PROGRAM BRIEF 1 Old Age Allowance Bangladesh has seen significant declines in fertility and mortality following remarkable improvements in human development. The country’s population pyramid, once with a wide base representing a very large young population, is starting to see a burgeoning elderly population (defined as those ages sixty two and older) who represented about 5 percent of the population in 2011i and is expected to grow to a staggering 20 percent of the population by 2050.ii Thus safety net programs to provide old age support for the poor elderly will be playing an increasingly important role. This policy brief discusses the program details, current challenges and reform areas, and way forward for the Old Age Allowance, the country’s largest anti-poverty cash transfer for the elderly. 1 The Program Brief series discusses major safety net programs that the Government of Bangladesh implements. The series includes notes on the Old Age Allowance; Allowances for the Widow, Deserted and Destitute Women; and Allowances for the Financially Insolvent Disabled by the Ministry of Social Welfare; Employment Generation Program for the Poorest; Food for Work; Work for Money; Test Relief; and Vulnerable Group Feeding by the Ministry of Disaster Management and Relief; and the Child Benefit Scheme. Many of these programs are supported by the World Bank. 1 Old Age Allowance PROGRAM BRIEF BACKGROUND Until the late 1990s, the only form of old age pension was elderly population. In recognition of these issues, the Old Age the Government’s civil service pensions (Pensions for Retired Allowance (OAA) program was introduced by the Government Government Employees and their Families) which covered of Bangladesh in FY98 to provide old age support for the poor about 5 percent of the labor force and 1 percent of the elderly elderly. population.iii Pensions programs for those employed in the formal sector, let alone the informal sector, are yet to be The OAA is an unconditional cash transfer allowance program developed. Therefore, the vast majority of Bangladeshi work administered by the Department of Social Services (DSS) force had no access to old age support other than informal under the Ministry of Social Welfare (MoSW). The program networks based mostly on kinship. Meanwhile, economic aims to target poor and vulnerable elderly (sixty-two years and development and rapid urbanization had already begun to older for women; sixty-five years and older for men). Initially a influence modern lifestyles. Nuclear households had started program with only rural coverage, the OAA reached out to only breaking away from joint families, rendering traditional social five men and five women per ward,iv paying BDT 100 (US$ 2.1 and family support structures inadequate for the welfare of the as of FY98) per month to each of 400,000 beneficiaries across the country. Table 1: Key features of the Old Age Allowance (OAA) Over time, the benefit amount and coverage of the program has expanded (figure 1). The number of OAA beneficiaries Number of beneficiaries 4 million has multiplied almost nine times and the benefit amount in nominal terms has increased fivefold. As of FY19, the Amount of monthly allowance BDT 500/ US$ 6 OAA provides BDT 500 (US$ 6.0) per month to each of Eligibility Means-tested and age-based 4 million beneficiaries across rural and urban areas, which targeting covers approximately one third of the elderly population.v The level of benefit represents about 30 percent of the average Agency Department of Social Services, monthly per capita consumption of the lowest expenditure Ministry of Social Welfare quintile.vi Number of beneficiaries Amount of Allowance(BDT) 4.5 600 4.0 4 500 3.5 500 Number of beneficiaries (Million) 3.5 3 Monthly Allowance in BDT 2.72 400 2.48 3.0 2.5 300 300 2 1.70 250 1.5 1.32 200 125 180 1 100 150 1.0 100 0.5 0 0 FY98 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* Figure 1: Growth of beneficiaries and benefits under OAA Source: Budget Archives, Finance Division, Ministry of Finance 2 PROGRAM BRIEF At the same time, the budget allocation for this program has been increasing (figure 2). The total national budget allocation 30.00 to OAA in FY19 is about BDT 24 billion (approximately US$ 289 million), which is 3.7 percent of the national social protection 24.00 25.00 budget for FY19 and close to 0.1 percent of the country’s GDP. 21.00 The Government has expressed a vision of universal coverage 20.00 19.90 of all old age citizens of the country. However, given the fiscal pressures associated with universal coverage, the priority has 14.40 Budget in BDT Billion 15.00 been on adjusting the benefit level and identifying the more 13.07 deserving poor for effective old age poverty reduction. 8.92 8.91 9.80 10.00 8.10 Today, the OAA is one of the largest anti-poverty safety net 6.00 programs in the country.vii The program aims to work on the 5.00 following aspects for the old age population: 0.00 • Socioeconomic development and social protection; FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* • Improved status in the family and society; • Enhanced morale; and • Improved nutrition and health care. Figure 2: Annual Budget Allocation to OAA, FY09 – 19 Source: Budget Archive, Finance Division, Ministry of Finance The total national budget allocation to OAA in FY19 BDT 24 billion is about (approximately US$ 289 million), 3.7% which is of the national social protection budget for FY19 and close to 0.1% of the country’s GDP. 3 Old Age Allowance PROGRAM BRIEF PROGRAM DETAILS 1) Outreach 2) Eligibility Criteria and Intake According to the implementation guidelines of the As stated in the implementation guidelines of the OAA, beneficiaries program, widespread awareness campaigns should are selected based on the following eligibility criteria: be carried out to invite applications for the OAA, and to • Nationality: Bangladeshi; gather community members and conduct community vetting to finalize the list of beneficiaries. The guidelines • Minimum age in years: 62 for women and 65 for men; are not clear about the frequency of such campaigns. • Permanent residency: in Bangladesh; and In reality, however, awareness campaigns are limited to • Annual income: less than BDT 10,000 (US$ 120). announcements through local mosques and ‘mic-ing’, if at all, and are utilized more ahead of a payment cycle Eligible applicants shall be prioritized if they are: rather than the application period. Limited efforts for • among