Elderly Poverty in GermanyFrom 2006 to 2016, elderly poverty in Germany (people older than 55 years old) increased from 4.5 to 5.6 million people. According to the German Institute for Economic Research (DIW), the percentage of people who face poverty while receiving retirement money could increase from 16.8% to 21.6% by 2039. In other words, one in five German pensioners could face impoverished conditions by 2039. Germany intends to combat elderly poverty with a basic pension plan.

Elderly Poverty in Germany

People who receive “less than 60%” of their average working salary from their retirement funds are currently considered at risk of facing poverty. This equals a monthly retirement income of less than €905 or $997. The percentage of people depending on other financial government assistance may also rise from 9% to 12% by 2039. These people would have monthly retirement incomes of no more than €777.

3 Main Pension Systems

A German pensioner can choose from three main pension systems. The German pension apparatus consists of a “pay-as-you-go system,” which is combined with other supplemental plans. The supplemental pension plans intend to provide funds in addition to the state pension that pensioners already receive.

  1. State Pension. This pension plans awards about 70% of net income to people older than 65 who have been working in Germany for at least five years. Enrollment in the state pension plan is mandatory for everyone working in Germany.
  2. Company Pension. The company pension plan is a plan workers can monetarily contribute to via the employer. The plan intends to augment the state pension plan and has become the most popular retirement plan in Germany.
  3. Private Retirement Scheme. This plan is established through insurance organizations and banks. The German government promotes these plans through tax incentives and bonus benefits.

Despite the three main pension plans that Germany has implemented, those working for a lifetime in Germany still struggle to make ends meet after retiring. This is especially relevant for those employed in low-earning careers.

The Basic Pension Plan

Since the amount of state pension given to a pensioner depends on their net income, those who participated in low-earning jobs are at increased risk of facing poverty. To address this, Germany recently decided to implement a new basic pension plan, which ensures that those who have been working in Germany for a significant amount of time will receive a basic amount of pension.

In January 2021, the German federal government enacted the basic pension plan to combat elderly poverty in Germany. This plan guarantees that individuals who have contributed to the German state pension system for a minimum of 35 years receive a basic pension in addition to their original state pension. The additional basic pension ensures that the pensioner has enough money to pay for fundamental necessities. No application is necessary as the government utilizes an automatic system for these basic pension benefits.

According to German legislator Malu Dreyer, more than 1.4 million people will benefit from the basic pension plan. Furthermore, a significant portion of women will benefit from the plan as four out of five beneficiaries will be women. The plan also rewards those who took time off work for familial caretaking as long as their total employment time meets the minimum requirements.

Looking to the Future

In hopes of decreasing elderly poverty rates, Germany implemented the basic pension plan, which aims to provide its low-earning citizens with enough funds to secure their basic needs after retiring. The state pension only provides the pensioner with 70% of their net income, which can be problematic for citizens who spent their lives working in low-paying positions.

The German government estimates that the plan will benefit more than 1.4 million people, providing hope that more than a million elderly citizens will not live the remaining years of their lives in poverty. Overall, the German government presents a clear path ahead for combating elderly poverty in Germany.

Lauren Spiers
Photo: Flickr

Elderly Poverty in Belarus
As it spends around $5 billion yearly on pensions, Belarus, a landlocked country in Eastern Europe, has seen a significant reduction in elderly poverty in the past two decades. Experts estimate at least a 25% reduction in elderly poverty in Belarus since 2002. Pension programs in Belarus contribute to lower rates of elderly poverty in the country.

Pension Programs in Belarus

Belarus has various social pension programs, including veteran and survivor pensions. However, the program with the most recipients is the old-age pension. The direct transfer of wealth through the old-age pension began in 1990, with men 60 and older and women 55 and older becoming eligible for pensions. The average pension is $150 per month. If the elder served in a war, has a disability, has more than five children or earned an above-average income, the elder must meet fewer qualifying conditions, but will still receive no more than around $300 a month.

In 2019, 5% of the Belarusian population lived under the poverty line. Elders, or people 50 and older, represent 20% of Belarusians and are roughly 3% less likely to fall into poverty than the general population. Elders remain vulnerable to falling into poverty, and many continue working past retirement age. Nonetheless, Belarus has achieved overall success in combating elderly poverty in recent decades.

