in 2001 as a regional initiative in Mexico City and subsequently expanded nationally in 2019, initially covered resident citizens aged 68 or older (aged 65 or older for indigenous or Afro-Mexicans). In 2021, this programme was expanded to cover all adults aged 65 or older. As of 2023, beneficiaries receive 4,800 Mexican pesos (MXN) (286 USD) every two months, which is expected to increase to 6,000 MXN (358 USD) in 2024. A lump-sum death benefit is also available to eligible survivors who cared for the deceased.

As of 2023, over 10 million people have received a social pension through the programme, a figure which is expected to increase as the Mexican population ages (Secretaría de Bienestar, 2022). Based on government estimates, the percentage of the population aged 60 and older is expected to nearly double over the next three decades, increasing from 12 per cent in 2022 to 22.5 per cent by 2050 (CONAPO, 2022). The establishment of the constitutional right to a pension is therefore an important milestone for social protection in the context of demographic transition.

Other increases in social pensions

In addition, several other countries took measures to increase the benefit level of social pensions.

In 2021, Canada introduced a permanent 10 per cent increase to its universal pension, the Old Age Security pension, for those age 75 or older. As of 2023, pensioners in this age group now receive 768.46 Canadian dollars (CAD) a month (565 USD), compared to 698.60 CAD a month (514 USD) for those age 65 to 74. This is the first increase in the benefit amount not linked to inflation since 1973.

In 2021, Cuba approved an increase to its minimum social pension benefit, alongside an increase to the minimum wage and changes to its contributory pension system. As of 2023, the minimum social pension benefit is 1,543 Cuban pesos (CUP) a month (64 USD).

In 2022, Guatemala increased the benefit amount of its social pension, the Older Adult Economic Contribution Programme (Programa del Aporte Económico del Adulto Mayor), from 400 Guatemalan quetzal (GTQ) a month (51 USD) to 500 GTQ a month (64 USD). As of 2022, the programme reached 142,738 beneficiaries, mostly in rural areas, and the government aims to reach 210,000 by the end of 2023 (MINTRAB, 2022).

In 2023, Guyana increased the benefit amount of its universal social pension to 33,000 Guyanese dollars (GYD) a month (158 USD), up from 28,000 GYD a month (134 USD) in 2022. This is the second increase in the social pension under the current government, which previously increased the benefit amount from 20,500 GYD a month (98 USD) in 2021. In addition to these increases, pensioners received one-off grants of 25,000 GYD (120 USD) in 2021 and 28,000 GYD (134 USD) in 2022 (DPI, 2023).

In 2023, Suriname approved several changes to its social assistance programmes. Among other adjustments, the Flat-rate Old-age Pension (Algemene Oudedagsvoorziening) amount was increased to 1,750 Surinamese dollars (SRD) a month (46 USD). The latest in a series of enhancements, the new amount reflects a 233 per cent increase in the benefit amount since January 2020. An additional top-up of 1,000 SRD a month (26 USD) was paid to beneficiaries in 2022 (Office of the President, 2023).

It should be noted that many other countries increased their social pensions as part of regular annual adjustments to reflect changes in the cost of living and other indicators. Some of these adjustments have been quite significant in recent years. For example, in 2023, the United States of America increased old-age and invalidity benefits under its social insurance and social assistance pension programmes by 8.7 per cent. The increase is the largest of its kind since 1981 and reflects the relatively high level of inflation in the country. As of 2023, social assistance pensioners under the Supplemental Security Income programme receive a progressive benefit of up to 914 USD a month (up to 1,371 USD for a couple) (SSA, 2023).

Final remarks

Social pensions are often implemented with the aim of alleviating poverty and reducing inequalities in pension outcomes. They do this in combination with other forms of social protection, notably by complementing contributory programmes, and therefore are vital components of social protection floors.

In the Americas, social pensions have been an important instrument to provide cash benefits to individuals with insufficient contributory pensions, as well as to certain social groups that have historically seen limited coverage, such as women, indigenous communities, and Afro-descendants. They are most successful as part of robust, effective social security systems that cover workers in both the formal and informal economies.  

While social pensions address gaps in contributory pensions, integrating uncovered workers into contributory systems remains an important avenue to raise living standards in old age, financially sustain social pensions, and achieve broader policy objectives. Often, coverage gaps or insufficient contributory pensions stem from individuals’ limited or irregular access to the formal labour market during their working lives, as well as challenges such as low or instable income and frequent job changes. For instance, self-employed workers, informally employed workers, workers in small and micro enterprises, casual or seasonal workers, domestic workers, workers in agriculture and fishing, and migrants can often be excluded, both legally and effectively.

Continued efforts to increase access to contributory systems and formal work do not only improve living standards, foster inclusion, and promote decent work. They are also instrumental to avoiding overstretched government expenditures for social pensions, which would put their sustainability at risk. For instance, efforts at simplifying or subsidizing contributions for low-income groups have allowed for their incremental incorporation into contributory systems - see for example (Federal Administration of Public Resources, 2017). Similarly, guaranteeing a minimum pension within contributory systems, as done in many countries within the Americas, can encourage enrolment. The coordination between social pensions and contributory systems is therefore key.

Finally, regardless of the nature of reforms, legal coverage does not automatically ensure effective access by the target population. In addition to general administrative barriers that may affect people of all ages – for example, challenges with literacy, language difficulties, lack of formal identification documents, remoteness, and lack of access to financial services - older people may face additional constraints due to digital literacy and age-related functional limitations. Achieving universal coverage requires appropriate, cost-effective solutions to fully implement policy reforms and reach difficult-to-cover groups.

In this regard, the ISSA Guidelines on Administrative Solutions for Coverage Extension (ISSA, 2022) aims to support institutions to strengthen their capacity to effectively cover difficult-to-cover groups. As these Guidelines identify administrative solutions to improve access to social security, regardless of the source of financing, they can also be used to improve effective coverage of social pensions.