Basic, targeted and minimum pensions
Basic and minimum pensions along with social assistance are defined as the first layer of protection for the elderly within the pension system. They make up the first tier of the taxonomy of pension systems, which was set out in the previous indicator of the architecture of national pension schemes.
Basic pensions only exist in two non-OECD economies compared to five of the OECD countries listed. Five Asian economies provide a social assistance benefit equivalent to 8.1% of average earnings. Furthermore, five economies provide a minimum pension benefit, most often above the basic or social assistance level. For a full-career worker, the average minimum pension is 24.5% of average earnings.
There are four main ways in which economies might provide retirement incomes to meet a minimum standard of living in old age (Table 1.2). The left-hand part of the table shows the value of benefits provided under these different types of scheme. Values are presented in relative terms – as a percentage of countries’ gross average wages – to facilitate comparisons between countries (see the “Average wage” indicator in Chapter 3). The right-hand part of the table shows the number of total recipients as a share of the population aged 65 and over.
Benefit level
Benefit values are shown for a single person. In some cases – usually with minimum contributory pensions – each partner in a couple receives an individual entitlement. In other cases – especially for targeted schemes – the couple is treated as the unit of assessment and generally receives less than twice the entitlement of a single person.
The analysis of benefit values can be complicated by the existence of multiple programmes in some economies. However, in non-OECD Asian economies this is very rarely the case as only India and Viet Nam have dual systems.
There are four economies that do not have either a basic or minimum pension within their system (China, Malaysia, Singapore and Sri Lanka). Basic pensions exist in only Hong Kong (China), the Philippines and Thailand, with the Philippines also having a minimum pension along with India, Indonesia, Pakistan and Viet Nam.
Coverage
The importance of first-tier benefits varies across Asian economies. The percentage of over-65s receiving such benefits is shown in the final four columns of Table 1.2. Different approaches of reporting the number of recipients, for example in case of benefits paid to couples or even households, may blur the data comparability across countries to some extent. Naturally, residence-based basic pensions have on average the highest coverage. However, contribution-based basic pensions also have very high recipient numbers in most countries that have such a scheme. Sometimes recipient numbers exceed 100% of the population aged 65 and older hinting to recipients younger than 65 or living abroad. Targeted schemes in Asian economies show the greatest variation, being claimed by only 7% of those aged 65 or over in Malaysia but by 56% of those in the Philippines and 42% in Hong Kong (China). These higher rates are primarily due to historically low coverage rates in mandatory pension schemes.
