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CHALLENGES AND POSSIBILITIES CHALLENGES AND POSSIBILITIES FOR IMPLEMENTATION; POLICY FOR IMPLEMENTATION; POLICY CHOICES AND POLICY PRIORITIES” CHOICES AND POLICY PRIORITIES” THE OLD AGE PENSIONS IN THE OLD AGE PENSIONS IN LESOTHOLESOTHO

BY THABO THULO COMMISIONER OF PENSIONS BY THABO THULO COMMISIONER OF PENSIONS

MINISTRY OF FINANCE AND DEVELOPMENT MINISTRY OF FINANCE AND DEVELOPMENT PLANNING (MoFDP)PLANNING (MoFDP)

LESOTHOLESOTHO

20 – 23 MARCH, 200620 – 23 MARCH, 2006

FAIRMOUNT HOTELFAIRMOUNT HOTEL

LIVINGSTONE, ZAMBIALIVINGSTONE, ZAMBIA

““FURTHERING NATIONAL ACTION TO FURTHERING NATIONAL ACTION TO REALISE COMMITMENTS TO SOCIAL REALISE COMMITMENTS TO SOCIAL

TRANSFERS IN AFRICA”TRANSFERS IN AFRICA”

THE CASE OF LESOTHO

BY THABO THULO- COMMISIONER OF PENSIONS BY THABO THULO- COMMISIONER OF PENSIONS

MINISTRY OF FINANCE AND DEVELOPMENT PLANNINGMINISTRY OF FINANCE AND DEVELOPMENT PLANNING

andand

DAVID CROOME-INSTITUTE OF SOUTHERN AFRICAN DAVID CROOME-INSTITUTE OF SOUTHERN AFRICAN STUDIESSTUDIES

NATIONAL UNIVERSITY OF LESOTHONATIONAL UNIVERSITY OF LESOTHO

4th October, 20064th October, 2006

ALTIS HOTELALTIS HOTEL

LISBON, PORTUGALLISBON, PORTUGAL

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Presentation LayoutPresentation Layout

PRESENTATION LAYOUTPRESENTATION LAYOUT

•Country Background

•Existing Schemes

•Policy

•Legal and Administrative Framework

• Pensions Impact project

•Conclusion

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BACKGROUNDBACKGROUND

(a) Completely surrounded by the Republic of (a) Completely surrounded by the Republic of South South Africa. Africa.

(b) Land area (b) Land area is is about 30,355 sq. km ( i.e. about 30,355 sq. km ( i.e. similar to similar to Belgium). Belgium).

(c) Mainly mountainous with the whole (c) Mainly mountainous with the whole country at country at least 1,500 mt above sea least 1,500 mt above sea level. level. (d) Estimated population 2.1 million. (d) Estimated population 2.1 million. Population Population very homogeneous, over very homogeneous, over 90% from the Basotho 90% from the Basotho tribe. tribe.

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(Background cont)(Background cont)

(e) Lesotho is a(e) Lesotho is amongst the 50 poorest mongst the 50 poorest countries in countries in the world (UNDP). the world (UNDP).

(f) 2/3 of population (f) 2/3 of population is is below the poverty line below the poverty line ofof

$ 2/day, 43 % < $1 day. $ 2/day, 43 % < $1 day.(g) Economy dominated by South (g) Economy dominated by South

Africa Africa (RSA), very vulnerable to (RSA), very vulnerable to external external economic forces. economic forces.

(h) Donor aid adds about 16% to (h) Donor aid adds about 16% to national national income. income. (i) Politically, Lesotho is a democratic (i) Politically, Lesotho is a democratic monarchy.monarchy.

(Background cont)(Background cont)

(e) Lesotho is a(e) Lesotho is amongst the 50 mongst the 50 poorest poorest countries in the world (UNDP).countries in the world (UNDP).

(f) 2/3 of population (f) 2/3 of population is is below the below the poverty line of $ 2/day, 43 % < poverty line of $ 2/day, 43 % < $1 $1 day.day.

(g) Economy dominated by South (g) Economy dominated by South Africa Africa (RSA), very vulnerable to (RSA), very vulnerable to external external economic forces. economic forces.

(h) Donor aid adds about 16% to (h) Donor aid adds about 16% to national income.national income. (i) Politically, Lesotho is a (i) Politically, Lesotho is a democratic democratic monarchymonarchy

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(Background cont.)(Background cont.)

(j) Independent since the British colonial (j) Independent since the British colonial power power left in 1966. left in 1966.

(k) Today, 4(k) Today, 4thth october,2006, marks the 40 october,2006, marks the 40thth independence anniversary, and independence anniversary, and

the the launching of the new launching of the new national flag. national flag.

