Social security expenses top pension costs

KATHMANDU, JUL 27 -

Expenditure for the Social Security Allowance Programme is higher than the amount the state spends for pension to civil servants, police, teachers, police and constitutional bodies among others.

“The proportion of actual expenditure on social security in 2009-10 was 2.79 percent of the total budget, while pension expenditure was 2.52 percent,” said a report on Social Security Allowance Programme released by the National Planning Commission on Thursday. “The trend grew at a higher pace in 2010-11 with its share reaching to 3.01 percent.”

Since the government started universal flat pension of Rs 100 per month to the elderly people above 75 years old in 1994, the average growth rate of expenditure under the programme has been at 0.75 percent, according to the report.

The government spent just Rs 400 million of total budget in 1994-95 under this programme which increased to Rs 820 million in 2005-06 and Rs 7.6 billion

in 2010-11. According to the study, inclusion of single women and endangered races, lowering the eligibility age threshold for Dalits and Citizens of Karnali Zone since 2008-09 and rise in allowance amount per month to Rs 500 since 2010-11 gave rise to the number of beneficiaries and cost involved in it. “With increase in life expectancy of the people, the amount will certainly grow further in the future,” the report said. “This raises the twin questions of how the fund will be managed and how the required fund will be financed.”

NPC Vice-chairman Dipendra Bahadur Kshetry said it would be challenging for the state to fund the increasing cost of social security allowance. “It is better to implement the system for people living below the poverty line to make it sustainable,” he said.

There had been efforts to implement the pension system in bureaucracy on the basis of the equal contribution from civil servants and the state, citing increased cost of pension in recent years.  The cost of social security allowance surpassing pension is a difficult situation for the government. The government has been raising 1 percent of the income of salaried  individuals, promising social security for them, for the last three years.

Despite increased cost, the state is not in position to revert this system as the scheme is very popular,  with a majority of beneficiaries benefiting directly, the study said.  “It is natural to see the popularity of the programme as it is distributive,” said Kshetry, adding, that  reverting the system for any government is politically risky.

The study, conducted in eight districts both in rural and urban areas incorporating views of the 5,179 individuals, revealed about two-third of them were satisfied with the current distribution system of the programme.

Curre-ntly, VDCs and municipalities distribute the amount to beneficiaries.

The study concluded that the programme helped in economic well-being of the beneficiaries with 80 percent of those surveyed reporting that they were using the amount for regular household expenditure.

 The study highlighted the need for bigger resources, addressing lapses in distribution system due to poor capacity of local bodies, politicisation, ineffective information system and limitation of service delivery.

Source: The Kathmandu Post