108
Population Aging
disappeared, older people’s incomes would be reduced by the amount of the pensions they are now receiving. The assumption is strong, since it is likely that without pensions, behavior would change. Some older people could receive transfers from relatives, friends, or nongovernmental organizations, or decide to reenter the labor market. These behavioral changes would be even more important in the long run, because young adults would begin preparing for old age with the knowledge that social security will not be available. Given these caveats, the simulations of this section should be viewed as just the direct short-term effects of the pension system on poverty. A deeper analysis requires a behavioral model that is beyond the scope of this document. Table 3.8 presents the results of this simple exercise: pension systems are the main factor that explains low old-age poverty rates in all four pro-aging countries (Argentina, Brazil, Chile, and Uruguay). The strongest impact occurs in Argentina and Brazil, where poverty among people over age 60 is less than 5 percent would increase by over 35 percentage points if pensions suddenly disappeared. In Bolivia, Chile, Costa Rica, Panama, and Uruguay the sudden disappearance of pensions would raise poverty among the aging by about 20 percentage points. Figure 3.11 shows that for older people in all countries, the proportion of males receiving pensions is higher than for females. On average for the region, 45 percent of males over 80 receive pensions while only 35 percent of females do. Males have better pension coverage than females in every country in LAC. On average, males are 30 percent more likely than females to have access to a public pension, but there are large differences across countries. The greatest inequalities are found in Peru (where males are five times more likely than females to have a public pension), República Bolivariana de Venezuela (three times), Paraguay, the Dominican Republic and El Salvador.
Impact of Private Transfers on Poverty We saw above how transfers from the family and from social networks are important income sources in several Central American and Caribbean countries: in the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua, income from transfers constitutes the main source of nonlabor income for the aging. Figure 3.12 presents the percentage of people over age 60 who receive income from private transfers.10 The data refer only to transfers from outside the household. This includes remittances from migrants but does not include sharing of the income of relatives who reside with the aging.