In Nepal, senior citizen population has almost doubled from 4.6% in 2001 to 9.1% 2011. If such growth trend continues, the Government of Nepal (GoN) has to make many wide-reaching changes in areas of health, finance, employment, education, social relations, physical, environmental, legal and sociological conditions because an aged nation touches on all aspects of society. Only a holistic approach will cover many different areas of the senior citizens.
“A society for all ages encompasses the goal of providing older persons with the opportunity to continue contributing to society. To work towards this goal, it is necessary to remove whatever excludes or discriminates against them.” – The United Nations’ 2002 Madrid International Plan of Action on Ageing (IPAA).
As a signatory of the UN 2002 Madrid IPAA, Nepal aims to offer respectful living conditions to her senior citizens. It also aims to utilize long accumulated knowledge and experiences of increasing number of seniors to make a difference in the society. Nepal is facing problems of increasing senior citizens in each successive census. These increases are mainly due to the decrease in fertility at the base and mortality at the apex. Recent trends show that many women are looking for career goals, hence ending up with fewer children. Average total fertility rate is going down from 4.5 in the 1990s to 2.6 today as more and more women are seeking good career, nucleated families, urban centric life, and fewer children with good quality of life. The mortality at the apex is decreasing due to improved socioeconomic conditions and medical technology. Though the reduction in fertility and mortality may not necessarily be the indicators of increasing elderly population, for example, France elderly population doubled in 120 years while it took only 18 years for Singapore to do so, in Nepal, senior citizen population has almost doubled from 4.6% in 2001 to 9.1% 2011. If such growth trend continues, the Government of Nepal (GoN) has to make many wide-reaching changes in areas of health, finance, employment, education, social relations, physical, environmental, legal and sociological conditions because an aged nation touches on all aspects of society. Only a holistic approach will cover many different areas of the senior citizens. Demographers and policy makers are hard pressed to put into place the necessary systems and structures that are required for the respectful living of elderly citizens.
Nepali society is dominated by a patriarchal system where over 80% of the 2.4 million senior citizens (60+ years) live with their children of which 97.3% live with their married sons and only 2.7% live with their married daughters. Since the government lacks adequate elderly care centers, it might be worthwhile for the GoN to provide incentives to those who take care of senior citizens besides providing universal pensions to all senior citizens of 75+ years and widows of 60+ years that started from 1995.
Staggering senior citizen:
Though the GoN has defined the age of senior citizens at 60+ years, there is some confusion in this definition. For example, on one hand Nepal demographic survey assumes that people 60+ years are senior citizens, on the other hand, the retirement age for civil servants is fixed at 58 years while for lower rank police and military personnel the retirement age varies from 44 to 46 though the retirement ages for higher level police and military officers range between 56 and 58. For university professors, the age is fixed at 63 years and for judges it is 65 years. These records suggest that except for university faculty and judiciary personnel, many people are forced to retire at their early ages.
Though the retirement is an honorable dignity and personal comfort, getting paid without being worried of any wrongdoing, early retirees add a lot of woes to the family. These early retirements would also open job opportunities for new generations; however, there is always a risk of losing experienced manpower. Some good indicators are appearing in Nepal however after several private sectors started utilizing skills of qualified retirees. Many retiree individuals are also entering into businesses. Without these activities, the financial and physical burden of taking care of elderly parents would have been beyond the children’s means. Though financial incentives might not be that important for all elderly all the time as long as these senior citizens are properly valued, the increasing trends of individualistic thinking with more focus on nucleated family among young generations, often leads to frustrating situations among many elderly citizens.
Nepal lacks good quality and affordable homes to accommodate elderly population. High income countries like the US and UK have set up several adult daycare centers. Singapore and Japan, for example, have geriatric-friendly housing. In Singapore, these are in the form of well facilitated flats with fire-proof doors, bathrooms with grad bars, and emergency buttons in each room. Additionally, each building had a doctor on standby. Japan’s government has adopted measures to promote houses following standard guidelines, including extra loans at preferential interest rates. Many “senior citizens’ villages”, with elderly-friendly housing and public amenities, have been established in several locations. Australia offers public transportation systems that are conducive to the elderly. Further, Australia, Britain, United States, and Canada have approved voluntary programs like “Meals on Wheels” delivery services to home-bound elderly. However, Nepal is nowhere close to these facilities and cannot be expected for couple of decades.
