|
Universal pensions in Mauritius: Lessons for the rest of us
Presented at the 4th International Research Conference on Social Security
Antwerp, 5-7 May 2003
Larry Willmore
UN Department of Economic and Social Affairs, United States
SARPN acknowledges the International Social Security Association (ISSA) as the source of this document - www.issa.int
|
|
|
[Download complete version  - 783Kb ~ 4 min (32 pages)]
[ Share with a friend 
]
|
Introduction
Mauritius is a small, subtropical country located in the Indian Ocean to the east of Madagascar. It was occupied successively by the Dutch in 1598, the French in 1715 and the British in 1810. As a British colony, it was increasingly self-governing after 1947. The constitution of that year gave voting rights to all adults, including women, subject to a test of “simple literacy”. Universal suffrage was introduced in 1958 and Mauritius became a full, sovereign state in 1968.
At the time of its independence, Mauritius suffered from excess population, high unemployment and a low standard of living. In this stagnant plantation economy, a single crop—sugar—accounted for 90% of export earnings. Sugar continues to dominate, even today, but, beginning in the 1980s, its relative importance dropped markedly because of increased foreign exchange earnings from exports of light manufactures (primarily garments) and from tourism. Growth since 1980 has been persistent and strong, so strong that some refer to it as a “Mauritian Miracle” (Subramanian and Roy 2001). Life expectancy at birth has reached 71 years, 84.5% of the adult population is literate, and income per capita, measured on a purchasing power parity (PPP) basis, is 40% that of the USA.1 The 1.2 million residents of Mauritius now have the standard of living of a middle-income developing country, and the country ranks 67th (between Saint Lucia and Colombia) out of 173 countries listed in the Human Development Report of the UNDP (2002). A consequence of this successful development has been a decrease in the birth rate and an increase in the number of elderly persons in the population: on reaching age 60, a Mauritian male can expect to live another 15 years and a woman an additional 20 years (Mauritius Central Statistical Office, 1999, p. 38).
Much of this is well known. What is less known is that every elderly resident of Mauritius receives income support from a system of non-contributory pensions that dates from 1950.2 Subject only to minimum residence requirements (12 years from age 18 for citizens, 15 years from age 40 for non-citizens), every resident aged 60 or over is eligible for a monthly pension that amounts, in the current fiscal year (2002/2003) to the following3:
-
age 60-89: Rs 1,700 (USD 58)
-
age 90-99: Rs 6,400 (USD 220)
-
age 100+: Rs 7,300 (USD 252)
Those who are totally blind or suffer from total paralysis receive an additional benefit of Rs 1,205 a month.4 It is also customary to pay all pensioners a “13th month” bonus at the end of each year. As a proportion of per capita GDP, these pensions range from approximately 18%, for the smallest and most common pension, to 92% for that of a person aged 100 years or more and severely disabled.
These basic pensions are not income-tested, nor are they retirement-tested. They are taxable as ordinary income, however, so those who continue to work, or have other sources of income, return some of their pension to the government in the form of tax. All pensioners aged 90 years or more pay some income tax, even if they have no other income, unless they have deductions for dependents or other allowable expenses. The rate of income tax in Mauritius is now nearly flat, with only two brackets: 15% for the first Rs 25,000 of taxable income, and 25% for all additional income. The basic personal deduction is Rs 60,000, equivalent to income of Rs 5,000 a month. In addition, all consumers, pensioners and workers alike, pay value added tax (VAT) on most goods and services, at a rate of 12 percent.
The history of universal pensions in Mauritius is not readily available and is incomplete even in this paper, which is a work in progress. For this reason the paper contains more details than may be welcomed by casual readers. Such readers may want to skim or skip the next section, as well as section 5, titled “Contributory, income-related pensions (from 1978).” The other three sections are of general interest, as is the conclusion.
Footnotes:
-
Another densely populated, former colony—Singapore—has done even better, and now has a per capita income equal to 80% that of the USA. These PPP estimates are for the year 2000 and are from Penn World Table version 6.1 (Heston, Summers and Aten, 2002). UNDP (2002, pp. 149-152) reports, for the same year, PPP per capita incomes for Singapore and Mauritius equal only to 68% and 29%, respectively, that of the USA, but the UNDP team did not have access to the latest Penn World Table at the time it drafted its report.
-
I myself was unaware of this long history, and erroneously reported (Willmore 2001) that the universal pension scheme of Mauritius began with passage of the National Pensions Act of 1976.
-
The US dollar equivalents shown are calculated at the market exchange rate. The US dollar does, of course, have more purchasing power in Mauritius than in the USA or other high-income countries.
-
In mid-1997, 11% of all pensioners, including 39% of those over age 80, were blind or paralysed, so qualified for a disability supplement (Mauritius Central Statistical Office, 1999, p. 35).
|
|
Related documents