Economic Growth Despite the Financial Crisis of 2009

During the years leading up to the 2009 financial crisis, Belarus began outperforming the Europe and Central Asia (ECA) region in terms of the $5/day poverty metric. In 2001, Belarus’s $5/day poverty rate was roughly the same as the ECA average. However, by 2009, Belarus had a significantly lower $5/day poverty rate than the ECA average.

Furthermore, between 2006 and 2011, Belarus’s rate of growth of expenditures in the bottom 40% of the population was 9% per year, the highest rate in Europe. Most European countries registered negative expenditure for the bottom 40% of incomes as they were recovering from the financial crisis. Belarus’ superior economic growth resulted largely from favorable energy pricing from its neighbor Russia and the resulting strong trade relations between the two countries.

Strong, reliable economic growth led to the expansion of sectors such as manufacturing and agriculture and enabled high levels of employment. Manufacturing and agriculture exports increased by 85% and 90% respectively from 2001 to 2008, with average wages increasing 10%. Therefore, the state budget grew and the funds set aside for pensions grew as well. Growing sectors offered increased employment opportunities for capable elders. As pensions and employment rose, elderly poverty dropped.

Growth in Both Urban and Rural Areas

From 2003 to 2008, the majority of elderly poverty reduction in Belarus occurred in urban areas such as the capital city, Minsk. However, from 2008 to 2015, the greatest change occurred in rural areas, which saw a 75% reduction in poverty between 2003 and 2014 while poverty decreased by 54% in cities.

Rising Demand for Pensions

With the country’s economy on a positive trajectory for more than two decades and the poverty rate falling, the average elder in Belarus receives a $150 monthly pension. In addition, increased exports spurred growth in agriculture and manufacturing, which provided job opportunities for elders seeking to increase their income during retirement. While the country is currently recovering from the 2014 recession, strong growth must persist in order to maintain low rates of elderly poverty as Belarus’ population is aging and the demand for pensions will continue to rise.

Max Sidorovitch
Photo: Unsplash

Elderly Poverty in Canada
Canada has an excellent track record when it comes to decreasing elderly poverty. Between 1976 and 1995, the rate of elderly poverty in Canada dropped from 36.9% to just 3.9%. Yet in the past two decades, elderly poverty in Canada has grown.

Current Elderly Poverty Rates in Canada

According to Ryerson University’s National Institute on Ageing, the rate of low-income older Canadians had increased to 14.5% by 2016. The situation is even more severe among certain groups, a recent study found. The nonprofit Social Planning Toronto and the research center Well Living House published a study in August 2020 finding that, as both a direct and indirect result of colonization, more than 90% of Toronto’s Indigenous seniors live in poverty. Poverty rates are higher among Indigenous Canadians because colonization has diminished Indigenous power and social structures.

Meanwhile, Toronto’s “racialized” and immigrant seniors live in poverty at double the rate of their counterparts. Discrimination leads to lower pay for racialized Canadians and immigrants, leaving them with less to live on when they retire. Additionally, immigrants may have less time to accrue assets and savings in the country before retirement.

Seniors Falling Through the Cracks

According to the National Institute on Ageing, Canada’s Retirement Income System stands on three pillars: government assistance, pensions that employers provide and seniors’ personal retirement plans, including tax-free savings accounts and non-registered assets.

However, in recent years, pensions have become a less common resource. Only about a third of working Canadians had registered pension plans from their employers in 2016, the National Institute on Ageing reported. Furthermore, even those with pensions still risk losing part of their pensions if the companies they work for go bankrupt.

Moreover, the most reliable and lucrative type of pension, a defined benefit (DB) pension, is becoming scarcer. Healthcare of Ontario Pension Plan, a defined benefit plan, explained in a 2017 report that DB pensions “are paid for life, and, for some, even rise along with inflation.” In contrast, with other types of pensions, which are becoming more prevalent, income is not guaranteed and may fluctuate over time.

Furthermore, saving for retirement is not possible for all Canadians, as the Healthcare of Ontario Pension Plan report notes. Those without pensions are in a particularly difficult position. The report indicated that the median retirement savings among pensionless Canadians are just $3,000.

