Bolivia's Dignity Pension Scheme | Reducing Inequality in FEALAC Member Countries

In Bolivia those aged 65 and over make up 6.5 per cent of the population in 2015, and in 2002 this group faced a high incidence of poverty at 53 per cent. In response to this high incidence of poverty the Government of the Plurinational State of Bolivia launched the Renta Dignidad, or Dignity Pension programme (RDP) in 2008. The RDP is a universal benefit for all residents aged 60 years and older. RDP is part of a strong State priority to guarantee a minimum level of universal income security to all Bolivians. The RDP is administered by the Authority for the Monitoring and Control of Pensions, which manages RDP payments through 1,100 payment centres across the country.

The RDP serves as a complimentary pillar in Bolivia’s pension system, which also includes contributory and subsidized schemes. Bolivia’s contributory schemes allows employed persons to accumulate retirement funds in a mandatory individual savings account, while a subsidised Solidarity Pension is made available for those aged 58 and over who have at least 10 years of contributions but have not accumulated enough to support longer-term monthly pension payments. Regardless of individual savings, all resident citizens of Bolivia, aged 60 and older, are included in the RDP, which provides monthly payments of USD 28 per month. The RDP also provides monthly payments of USD 21 per month to those who already receive the contributory or solidarity pension. This expansion of the RDP allows for greater assistance to those in need while maintaining everyone’s right to a universal pension. Financial assistance for funerals is also included as part of the RDP and acts as an incentive for families to report the death of recipients, complimenting national population and civil registry monitoring. The RDP reached 800,000 older and disabled persons in 2010, 83 per cent of whom did not receive pensions under other schemes. In total, 97 per cent of eligible residents received the RDP in 2010. Empirical evidence shows that the per capita income of Bolivians benefitting from the programme has increased on average by 16.4 per cent.

The primary source of financing for RDP is a direct tax on hydrocarbons and the profits of capitalized enterprises that form part of a newly established Dignity Pension Fund. In 2012 this fund had reserves for future obligations amounting to USD 573 million which was equivalent to 2.1 per cent of Bolivia’s GDP. While the RDP has been successful in reaching nearly 100 per cent of target beneficiaries, authorities still face some challenges in ensuring payments reach a nationally defined minimum standard of living. Nonetheless, the RDP is an important step toward universal income protection for all older persons in Bolivia and is inclusive of persons with disabilities, representing an integrated approach toward income security.