Lack of caring manpower and government attempts
Had there been affordable living for elderly, the government would have provided specialized geriatric psychiatric experts with multidisciplinary facilities, and seniors would have started saving for their retirements to acquire such livings. A doctor, an occupational therapist and psychiatrist would all have been part of the team to make a difference in the society. That would have generated employment and created a win-win situation for the government, elderly, and young generation looking for good career. How nice it would have been for young medical doctors to find jobs and serving elderly? However, due to the lack of such facilities, the traditional thinking that it is the duty of children to take care of elderly at old ages is very much prevalent in the Nepalese society. Despite willingness to provide adequate care to elderly by children, many young generations have been favoring nuclear families with fewer children to provide them quality lives making them competitive in the globalized environment. Successive census record show that the average household size in Nepal is decreasing; for example, a household size was 5.8 in 1981, 5.6 in 1991, 5.4 in 2001 and 5.3 in 2011. Reduction in the household size has made it difficult to give a good care to elderly parents, even if children may try really hard to do so. Today, many caregivers struggle in balancing between their career and responsibilities of caring elderly people. As there are not many people at home to care elderly population, much work needs to be done by existing members, where both care givers and elderly start frustrating due to the lack of time. In many cases relationships among senior citizens and children have become sour and senior citizens are having mental depression. Senior citizens often feel of being burdened on the career of younger generations. Under the changing sociological context, if the government could not come up with needed facilities for elderly population, stricter regulations are needed to provide care needed for independent, assisted and dependent senior individuals. These regulations are needed in view of the increasing frustration among seniors, who might be thinking of being burdened to their families. There is no quick fix formula to this problem, which requires the knowledge of real world experience. In order to explore possible solutions, it is worthwhile to review contemporary literature to seek real word solution from similar geographic, socioeconomic, and sociocultural settings and offer suggestions to the GoN to improve the living conditions of elderly.
The world is ageing and the dependency ratio is increasing. In this ageing world, only 15% of the world’s households have formal retirement incomes that cover less than 10% of the world’s working-age population. Senior citizens not having any retirement coverage live and work in developing countries in agriculture or in the informal sector of the economy. In order to offer a respectful living of senior citizens like in other countries around the globe, the government of the Nepal in 1995 started a universal pension system for elderly citizens of 75+ years and to widows of 60+ years. The initial response was massive, but financially overwhelming.
What others have done?
New Zealand, Mauritius, Namibia, Botswana, Bolivia, Samoa, Brunei, Kosovo, and Mexico City provide a basic pension to the elderly who previously did not participate in the retirement schemes. Botswana started universal age pensions in October of 1996. The age pension scheme of the municipal government of Mexico City commenced in February of 2001 to provide relief to people of 70+ years, and achieved near-universal coverage by October of 2002. Kosovo started its universal pension system in July of 2002. Likewise, Mauritius, Namibia, and Brunei started universal pension to elderly citizen of 60+ years.
Residence-based pensions are known to exist in Denmark, Finland, Iceland, Norway, and Sweden, Canada, and the Netherlands. All these countries require 40 years of residence as an adult for a full pension, whereas the Netherlands has a more stringent requirement 50 years. In 1974, the Government of Costa Rica created a non-contributory contributory pension tightly targeted for poor citizens over the age of 65, but in 2000 it was revealed that 40% of the pensions were collected by ‘‘non-poor’’ while 32% of those elderly living in extreme poverty were not receiving pension.
The World Bank (1994) proposed a three pillar scheme; for example, basic pension, mandatory contributions to an earning related scheme, and voluntary savings. The first pillar is an anti-poverty pillar that guarantees a minimum income in old age, irrespective of a person’s history of earnings. The second is a forced savings pillar that provides, in general, the most benefits to those with the most covered earnings. The third pillar is a voluntary savings pillar, available to anyone who wants to supplement the retirement income provided by the first two pillars. The first pillar protects the elderly from absolute poverty (consumption below a minimum level that is regarded as decent by community standards), whereas the second two pillars promise increased consumption in retirement in exchange for reduced consumption in pre-retirement years. Under this scheme, the New Zealand government provides a flat apartment to elderly couple who also receive basic pension from the government at age 65+, which he or she is free to supplement with voluntary savings or earnings.
What Nepal can offer?
Under the present circumstances, it is simply not realistic in Nepal to expect the poor to qualify for a minimum pension through contributions. The only possibility to help elderly poor is to establish sustainable non-contributory, minimum-benefit programs paid at a flat rate to all who qualify by residence or citizenship once they reach a designated age. Universal pensions are easiest to administer because everyone above certain age bar can enjoy the pension. However, once the number of elderly increases, any governments would seek to reduce costs, and possibly increase the age of entitlement. Probably, a situation would come in Nepal when the government would have to take several steps to reduce the financial burdens of 1995’s pension system. First, it might require certain residency requirements in the proposed provinces or state once the country get federated to qualify for a full pension. It might be that some states need to supplement pensions of the central government similar to the cases of the United States and India. Second, it might reduce the pension proportionately for non-resident years. Third, the GoN might recover (‘‘claw-back’’) a portion or the entire pension from other income, which amounts to an ex post income test. Fourth, the governments can impose an ex ante test of income or assets in an effort to restrict that is eligible to receive a basic pension.