Recent Steps to Combat Elderly Poverty

In early 2021, the government acted to address elderly poverty in Canada. In May 2021, Prime Minister Justin Trudeau announced that he would include several provisions in the 2021 budget to aid seniors. Under this new budget, the government’s Old Age Security Pension for seniors will increase. The budget states that the government will give full pensioners $766 more in the first year of the change and will adjust the amount based on inflation in future years.

About 3.3 million Canadians 75 and older will receive increased pensions under the 2021 budget. They will also receive a lump sum of $500 in August under the 2021 budget. Acknowledging that “too many seniors are worried about their retirement savings running out,” the government expressed its commitment to supporting seniors’ solvency in retirement.

However, the new budget has also received criticism for not doing enough. The Canadian Federation of Pensioners castigated the budget in a press release for failing to keep defined benefit pensioners from losing pension money when companies go bankrupt. Another organization dedicated to seniors, C.A.R.P., explains that pensioners of bankrupt companies “are not automatically able to negotiate their terms when assets are divided,” while other creditors are. As a result, if companies go bankrupt and cannot pay pensions, pensioners receive only part of what they should.

Changing Non-Guaranteed Pensions and Bringing in Bill C-253

C.A.R.P., the Canadian Federation of Pensioners and a third organization called the National Pensioners Federation have teamed up to change the system of non-guaranteed pensions. The organizations have suggested a government pension insurance program for federally regulated pensions. They are also pushing Canadians to contact their government. The Canadian Federation of Pensioners, in particular, encourages Canadians to ask their representatives to support Bill C-253, which will help prevent pension reduction when companies go bankrupt. A committee took the bill to the House of Commons as of June 6, 2021. The bill’s passage would be another step toward bringing down elderly poverty in Canada.

Victoria Albert
Photo: Pixabay

Elder Poverty in Thailand
Thailand’s population of senior citizens has been increasing in recent years. Alongside this increase in population size, the percentage of elderly poverty in Thailand is also rising. A decrease in the younger generation’s desire to have children and a lack of retirement incomes have contributed to this poverty increase. Here are eight facts about elderly poverty in Thailand.

8 Facts About Elderly Poverty in Thailand

  1. Less Young People in Thailand are Having Children: Many young Thai people say they are choosing not to have children because starting a family is not affordable. Raising children limits personal freedom and hinders opportunities for career development. As a result, the number of children being born into the “new generation” has decreased.
  2. Fewer Children Increases Poverty: The age that Thai couples are choosing to have children has grown to be older in recent years. Divorce rates in Thailand have also increased. This contributes to elderly poverty because the biggest source of financial security for elders in Thailand is family members, especially children and grandchildren. With fewer children and grandchildren being born, there is a higher risk of poverty for the elderly.
  3. Thai Population Grows Older: Thailand’s population is quickly growing older. According to the World Bank, “the proportion of people older than 60 will increase dramatically in the next 50 years, from 15% in 2010 to 35% in 2060.”
  4. Elderly Poverty is Significant: The poverty rate is higher among the elderly than in the total population. In 2010, 10.9% of people over the age of 60 were impoverished, while only 7.7% of the total population was in poverty.
  5. The Dependency Ratio is Growing: Right now, the dependency ratio in Thailand is 56%. This ratio compares the population of children and the elderly to the number of citizens of working age. By 2070, the World Bank predicts that the dependency ratio will exceed 100%, which means that there will be more people not working than people who are working.
  6. Males Have a Higher Poverty Rate: The poverty rate of males is higher than the poverty rate of females at most ages. This difference is particularly prevalent among those over 70 years old. Additionally, the highest poverty rates overall are children below age 15 and elderly above age 60.
  7. The Elderly Poverty Rate is Growing: Although the number of elders that fall below the poverty line in Thailand is fairly low, the amount of elders close to the poverty line is high. Nearly 18% of the elderly in Thailand are impoverished or vulnerable to poverty.
  8. Thailand is Creating Pension Programs: There are currently eight pension programs in Thailand that are working to lower elder poverty by providing retirement incomes. Despite mandatory pension schemes, approximately two-thirds of Thailand’s employed population is not financially insured. While the Social Security Fund insures private employees and the Government Pension Fund insures government officers, informal sector workers receive minimal financial support.

