Uruguay’s residents over the age of 65 represent approximately 14 per cent of the population. This population experienced a relatively low incidence of poverty at approximately 3 per cent in 2003. The Government of Uruguay has contributed to this low incidence of poverty through the introduction of the Non-Contributory Pension for the Elderly and Disabled, or Programa de Pensiones No Contributivas a la Vejez e Invalidez, (PNC) in 1919. This scheme provides economic support to all older and disabled persons who lack a monetary income to afford their livelihood expenses. The pension scheme is managed by the Banco de Previsión Social (BPS) and aims to maintain low incidence of poverty and vulnerability among older and disabled persons.
In Uruguay, older persons can be eligible for two pension schemes: a non-contributory scheme, and a mandatory individual pension savings scheme. The individual savings scheme is mandatory for individuals with earnings equivalent to UPS 24,709, or USD 1,116, per month or more and optional to all others. The non-contributory scheme is available to all Uruguayans over the age of 70 who have resided in Uruguay for at least 15 years and require financial assistance in order to meet a minimum standard of living. The non-contributory scheme entitles eligible older and disabled persons to a monthly cash benefit of USD 135. Eligibility for persons with disabilities is determined by their disability and also requires residency in Uruguay for a period of 15 years. As of 2012, public spending of social security is made up of 8.7 per cent accounting for pensions alone as a percentage of GDP.
At the beginning of the 20th century, a system of contributory cash-based transfers was created in Uruguay, which aimed to protect workers and families in the formal sector and to ensure income security during retirement. The PNC marks an important historical precedent for the design of social protection systems for the elderly and disabled in Latin America and the Caribbean. While there have been plenty of changes throughout its existence, it has contributed significantly to the reduction and low incidence of poverty among the elderly and disabled and continues to display strong political will toward achieving broader income security coverage for older persons.
Further Reading:
- Fernando Filgueira, Diego Hernandez (2012). Social Protection Systems in Latin America and the Caribbean: Uruguay. United Nations Economic Commission for Latin America and the Caribbean, Santiago. Accessed from http://www.cepal.org/en/publications/social-protection-systems-latin-america-and-caribbean-uruguay on December 2016.