Income security in old-age, disability and death of a breadwinner
Updated by Anne Drouin , Krzysztof Hagemejer , Tharcisse Nkanagu on 24.09.2012
The important policy message coming from ILO social security standards is that social security should be seen as a comprehensive and consistent set of complementary policies and measures providing income security and affordable access to medical care. To conform to international labour standards, national policies should thus build a basic set of provisions and then - as economic and social development takes place - progressively expand coverage and increase levels of protection. Social security pensions designed to provide income security at old-age, or in case of disability or loss of a breadwinner, are an inseparable part of that minimum social security package.
ILO Convention No 102, in its Parts V, IX, and X, and ILO Convention No 128 specify rights to social security benefits at retirement (old-age pension), in case of disability (disability pension) and in case of a loss of the breadwinner (survivors' pension). Specific types of disability and survivors' pension are also required in cases related to employment accident, injury or sickness as foreseen by Part VI of Convention No 102 and by Convention No 121.
Right to affordable retirement
Both Conventions (102 and 128) stipulate that old-age pensions are to be paid in the form of life annuities ("periodical payments" paid "throughout the contingency") to persons reaching the age prescribed by the national legislation. In general, this age should not be higher than 65; however, the Conventions allow to set a higher retirement age if justified. Fixing retirement age above 65 should give "due regard to the working ability of elderly persons" (Convention 102) and "demographic, economic and social criteria, which shall be demonstrated statistically" (Convention 128).
At the same time, Convention No 128 says that "If the prescribed age is 65 years or higher, the age shall be lowered, under prescribed conditions, in respect of persons who have been engaged in occupations that are deemed by national legislation, for the purpose of old-age benefit, to be arduous or unhealthy".
Right to income security on the loss of a breadwinner and disability
Conventions No 102 and No 128 stipulate that a survivors' pension should be awarded on "the loss of support as the result of the death of the breadwinner" and incapacity for self-support.
Minimum pension levels
The Conventions give a wide freedom of choice concerning through what mechanism (or combination of mechanisms) old-age, disability and survivors' pensions should be delivered: earnings related or flat rate, contributory or non-contributory, means-tested or not - what is important is the outcome in terms of benefit levels.
If basic income security is to be provided mainly by the earnings-related pensions, the minimum replacement rate should be guaranteed at least for those with earnings lower than prevailing, typical, or average levels.
Minimum standards in governance and financing
While there is a wide choice of policy measures which could be adopted to provide pension benefits, these measures should nevertheless meet certain standards concerning governance of social security pension systems and their financing: