“Pension 65 and Beyond”Impact Evaluation of Pension 65 and its interactions with other

mechanisms of social protection

GRADE, Peru

Brasilia, September 2014

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Pension 65Pension 65 (Programa Nacional de Asistencia Solidaria) is one of the socialprotection strategies implemented by the Peruvian Government. It targets theelder population aged 65 or more living in extreme poverty that has nopension for retirement.

Eligibility

I Elders, 65 years or olderI In extreme poverty according to SISFOH (household targeting

system)I No access to other pension mechanism or ESSALUD

What does the Program do?

I Delivers cash transfers: non-contributory pension of S/.125 (∼ US$45) per month per user. Bi-monthly payments

I Fosters social protection: promotes participation of other institutionssuch that P65 users can access complementary services

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Our study

The overall objective of the study is to assess the impacts of Pension 65 onthe welfare of elder adults and their families, but also to establish how theProgram affects welfare in the context of other protection mechanisms.

Research team:

I GRADE, PerúI Colaboration with Oxford, UK and Economic Development

Initiatives-EDI, Tanzania

Funds:

I International Iniciative for Impact Evaluation – 3ieI International Development Research Centre – IDRC de Canada

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Objetives and Research Questions

Objetive A: To assess impacts of Pension 65I Health, nutrition and poverty status of beneficiaries and their

familiesI Investments in children

Objetive B: To analize interactions between Pension 65 andJuntos

I Complements or substitutes?Objetive C: To analize interactions between Pension 65 andinformal social protection networks

I Potential for crowding-out or spill-over effects

Objetive D: To analize effects on labor markets and familyentrepreneurshipObjetive E: To analize gender issues

I Resource allocation, roles and power within the householdI Gender and investment in children

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Interactions with Juntos

Little is known about the effect of overlapping between social protectionprograms, and how the concentration of resources may result incomplementarities, or conversely on diminishing returns. Understanding thisis crucial for the design and targeting of social programs.

1 Impacts on Graduations.

I Larger cash transfers. Combined Pension 65 (∼ US$ 45/elder) andJuntos (∼ US$ 37/household) can have a magnified impact onasset accumulation, savings, investments, etc.

2 Externality of Juntos conditionalities.

I Juntos may change preferences or have a demonstration effects.I When Juntos is present, additional chas from Pension 65 can be

allocated to children, education, health, etc.I Conditionality could be maintained after graduation from Juntos.

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Interactions with informal social protection networks

The importance of interactions between social programs and informalnetworks is recognized, but there is still little empirical evidence. We seek toquantify the magnitude of Pension 65 impacts on inter-family transfers.

1 Quantify indirect transfers to non-beneficiaries (Spill-over effects).

2 Assess the burden reduction that the elders may represent for family andsupport networks, especially direct family(Crowding-out effects); andhow the freed funds are re-assigned.

3 Impacts on agricultural and labor Andean reciprocity systems.

4 Impact on inter-generational transfer of assets such as land.

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Impacts on labor markets and family entrepreneurship

Pension 65 will generate an increase in non-labor household income throughan unconditional cash transfer. It is expected that this could generate impactson the allocation of time (home and market). It may also allow familybusinesses to develop.

1 How does the labor supply of beneficiary families is affected? Does thelabor supply of non-beneficiaries is also affected? Maybe throughchanges in local markets?

2 What is the impact of Pension 65 on incentives to formal employment?Are incentives to formalization (and therefore to contributions to theformal pension schemes) distorted by the introduction ofnon-contributory pension plans?

3 Is there any impact of Pension 65 on family entrepreneurship?

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The gender dimensionInternational evidence suggests that gender inequality is (heterogeneously)incorporated in the design of policies and social protection programs, butgenerally in a limited way. However, it is increasingly recognized that povertydepends not only on income but also on social risks such as discrimination,unequal distribution of resources and power between women and men withinthe family.

1 What are the effects Pension 65 in the allocation of resources, roles andpower within the household? Are women disproportionally affected?

2 How does gender affect family investments among beneficiaries? Dograndmothers make greater investments oriented to infancy andchildhood (nutrition, education and employment)?

3 Does the women’s time spent caring for elders is reduced? Does theirtime for other activities at home or in the market increases?

4 Does it lead to greater labor supply of women? Could this also affect thebargaining power and empowerment of women within the household?

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MethodsIdentification strategy

I Random assignment of eligible elders to treatment and controlgroups

I Pre- and post- intervention dataI Coordinated with Pension 65 and basedon its roll-outI Combined with new and old Juntos areasI Double-difference and triple-difference

Quantitative instrumentsI Baseline (pre) and follow-up (post) surveysI Combined with a census of family networks

Qualitative instrumentsI In-depth interviews with Program beneficiaries and their families, as

well as local authoritiesI EtnographyI Qualitative methods will help us develop a deeper understanding of

processes and channels, providing contextual narratives withadditional meaning to complement the quantitative analysis

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Expected results

Comprehensively exploreI Welfare of the elderly populationI Family investments in infancy and childhoodI Welfare of women

Impact on policyI Generate evidence that contributes to local and

regional/international debate on non-contributory pension plans,and more broadly on social protection programs

I Highlight gender issues in the analysis of impacts of socialprotection programs

I We also aim to raise conscientiousness that social protectionprograms do not work in isolation from other programs or informalinsurance arrangements

I We believe that the inclusion of these issues in the design ofpolicies can lead to more effective social protection programs

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