National Approaches Income Support for Nonworkers

Means-tested and social insurance programs have evolved to provide income support to people who cannot, or are not expected to, support themselves. Thanks to old-age income protection schemes, typically referred to as social security, growing numbers of men and women around the world face an economically secure old age free of work. Between 1940 and 1999, the number of countries with programs that provide cash benefits to older persons, the disabled, and survivors rose from 33 to 167 (U.S. Social Security Administration, 1999).

Social security programs take a variety of forms. They may be non-contributory and paid for out of general revenues, or they may require contributions from workers and employers. They may be defined benefit plans that use a formula to calculate benefits based on some combination of earnings and years of employment or defined contribution plans whose benefits depend on plan contributions. Some provide a flatrate benefit to all residents of a country, subject to certain conditions; others are based on work histories and years of earnings. Programs may be targeted to individuals or families with income and/or assets below a certain level; others pay benefits to anyone who has met the contribution requirements. Mandatory savings programs, such as provident funds, are found in a number of countries; and in a few countries, mandatory private pensions add another layer of income protection in old age.

In the more developed countries of the world, social security coverage is nearly universal. Coverage in the less developed countries is generally far more limited, often restricted to public sector employees or workers in urban areas. Though still young, these countries are aging rapidly, causing governments to examine how best to extend old-age protection to vast numbers of people who lack access to a public old-age support system.