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BY THABO THULO COMMISIONER OF PENSIONS MINISTRY OF FINANCE AND DEVELOPMENT PLANNING (MoFDP)

“FURTHERING NATIONAL ACTION TO REALISE COMMITMENTS TO SOCIAL TRANSFERS IN AFRICA” THE CASE OF LESOTHO. CHALLENGES AND POSSIBILITIES FOR IMPLEMENTATION; POLICY CHOICES AND POLICY PRIORITIES” THE OLD AGE PENSIONS IN LESOTHO. BY THABO THULO- COMMISIONER OF PENSIONS

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BY THABO THULO COMMISIONER OF PENSIONS MINISTRY OF FINANCE AND DEVELOPMENT PLANNING (MoFDP)

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  1. “FURTHERING NATIONAL ACTION TO REALISE COMMITMENTS TO SOCIAL TRANSFERS IN AFRICA” THE CASE OF LESOTHO CHALLENGES AND POSSIBILITIES FOR IMPLEMENTATION; POLICY CHOICES AND POLICY PRIORITIES” THE OLD AGE PENSIONS IN LESOTHO BY THABO THULO- COMMISIONER OF PENSIONS MINISTRY OF FINANCE AND DEVELOPMENT PLANNING and DAVID CROOME-INSTITUTE OF SOUTHERN AFRICAN STUDIES NATIONAL UNIVERSITY OF LESOTHO 4th October, 2006 ALTIS HOTEL LISBON, PORTUGAL BY THABO THULO COMMISIONER OF PENSIONS MINISTRY OF FINANCE AND DEVELOPMENT PLANNING (MoFDP) LESOTHO 20 – 23 MARCH, 2006 FAIRMOUNT HOTEL LIVINGSTONE, ZAMBIA

  2. PRESENTATION LAYOUT • Country Background • Existing Schemes • Policy • Legal and Administrative Framework • Pensions Impact project • Conclusion Presentation Layout

  3. BACKGROUND(a) Completely surrounded by the Republic of South Africa.(b) Land area is about 30,355 sq. km ( i.e. similar to Belgium).(c) Mainly mountainous with the whole country at least 1,500 mt above sea level. (d) Estimated population 2.1 million. Population very homogeneous, over 90% from the Basotho tribe.

  4. (Background cont)(e) Lesotho is amongst the 50 poorest countries in the world (UNDP). (f) 2/3 of population is below the poverty line of $ 2/day, 43 % < $1 day. (g) Economy dominated by South Africa (RSA), very vulnerable to external economic forces. (h) Donor aid adds about 16% to national income.(i) Politically, Lesotho is a democratic monarchy. (Background cont) (e) Lesotho is amongst the 50 poorest countries in the world (UNDP). (f) 2/3 of population is below the poverty line of $ 2/day, 43 % < $1 day. (g) Economy dominated by South Africa (RSA), very vulnerable to external economic forces. (h) Donor aid adds about 16% to national income. (i) Politically, Lesotho is a democratic monarchy

  5. (Background cont.)(j) Independent since the British colonial power left in 1966. (k) Today, 4th october,2006, marks the 40th independence anniversary, and the launching of the new national flag. (l) Country divided into 10 districts, 80 constituencies and 128 very recently formed local community councils. (m) One of the highest levels of HIV infection in the world. ( 30% 20 – 40 year olds infected )(n) Life expectancy falling rapidly.(37F & 36M) (o) Massive increase in numbers of orphans. (Background cont.)(j) Independent since the British colonial power left in 1966. (k) Today, 4th october,2006, marks the 40th independence anniversary, and the launching of the new national flag. (l) Country divided into 10 districts, 80 constituencies and 128 very recently formed local community councils. (m) One of the highest levels of HIV infection in the world. ( 30% 20 – 40 year olds infected )(n) Life expectancy falling rapidly.(37F & 36M)(o) Massive increase in numbers of orphans.

  6. Existing Social Protection Schemes Prior to the introduction of Old Age PensionSocial protection system in Lesotho has been mainly confined to the following categories, and distributed across various government ministries: (i) Retired civil servants in the form of unfunded defined benefits pension scheme. (ii) Public Financial Assistance program for the destitute. (iii) African Pioneer Corps pensions to veterans of the two world wars and their dependants/widows. (iv) Universal free primary education which will be fully achieved in 2007.