Elders in Thailand rely on the assistance of their families and pension after retirement. However, the decrease in the nuclear family and the lack of financial insurance are affecting the poverty rate among elders. Pension programs are working to lower the elder poverty rate in Thailand to combat financial reliance on families.

Grace Parker
Photo: Wikimedia Commons

Elderly Poverty in Australia 
What is the happiest nation on Earth? Well, according to BBC News’ qualifications, Australia held the title for three straight years. Australia boasts a long life expectancy, a thriving economy and low rates of unemployment. Australia also consistently beats OECD (Organization for Economic Cooperation and Development) averages when it comes to economic standards. For example, Australia is above the OECD average employment rate for people 15 to 64 years old. More than 73% of this demographic has employment, establishing the country as a place of opportunity and economic success. This statistic may explain why many consider Australia “happy,” but it leaves out a significant portion of Australia’s population: the elderly. They often experience exclusion from employment statistics, being a largely retired group, leaving their story untold and unrecognized. Here is some information about elderly poverty in Australia.

Elderly Poverty in Australia

Poverty inevitably throws its hardest punch to vulnerable groups like women or children. These groups have since become the focus of government programs and charities that aim to protect these demographics. But people too often forget the elderly, another vulnerable group.

Elderly poverty is a very real threat, even in developed nations like Australia. In fact, almost a third of Australians on pension live in poverty. The poverty rate for all of Australia’s elderly aged 65 and up is 19.5% and this number increases to 28.7% in groups over 75. With such shockingly high numbers, the question is, how is Australia neglecting its elderly?

In 2016, an OECD report found that Australia spends over 50% less of its GDP on pension than other OECD countries. In fact, only 3.5% of the country’s GDP goes toward providing people with a pension. That leaves elderly people on a pension that is less than the median household income for Australia. The annual payment for one person is around $22,000. Considering the relatively high cost of living in Australia, this amount leaves many in need. The Australian government has ignored calls to raise pensions so far with pensions rates dropping or remaining stagnant since 2002.

Elderly people in Australia are especially at risk to fall into poverty. With so many people past the age of retirement and unable to work, they must depend on Australia’s unreasonably low pension to live. Aging is already a stressful process that, combined with financial stress and housing insecurity, becomes overwhelming.

The Solution

Thankfully, elderly people in Australia are not without help. Australians and people from all over the world are fighting for them. Specifically, Mission Australia has made elderly poverty one of its focuses. It calls for age pension reform and passionately advocates for Commonwealth Rent Assistance Recipients (of which many are elderly) to receive benefits that preserve a dignified and comfortable standard of living.

Council on the Ageing’s Chief Executive, Ian Yates, has admitted that raising the pension will be difficult, but that it is a necessary step. He said that “Claims that the age pension is somehow too extravagant and unsustainable do not bear out.”

Elderly poverty in Australia presents a problem that too often slips under the radar. However, with more people agreeing with Ian Yates or joining Mission Australia’s cause, the solution to the problem could be on the near horizon. Unlike most poverty issues, the solution to this one is simple, improve pension and/or other government programs in place for the elderly.

Elderly populations deserve respect and dignity just like any other group. And, only after the Australian government has addressed their plight can Australia truly be in contention for the “happiest nation on Earth.”

– Abigail Gray
Photo: Flickr

$10 a Month
While some Cubans work hard their entire lives, outlooks are bleak due to cut assistance from the U.S. and Venezuela. Some seniors living on the country’s monthly retirement pension survive off of $10 a month.

Rationing books are a common item in many Cuban households. Cuba’s $10 a month pension makes it impossible for some seniors to live a normal lifestyle. Ration books help many Cuban seniors ration what food they can buy each month at heavily taxed prices. A majority of retired Cuban seniors do not actually retire. They continue to work out of little shops to try and sell whatever they can to make more money than their pension gives them.