(l) Country divided into 10 districts, 80 (l) Country divided into 10 districts, 80 constituencies and 128 very constituencies and 128 very

recently formed recently formed local community local community councils. councils.

(m) One of the highest levels of HIV (m) One of the highest levels of HIV infection in infection in the world. ( 30% 20 – 40 the world. ( 30% 20 – 40 year olds infected )year olds infected )

(n) Life expectancy falling rapidly.(37F & (n) Life expectancy falling rapidly.(37F & 36M)36M)

(o) Massive increase in numbers of (o) Massive increase in numbers of orphans.orphans.

(Background cont.)(Background cont.)

(j) Independent since the British (j) Independent since the British colonial colonial power left in 1966.power left in 1966.

(k) Today, 4th october,2006, marks (k) Today, 4th october,2006, marks thethe 40th independence anniversary, 40th independence anniversary, and and the launching of the new national the launching of the new national flag. flag.

(l) Country divided into 10 districts, (l) Country divided into 10 districts, 80 80 constituencies and 128 very constituencies and 128 very recently recently formed local community councils. formed local community councils.

(m) One of the highest levels of HIV (m) One of the highest levels of HIV infection in the world. ( 30% 20 – infection in the world. ( 30% 20 – 40 40 year olds infected )year olds infected )

(n) Life expectancy falling rapidly.(n) Life expectancy falling rapidly.(37F & (37F & 36M)36M) (o) Massive increase in numbers of (o) Massive increase in numbers of orphans.orphans.

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Existing Social Protection Schemes Prior to the introduction Existing Social Protection Schemes Prior to the introduction of Old Age Pensionof Old Age Pension

Social protection system in Lesotho has been mainly confined Social protection system in Lesotho has been mainly confined to the following categories, and distributed across to the following categories, and distributed across various government ministries: various government ministries:

(i) Retired civil servants in the form of unfunded defined benefits (i) Retired civil servants in the form of unfunded defined benefits pension scheme pension scheme.. (ii) Public Financial Assistance program (ii) Public Financial Assistance program forfor the destitute. the destitute.

(iii) African Pioneer Corps pensions to veterans of the two world wars (iii) African Pioneer Corps pensions to veterans of the two world wars and their dependants/widows. and their dependants/widows.

(iv) Universal free primary education which will be fully achieved in 2007. (iv) Universal free primary education which will be fully achieved in 2007.

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Old Age Pension Policy in Old Age Pension Policy in LesothoLesothoOld Age Pension PolicyOld Age Pension Policy

• The Ruling political party has had the introduction of the OAP as a manifesto policy since 2002.

• In 2004, the Lesotho Government announced a new policy to care for its senior citizens, acknowledged to be one of the most vulnerable groups in the society. It committed the Government to the introduction of a universal old age pension scheme in November 2004.

• In doing so, senior citizens aged seventy (70) years and above are the recipients under this scheme, at the rate of M150($25) per person per month.

• According to the Bureau of Statistics, it was estimated that about 70,000 senior citizens fall in the age distribution of 70 years and above. This is 3.6% of the total population.

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•

Policy ObjectivesPolicy Objectives(i) Increase living standards and reduce poverty.(i) Increase living standards and reduce poverty.

(ii) implement strategies outlined in the National (ii) implement strategies outlined in the National Vision and Vision and the Poverty Reduction Strategy the Poverty Reduction Strategy Program.Program.

(iii) Provide financial security to the elderly as a safety (iii) Provide financial security to the elderly as a safety net net measure. measure.

Major Major ChallengesChallenges

(1) (1) Ensuring proper regulation and supervision of the Ensuring proper regulation and supervision of the scheme.scheme. (2) Mobilising resources to sustain the scheme. (2) Mobilising resources to sustain the scheme. (3) (3) G8 debt cancellation initiative- Lesotho, unlike other G8 debt cancellation initiative- Lesotho, unlike other low-low- income countries, which are bigger and richer than income countries, which are bigger and richer than Lesotho, Lesotho, was not forgiven her debts. As a result, Lesotho was not forgiven her debts. As a result, Lesotho is faced with is faced with great resource constraints.great resource constraints.

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(policy cont.)(policy cont.)

• Implementation was achieved as Implementation was achieved as promised in November 2004, and about promised in November 2004, and about 66000 eligible people were registered..66000 eligible people were registered..

• Major policy change: Introduced early Major policy change: Introduced early this year, whereby the veterans of the this year, whereby the veterans of the two world wars are going to receive two world wars are going to receive both war pension and old age pension.both war pension and old age pension.

