Universal Pensions for Developing Countries

SummaryThe governments of New Zealand, Mauritius, Namibia, Botswana, Bolivia, Nepal, Samoa, Brunei, Kosovo, and Mexico City provide a basic pension to the elderly with no test other than citizenship, residence, and age. These universal non-means-tested pensions automatically protect an entire population, in a way that contributory, earnings-related pensions never can. The author examines the value of this scheme for low-income countries and argues that an income test, if desired, is best done ex post through the tax system rather than ex ante, even though there are few examples of ex post recovery systems operating in the world today.