An article for the German website Deutsche Welle talks about Cuban seniors that work after retirement to help alleviate some of the pressure that only $10 a month creates. One local man, Antonio Loreno Lozana, runs a small tobacco farm with one of his sons, which gives them an extra $150 a month when they sell to the state, including extra proceeds from selling coffee to tourists. Another man, Raul Bouza, sells small household products outside of his house. This is to pay for the license to run his business which costs 500 pesos, which is double the 240 pesos he receives from the government each month.

Cuba’s $10 a month pension means some Cubans will never actually have the chance to fully retire. Ebaristo Dia Dia, who is 85-years-old, works in a print shop in Havana where he folds boxes. He makes an extra 300 pesos a month and his boss offers him breakfast and lunch. Some citizens depend on tourists giving them small tips and donations. Some senior citizens are too old to work, so they rely on small donations from helping lost tourists find the right direction.

In Cuba, there is a law in which citizens over 65 can apply for less work-intensive jobs after retirement but many of these jobs require significant pay cuts and they lose certain benefits that help them with medical care and other expenses. Cuba is also unique in the sense that it is a developing country with free education and health care. Yet, many seniors are still working, and some through poor health conditions.

The Elders Care Program

The only English-speaking Protestant church in Cuba provides the Elders Care Program, which offers a bundle of food to people involved with the program each week. This bundle costs about 36 pesos ($1.50 US) and includes a few taro roots, a few bananas, a tomato or two and a pound of black beans. This is where the ration book comes into use, rationing sugar, rice or a daily piece of bread which is vitally important for elderly Cubans to survive.

Cubans that receive this care from the Elders Care Program are extremely grateful. It helps add some form of nutrition and calories to their limited diet. An elderly couple interviewed in the article mentioned above, says they are very appreciative of the efforts the Elders Care Program puts forth. The husband stated that “We have a piece of chicken and five eggs per month. Eggs are a luxury. Sometimes all we have in a day are some beans and a bread bun.” This is an example of what extreme poverty some Cuban citizens are actually experiencing after retirement.

The Cuban Economy

Without economic reform and cheap oil that used to come from Venezuela, the economy has stalled. Population rates are also declining in Cuba, which puts a damper on the Cuban economy even further. The country has essentially frozen pensions while rising inflation continues to eat up their value. The country is facing one of the biggest challenges it has faced in decades. The pension system has proven ineffective, and an economic recession and a huge impact on social services might happen in the near future.

The current impacts on the economy are only the beginning of what is to come in the future years for Cuba. Cuban society should prepare itself for the demographic issues that Cuba is dealing with. One broad solution is to increase the production of all Cuban goods. The second solution is for emigrants to return to Cuba. These solutions could take years to take effect, which is time that Cuba does not necessarily have.

Cuba’s $10 a month pension is not a sustainable, proper solution for any retired Cuban. Although assistance programs exist, none of these programs allow for enough money to flow to each household. There are not enough solutions in order to solidify a plan that the government can follow in order to gain more money for each retiree. The government will most likely require aid from a foreign country and will have to reform many laws that put in place more solid, long-term solutions for Cuba’s retired population. The current programs in place cannot support the growing number of retiring citizens in Cuba at this time. The government needs to take certain measures in order to provide Cuba’s elderly with a solid monthly pension that provides them with funds for many necessities.

– Quinn McClurg
Photo: Flickr

 

 

Elderly Care in South Africa
The South African government currently offers seven different types of social protection grants for its inhabitants. One of those grants is the Old-Age Pension Grant also known as the Older Person’s Grant (OPG), the only grant targeted specifically towards elderly care in South Africa. It provides a monthly income for citizens, refugees and permanent residents who are aged 60 or above with no other means of income.

Overview

The grant is allotted based on the results of a means-test, which requires the recipient to provide the government with information on their household, income and financial assets. In 2018, pensioners over the age of 60 received R1600 a month, which is around $115. Pensioners over the age of 65 received R1620, or $117 per month. The government reported that pension recipients will see a small increase in the amount received per month during the year.

Benefits of the Old Age Pension

The Old Age Pension keeps the elderly from falling into further poverty once they have surpassed their ability to provide household income. In fact, according to the International Labor Office, along with other grants, the OPG has been instrumental in the “reduction in poverty incidence among older persons from 55.6 percent in 2006 to 36.2 percent in 2011.”