• Lesotho is among the only six Sub-Lesotho is among the only six Sub-Saharan countries, and Saharan countries, and

• one of only two LDCs in the world to one of only two LDCs in the world to introduce a universal non-contributory introduce a universal non-contributory pension for its senior citizens. (with pension for its senior citizens. (with Nepal)Nepal)

(policy cont.)(policy cont.)

• Implementation was Implementation was achieved as achieved as promised in November 2004, promised in November 2004, and and about 66000 eligible people about 66000 eligible people were registered.were registered.

• Introduced early this year, Introduced early this year, the the veterans of the two world veterans of the two world wars wars are going to receive both war are going to receive both war pension and old age pension.pension and old age pension.

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• The Old Age pensions Act, 2005 was enacted in January 2005, and applied retrospectively from

November, 2004. The scheme is administered fully within the Ministry of Finance and Development Planning.

• All senior citizens aged 70 years and older and who are not receiving any form of pension or grant from the public assistance program funded from government consolidated fund are eligible to register for an old age pension.

LEGAL AND ADMINISTRATIVE FRAMEWORKLEGAL AND ADMINISTRATIVE FRAMEWORK

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Registration ProcessRegistration Process

* * In the process of registering eligible citizens, the MoFDP In the process of registering eligible citizens, the MoFDP employed a participatory approach. employed a participatory approach.

* The Offices of District Administrators, Members of Parliament, * The Offices of District Administrators, Members of Parliament, and the Chiefs were sensitised through workshops and public and the Chiefs were sensitised through workshops and public gatherings. gatherings.

*The registration process was carried out on a *The registration process was carried out on a constituency constituency basis, using the voters’ registration centres. basis, using the voters’ registration centres.

* The pension targets the individual pensioners and not the * The pension targets the individual pensioners and not the households, and therefore if there is more than one elderly households, and therefore if there is more than one elderly person within the household, each one is entitled to a pension person within the household, each one is entitled to a pension in his in his/her /her own right to register.own right to register.

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•Applicants were required to produce any of Applicants were required to produce any of the the following documents for identification: following documents for identification:

(i) Passport.(i) Passport.

(ii) Voters’ registration card.(ii) Voters’ registration card.

(iii) Any other acceptable form of (iii) Any other acceptable form of photographic photographic identification. identification.

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CChallenges encountered in the processhallenges encountered in the process

Lack of documentation or photographic identification to Lack of documentation or photographic identification to prove ageprove age

Many elderly people do not have documentation to prove Many elderly people do not have documentation to prove their age, and they only remember the historical event when their age, and they only remember the historical event when they were born.they were born.

Poor communication to the beneficiaries which resulted in Poor communication to the beneficiaries which resulted in people who do not qualify joining long queues to be people who do not qualify joining long queues to be registered.registered.

Poor roads infrastructure, sometimes coupled with bad Poor roads infrastructure, sometimes coupled with bad weather conditions, making it extremely difficult to reach weather conditions, making it extremely difficult to reach some of the rural areas.some of the rural areas.

Errors of inclusion and exclusionErrors of inclusion and exclusion

CChallenges Encountered in the Processhallenges Encountered in the Process

Lack of documentation or photographic Lack of documentation or photographic identification to prove ageidentification to prove age

Many elderly people do not have Many elderly people do not have documentation to prove their age, and documentation to prove their age, and they only remember the historical event they only remember the historical event when they were born.when they were born.

Poor communication to the beneficiaries Poor communication to the beneficiaries which resulted in people who do not which resulted in people who do not qualify joining long queues to be qualify joining long queues to be registered.registered.

Poor roads infrastructure, sometimes Poor roads infrastructure, sometimes coupled with bad weather conditions, coupled with bad weather conditions, making it extremely difficult to reach making it extremely difficult to reach some of the rural areas.some of the rural areas.

Errors of inclusion and exclusionErrors of inclusion and exclusion

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DELIVERY OF PENSIONSDELIVERY OF PENSIONS 1. Identification of the Lesotho Postal Services as a well 1. Identification of the Lesotho Postal Services as a well placed placed service provider. This arrangement was in service provider. This arrangement was in realisation of the realisation of the infrastructure and the geographical infrastructure and the geographical locations of the post locations of the post offices throughout the 10 districts offices throughout the 10 districts of the country.of the country.

2. Involving the military and the police in the delivery 2. Involving the military and the police in the delivery of cash of cash in transit to the pay centres and to bring a in transit to the pay centres and to bring a sense of safety to sense of safety to the pensioners. The military helicopter the pensioners. The military helicopter is used to reach is used to reach some remote areas which are totally some remote areas which are totally inaccessible by road inaccessible by road transport . transport .