  7. Old Age Pension Policy in Lesotho • Old 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.

  8. Policy Objectives(i) Increase living standards and reduce poverty. (ii) implement strategies outlined in the National Vision and the Poverty Reduction Strategy Program. (iii) Provide financial security to the elderly as a safety net measure.Major Challenges(1) Ensuring proper regulation and supervision of the scheme. (2) Mobilising resources to sustain the scheme. (3) G8 debt cancellation initiative- Lesotho, unlike other low- income countries, which are bigger and richer than Lesotho, was not forgiven her debts. As a result, Lesotho is faced with great resource constraints.

  9. (policy cont.) (policy cont.) • Implementation was achieved as • promised in November 2004, and • about 66000 eligible people • were registered. • Introduced early this year, the • veterans of the two world wars • are going to receive both war • pension and old age pension. • Implementation was achieved as promised in November 2004, and about 66000 eligible people were registered.. • Major policy change: Introduced early this year, whereby the veterans of the two world wars are going to receive both war pension and old age pension. • Lesotho is among the only six Sub-Saharan countries, and • one of only two LDCs in the world to introduce a universal non-contributory pension for its senior citizens. (with Nepal)

  10. LEGAL AND ADMINISTRATIVE FRAMEWORK • 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.

  11. Registration Process * In the process of registering eligible citizens, the MoFDP employed a participatory approach. * The Offices of District Administrators, Members of Parliament, and the Chiefs were sensitised through workshops and public gatherings. *The registration process was carried out on a constituency basis, using the voters’ registration centres. * The pension targets the individual pensioners and not the households, and therefore if there is more than one elderly person within the household, each one is entitled to a pension in his/her own right to register.

  12. Applicants were required to produce any of the following documents for identification: (i) Passport. (ii) Voters’ registration card. (iii) Any other acceptable form of photographic identification.

  13. Challenges Encountered in the Process Challenges encountered in the process Lack of documentation or photographic identification to prove ageMany elderly people do not have documentation to prove their age, and they only remember the historical event when they were born.Poor communication to the beneficiaries which resulted in people who do not qualify joining long queues to be registered.Poor roads infrastructure, sometimes coupled with bad weather conditions, making it extremely difficult to reach some of the rural areas.Errors of inclusion and exclusion • Lack of documentation or photographic identification to prove ageMany elderly people do not have documentation to prove their age, and they only remember the historical event when they were born.Poor communication to the beneficiaries which resulted in people who do not qualify joining long queues to be registered.Poor roads infrastructure, sometimes coupled with bad weather conditions, making it extremely difficult to reach some of the rural areas.Errors of inclusion and exclusion

  14. DELIVERY OF PENSIONS1. Identification of the Lesotho Postal Services as a well placed service provider. This arrangement was in realisation of the infrastructure and the geographical locations of the post offices throughout the 10 districts of the country. 2. Involving the military and the police in the delivery of cash in transit to the pay centres and to bring a sense of safety to the pensioners. The military helicopter is used to reach some remote areas which are totally inaccessible by road transport . 3. Arranging to pay recipients directly in cash through all the post offices, in the presence of the military and police officers. Other public buildings such as the Health centres, Local Courts, Chiefs’ offices, schools, etc, are used as additional pay centres. The provide a total of about 291 pay centres. 4. Following the first local elections in April, 2005, plans are being developed to use the local community councils for both registration and pay centres.

  15. 10. 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.

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

  17. LESOTHO PENSIONS IMPACT PROJECT National University of Lesotho: Institute of Southern African Studies November 2004 – March 2007 Interdisciplinary Pilot research , 12 contributing departments. Funding from University and HelpAge International.

  18. 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 Lesotho PROMOTE discussion of and get evidence for the implementation of old age pensions in other developing countries, especially southern Africa

  19. 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.

  20. HELP RECEIVED AND GIVEN 95% ambulant and care for themselves 50-60% need help with house and garden Help 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

  21. 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

  22. PENSION AND EDUCATION • 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 • 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

  23. 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.

  24. 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.

  25. 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

  26. 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

  27. PENSION AND HUNGER

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