How the financial burdens are adjusted?
Fifty years ago, the total elderly global population (65+ years) was comprised of only 5%, but today it is 7%. Using the UN’s medium variant assumptions for future fertility and life expectancy, it is expected that in 2060, the elderly population will comprised of 16%. To offer universal pension to the increased number of senior citizens, it would require redefining the dependency ratio by policy decisions rather than by the biological clock. With this policy decision, the proportion of a given population that is eligible for a universal pension can be raised or lowered. If the definition of elderly population cutoff point is set at 70 years, the proportion of the world population that will be ‘‘aged’’ in 2060 shrinks from 16% to 11%; with 75 years it will reduce to 7.4%. In the 2000s, Antigua and Barbuda announced to provide generous pensions to all citizens over 60 years of age, but failed to carry out this promise due to financial crises. Others have taken different measures. For example, the Mexico City requires at least three years of residency immediately prior to receiving pension; New Zealand requires 10 years of completed residency from age 20, with at least five of those years after age 50; Mauritius requires 12 years; Brunei requires 10 years of residencies from age 50 for the native born, and 30 years for non-native residents. These examples might be useful for Nepal to limit pensions to non-resident Nepali who might seek their rights if the country accepts dual citizenships.
Increasing frustration among seniors
Though the policy instrument, Nepal’s elderly population could be adjusted depending upon the financial situation of the country. The country has already experienced a big jolt in 1997 when the age old pension system became too popular and the government faced serious financial crisis while distributing pensions (termed 'allowance') to people 75+ years and 60+ years’ widows. To minimize the financial burden, the GoN instructed Village Development Committees to limit payments to only persons who are below the poverty line. However, the identification of poor people became a subjective judgment and turned out to be impracticable, and the government soon restored the system of pension distribution based on age. This faulty policy led to frustration among senior citizens.
Only 77% of the age-qualified population receives pensions in Nepal because of the difficulties in establishing proof of age, delays in processing applications, and difficulties in reaching out to remote areas of the country. Many wealthy families do not bother to apply for a pension. Though fraudulent cases in the distribution of pension have not been reported in Nepal, it is likely that Nepal might face similar problems as in Bolivia where persons younger than the qualifying age have obtained pensions, whereas elderly people failed to get pension. Other frustrations among elderly might result due to the uncertainties in the payment of pension. For example, elderly are paid in every three-four months and many elderly do not get relief at the time of need. Elsewhere from Russia, it has been reported that uncertainty of a public pension in households following the 1996 Russian crisis led to the increase of death of elderly by 5%. People are also frustrated because of the upstream transfers of resources rather than downstream transfers for their education. Widows who receive ‘‘Helpless Widows Assistance,’’ which is much smaller than the elderly people get, also are equally frustrated for not having other incomes. Uncertainties loom around whether the universal pension would work as anti-poverty mantra. Critiques to this pension say that this is an inequitable process because the wealthier live longer on average than the poor and would get advantages for a longer period than poor. Other express concerns that resources are not spent for the right target groups, for example, schooling children rather resources are used for cheap popularity.
Studies show that population of senior citizen in Nepal is increasing, and people who remain active physically, socially and mentally, are less affected by the effects of ageing. Also, it is observed that people who are still married and have sufficient incomes are less depressed than those who are widowed and have limited incomes. Some steps that might help solve elderly problems in Nepal include but not limited to: a) establishment of elderly care centers for rehabilitation, and establishment of elderly clubs to facilitate the meetings of senior citizens; b) providing incentives (tax concession, discount cards for grocery, shopping, transportation, and utilities) to those who provide quality cares to elderly; c) subsidies to buy agricultural inputs for farming to grow fruits and vegetables needed for elderly; and d) free health care trainings and certification to those who are involved in the elderly care.
The Government of Nepal has attempted to respectfully improve the livings conditions of elderly through universal pension system to ensure that no one faces poverty in old age. In order to achieve the goal of universal basic pension, more research is needed from political economy perspective. As this pension system institutionalizes, there will be much pressure from citizens to increase the size of the pension taking into account the price inflation and through formal or informal indexing of the benefit level. New Zealand has already faced that problem. If universal pension system is misused by affluent families, it is better to do this through the tax system, collecting a surcharge on a pensioner’s income above a given threshold. Making every pension taxable would prevent the misuse of fund.