3. Arranging to pay recipients directly in cash through 3. Arranging to pay recipients directly in cash through all the all the post offices, in the presence of the military post offices, in the presence of the military and police and police officers. Other public buildings such as officers. Other public buildings such as the Health centres, the Health centres, Local Courts, Chiefs’ offices, Local Courts, Chiefs’ offices, schools, etc, are used as schools, etc, are used as additional pay centres additional pay centres. The . The provide provide a total of about 291 pay a total of about 291 pay centres. centres.

4. Following the first local elections in April, 20054. Following the first local elections in April, 2005, , plans are plans are being being developdevelopeded to use the local community to use the local community councils for councils for both registration and pay centres. both registration and pay centres.

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10. CONCLUSION10. CONCLUSION

• Old age pension in Lesotho has had relative success in meeting some of the basic human needs of older people.

•

• As we look into the future, we envisage, and therefore are working hard towards a well administered and sustainable scheme, and looking forward to achieving one key

component in the Millennium Development Goals (MDGs).

• The Lesotho government is making great efforts to reform and modernise other pension’s laws ,such as civil service.

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THANK YOU

khotso, Pula, Nala.’Email:thulot@finance.gov.ls

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LESOTHO PENSIONS IMPACT PROJECT

National University of Lesotho: Institute of Southern African StudiesNovember 2004 – March 2007Interdisciplinary Pilot research , 12 contributing departments.Funding from University and HelpAge International.

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OBJECTIVES OF PILOT STUDY Assess the impact and poverty reducing effects of the old age pensions on the well being of recipients

ASK reasons for, processes involved and anticipated benefits and costs ASSIST the development, presentation and implementation of a nationwide study of the old age pension system in LesothoPROMOTE discussion of and get evidence for the implementation of old age pensions in other developing countries, especially southern Africa

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WHO AND WHERE ?• Interviewers, all recent NUL graduates with previous experience of field work• 50 villages and the small urban center around the University, about 35 km from Capital• Area in the foothills representative of the environmental and typical socio- economic characteristics of Lesotho.

2020

HELP RECEIVED AND GIVEN

95% ambulant and care for themselves50-60% need help with house and gardenHelp from family, esp. children, no change after pension. 86% have good links with family, pension has improved links for 21%215 respondents are caring for 65 dependent ‘orphans’, extra spending on them is 20% of pension each month

2121

EMPLOYMENT, INCOME, SUPPORT

• Only 7% still in paid work• 23% get money income as well as pension• Post pension, 9% more interested in paid work, 60% less interested• 25% of income receivers get less cash support after pension• No post-pension net change in assets held ( nb 95% already own house)

• Small increase in lending & giving to others• Average 4% of pension saved• 45 new jobs created, most farm or domestic work• 11% says having pension makes it easier for them or family to get credit

2222

PENSION AND EDUCATION

• 60% have household members at school, two-thirds at primary level• 90 children get support from pension, av. M60 month for uniforms, transport, etc• 75% would use higher pension to spend more on this

• No interest in using pension to educate themselves.• In terms of priorities spending on education is - less important than spend on accommodation and health, - more important than spend on food and clothes

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PENSION AND RESPECT

• Still a lot of respect for elderly in Basotho villages. 83% say they get ‘A Lot’or Some respect from family (esp. children) and neighbours. Pension makes a small positive difference in this.• Similar response on the role of pensioner as an advice giver.

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PENSION AND RELATIONS WITH OTHERS

• 205/215 say “I control myself and the use of my pension”. Only 10 have others ( family ) doing this;• 7% claim they are being abused physically or mentally, mostly by family;• 3 reports of abuse in order to get hold of pension money. Otherwise people feel safe with money in house.

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PHYSICAL AND MENTAL HEALTH

• 80% mostly healthy but 15% say they have serious health problems. joints, B.P., vision.• Local health services available, but means some travel and cost. • Community health service too passive.

After pension• Spend more on health, priority for hospital/clinic visits and to buy medicine. • Use on average 8% of pension for extra health

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FOOD AND NUTRITION FOOD AND NUTRITION FOOD AND NUTRITION

• 61% use pension to buy more food. Average spend M 50/month. • Pensioners on average get to eat 40% of extra food for themselves . MEAT, EGGS, SUGAR bought new.• Only 16% responders believe that getting the pension will make people grow less food

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% before % before pensionpension

% after pension% after pension

Never enough Never enough food to fill mefood to fill me

2020 1010

Sometimes Sometimes enough food to enough food to fill mefill me

4747 4747

Always enough Always enough food to fill mefood to fill me

3636 4646

PENSION AND HUNGER