Furthermore, it was even reported that female pension recipients reported better overall health within the first five years of payments than elderly females who had not yet become eligible for the grant. However, the benefits of the grant do not stop with the elderly.

Elderly people who receive the grant and live in a household with more family members are reported to share their monthly income with the rest of the house, which helps to reduce poverty for the entire household. It is estimated that one grant can reach up to six people in a household.

In addition, there is a positive correlation between employment and members living in a household where the pension is received. Women who are aged 20-30 that live in a recipient’s house are 15 percent more likely to be employed than those who do not.

Moreover, children who live in a recipient’s household are reported to have better height-for-age and weight-for-height than those who do not. Due to the HIV/AIDS epidemic, many grandparents have taken over the care of their grandchildren as their parents are suffering or have perished from related illnesses. This grant helps grandparents care for these children appropriately.

More Work to Be Done

The pension has done great things for elderly care in South Africa, but also because of its reach into multi-generational households, it has aided overall poverty and living conditions in the country. However, there is more work to be done. Only 80 percent of age-eligible inhabitants are receiving the pension. Those who are eligible but still not receiving the grant are usually males with poor socioeconomic status that live in smaller households and come from the Mozambican origin.

This lack of reception could be explained by many factors. For one, the application process for the grant requires the applicant to travel to a state application center and provide heavy documentation regarding health, income and household information. Traveling to these centers can be difficult and costly for those living in extremely rural areas.

The South African government is dedicated to aiding decrease in
poverty levels and creating a better standard of living for its inhabitants, but many older individuals still hold distrust of the government from the apartheid regime. Elderly care in South Africa has benefitted exponentially from this grant, and though it is a means-tested pension right now, the government hopes to make it universal in the future.

Mary Spindler
Photo: Pixabay

Protest and Potential Reform for the Chilean Pension System
In the past, pension analysts, the World Bank and political figureheads around the world, including George W. Bush, have praised the privatized Chilean pension system as one of the most effective in the world. However, many issues have arisen due to the system, and Chilean retirees are unable to sustain themselves due to small pensions. Many citizens are forced to work past retirement age in order to live at the most basic level.

Following protests from dissatisfied citizens and warnings from international organizations regarding the failing pension system, Chilean President Michelle Bachelet began to explore reform options in 2008. Under the current system, which was implemented in 1981 under the military dictatorship of General Augusto Pinochet, workers must contribute 10% of their salaries into accounts operated by private businesses called pension fund administrators or AFPs.

The companies invest the money while employers and the government don’t make any contributions to the workers’ accounts. The funds are controlled by six AFPs and are equal to approximately 71% of Chile’s gross domestic product.

Recently, discontent among citizens has reached an all-time high as fewer and fewer people are capable of surviving solely off the money from the Chilean pension system. Although the invested money has helped to boost Chile’s economy in the past, the pension system is rather unreliable. If the stock market dips or the global markets stray from normal trends, workers lose savings and retirees receive smaller pension checks. Culturally, the Chilean economy is informal and people make inconsistent contributions to their pension accounts, which makes the situation even worse. Currently, the average pension check in Chile is $315, which is less than a monthly minimum wage salary.

Women also fare worse than men due to the fact that they typically earn less, are more likely to retire early and have a longer life expectancy than men. These factors, mixed with a general financial illiteracy among Chilean citizens, have led many people into desperate situations.

In 2008, President Bachelet introduced several pension reforms in an attempt to remedy the failings and move toward a mixed public-private system. She implemented a state-funded minimum pension amount of $140 for those who were unable to save for retirement. Close to 1.3 million Chileans receive this benefit today.

Now, further reforms such as a minimum required contribution from employers, the introduction of a state-run AFP with the hopes of creating competition and efforts to keep fund managers commissions on an equal playing field. Bachelet stated, “This increase in contributions will allow us to build the foundation for collective savings with solidarity. Part of it will enable raising current pensions and the other part will be used to ensure more equity in future pensions.”

As long as the Chilean pension system follows through with these reforms and takes care of their growing aging population, outside parties may still be able to look at Chile as having one of the most effective pension systems in the world.

Peyton Jacobsen

Photo: Flickr