The right to social protection, including old age income security, is enshrined in various national constitutions and legal instruments at the international level, including the Universal Declaration of Human Rights of 1948 and the International Covenant on Economic, Social and Cultural Rights of 1966. Social protection features prominently in the 2030 Agenda for Sustainable Development, where it is regarded as an important contribution to achieving various Sustainable Development Goals (SDGs). These include the eradication of poverty (Goal 1), the promotion of gender equality and women’s empowerment (Goal 5), and the reduction of inequalities (Goal 10).

Recent developments in social pensions in Latin America. Photo: VNA

Social protection is thus a universal human right. Moreover, as recognized in the 2030 Agenda for Sustainable Development, investment into social protection is a key tool to build more inclusive and equitable societies, which can yield real economic returns. ILO Recommendation No. 202, adopted in 2012, gives guidance to countries in setting nationally defined social protection floors. It features a number of basic guarantees that comprise essential health care and income security across the life cycle, including during old age.

This article reviews the role of social pensions in Latin America in ensuring basic income security for the elderly in the region. It is based on information from the 2019 Americas edition of the International Social Security Association’s (ISSA) Social Security Programmes Throughout the World as well as good practices submitted by ISSA member institutions as part of the ISSA Good Practice Awards.

Non-contributory pensions are an increasingly important instrument for governments around the world to extend protection against the vulnerabilities and risks associated with old age. In no region is this more evident than in Latin America, where the number of non-contributory pension programmes has rapidly increased since the early 2000’s (ECLAC 2020b, p. 103).

The following table compiles the main non-contributory pensions in Latin American countries as of 1 July 2019 (excluding the islands of the Caribbean). It shows that social pensions exist in all countries in the region, except Honduras and Nicaragua. The two countries of Bolivia and Mexico offer universal old-age pensions, awarded solely based on the age and citizenship as well as residency status of the individual. All other countries with social pensions in the region perform a form of means- or income test to assess applicants’ eligibility for a benefit (see the ISSA country profiles for detailed information).

According to the Economic Commission for Latin America and the Caribbean (ECLAC 2020a, p. 121), the coverage of older persons by all contributory and non-contributory pensions expanded by nearly 10 percentage points between 2010 and 2019 in Latin America. This expansion was driven mainly by non-contributory pension programmes, which provide much smaller benefit amounts than contributory schemes (ibid). Looking at the national minimum wage as a reference in Table 1, these benefit amounts are particularly modest in some cases, while the most generous pensions are paid in Argentina, Brazil and Uruguay.

In the context of the persistent low coverage by contributory systems, high levels of inequality and pervasive informality, the introduction or expansion of social pensions has been an important tool to make pension systems more inclusive. As the relatively young populations in the region age, pressures to expand coverage horizontally while providing more adequate old-age protection to all members of society are likely to increase. Against this backdrop, recent reforms in Argentina and Mexico provide examples for the measures taken in the region.

Illustrative image (internet)

In Mexico, social pensions go back to a monthly universal benefit first introduced in 2001 in Mexico City. A subsequent non-contributory pension for persons in rural areas aged 70 or older was gradually expanded to become the first national social pension scheme in 2013. From its inception in 2007 to the national rollout in 2013, the number of beneficiaries under the programme increased from around 1 million to nearly 5 million (Avila-Parra and Escamilla-Guerrero 2017, pp. 34 ff.).

In January 2019, the Mexican government introduced a new universal pension programme – Programa Pensión para el Bienestar de las Personas Adultas Mayores. It replaced the previous social pension programme – Programa Pensión para Adultos Mayores (PPAM), which paid a periodic benefit to persons aged 65 or older who were neither receiving a contributory pension nor a benefit under the Prospera conditional cash transfer scheme greater than 1,092 Mexican pesos (MXN).

The new programme removed the means test and more than doubled the amount previously paid under the PPAM, increasing the pension from MXN 1,160 every two months to MXN 2,550 every two months (MXN 2,700 since January 2021). While the reform increased the eligibility age for the non-contributory pension from 65 years to 68 years for most persons, it was kept at 65 years for indigenous persons. Persons aged 65 to 67 who were receiving the social assistance pension as of December 2018 retained their right to a pension and automatically received the new benefit (ISSA Mexico country profile).

Illustrative image (internet)

According to government figures, only 23 per cent of women and 40 per cent of men who had reached the legal retirement age were receiving a contributory pension in February 2019; 26 per cent of the elderly had neither access to a contributory, a non-contributory pension, nor minimum income support (Secretary of Welfare 2019). The new programme increased the number of eligible beneficiaries for a non-contributory pension from approximately 5.5 million to around 8.5 million people. As of June 2020, 8,086,895 persons were receiving the new social pension (Secretary of Welfare 2020,p. 11). Out of these, 56 per cent were women and 44 per cent were men, counting 811,534 beneficiaries identified as indigenous persons. Therefore, the reform of the PPAM to a universal pension was good news for many elderly persons in the country.