the oldest of applicants; awareness campaigns to invite applications are mostly • unable to work and/or, ill or weak; and due to the following reasons: • landless (own less than 0.5 acre) and/or destitute. • Managing expectations – The OAA continues to An applicant shall be considered ineligible if he or she receives be a means-tested, targeted program with budget Government pension or regular safety net benefits or grants from limitations. With no exit rules, the list of beneficiaries the Government, NGOs or any other source. While participation is not updated unless replacements take place due to of multiple members of the same household was not originally beneficiaries’ death or budget increases to absorb more limited by the implementation guidelines, the single-benefit-per- persons. The concern that widespread awareness about household criteria was introduced via an instruction in the mid- the program may invite a large number of applications, 2000s. every year, beyond the ability of the OAA’s capacity discourages active outreaches. • Financial – Dedicated budget allocations for awareness generating activities are largely absent at the union level. • Administrative – DSS has one staff, the Union Social Worker (USW) at the union level, tasked with administering all programs of DSS in Carrying out meaningful awareness therefore becomes difficult. that union. campaigns >62 yrs With limited outreach campaigns, individuals acquire program information mostly by word of mouth. Union Chairmen and Ward Members as well as USWs along with >65 yrs social networks including neighbors often serve as sources of information. Studies suggest that the media was found to be a source of information for the non-poor and less for the poor. It was noted from the evaluation that greater access to information on program eligibility, entitlement and selection process might enhance the chances of more pro-poor selection of beneficiaries and also help reduce leakage. THE WORLD BANK 4 PROGRAM BRIEF Step 1 Application There is however some annual change due to increase in budgetary allocations and the demise of existing beneficiaries. Applications submitted to Upazila Social Service Officers According to DSS, about 10-15 percent of beneficiaries are new (USSOs) (rural) and District Social Service Officers (DSSOs) due to replacements or additions. The waiting list is the main (urban), using the designated form. source of new applicants for replacements and additions. Despite clear eligibility criteria and procedures described in the Step 2 Initial listing of Applicants implementation guidelines, there are several challenges in the field in beneficiary selection. The brief discusses three main issues that need to be considered going forward: USSOs and DSSOs prepare ward wise lists of potential beneficiaries and present them to the Union Committee Subjectivity of beneficiary selection: While the • and Municipality/City Committee for rural and urban wards implementation guidelines of the OAA indicate a clear respectively. eligibility criteria and prioritization of the fragile and sick oldest citizens, it is difficult to select beneficiaries in an objective manner. Enforcement of eligibility criteria especially Step 3 Union (rural) and Municipal (urban) Committees’ approvals regarding the means test would be difficult due the lack of formal documentation about land ownership or income Union Committee (rural) and Municipal Committee (urban) statements. Also, given that the local committees select select potential beneficiaries and send three separate lists to beneficiaries, prioritization rules are not always clear. the Upazila Committee/District Committee: 1. Ward wise lists of applicants; 2. List of selected potential beneficiaries; 3. Under-representation of urban areas: While the • Waitlist of potential beneficiaries. implementation of OAA beneficiary selection with various committees’ roles and composition at the union, upazila, and district levels for rural areas, is in line with the guidelines, the Step 4 Upazila Committee’s (rural)/City urban process widely varies. For instance, Ward Committees for Corporation Committee’s (urban) approval urban areas seem to play an important role, but their roles are not defined in the implementation guidelines. Moreover, the The Upazila Committee (rural) and the District Committee urban selection process of the OAA is yet to be clearly defined (urban) finalize the list of potential rural beneficiaries, and especially since the urban poor move frequently and are hard waitlist of potential beneficiaries and seek approval of the to track. The variability of the selection process in urban areas, local Member of Parliament. in relation to the program guidelines, is also revealed by some World Bank field work.x The NSSS (2015) highlights the need to Figure 3: Process of beneficiary selection of OAA strengthen the OAA program in urban areas as almost all OAA beneficiaries (94 percent) come from rural areas despite the fact that one third of the population lives in urban areas. According to the implementation guidelines of the OAA, inviting applications and selection of beneficiaries follows a Complementarity with Widow Allowances (WA): The • four-step process (figure 3). eligibility of OAA overlaps with that of WA. The WA began around the same time as the OAA and caters to a broader age spectrum Multiple evaluations have found that the targeting process of of vulnerable women. Indeed poor, vulnerable, widowed, old the OAA has loopholes. Figures for targeting errors (share of the women (aged sixty-two years and above) can be eligible for non-poor) which infer non-compliance of existing beneficiaries both OAA and WA. While they are unable to receive duplicative to the eligibility criteria, range between 20 and 50 percent, as benefits, there is no clear rule of assigning individuals to cited by various studies.viii Moreover, the OAA has no precedence one over the other program. As a result, the assignment is of disqualifying a beneficiary on grounds of ineligibility that is determined based on the availability of budget at the union revealed following enrolment; or graduation out of poverty.ix Old Age Allowance 5 Old Age Allowance PROGRAM BRIEF level.xi Thus looking only into OAA may bias the coverage and selection errors of the program for vulnerable elderly women. The NSSS has an inclination towards transitioning eligible beneficiaries from other programs to the OAA once they MoSW approves fund release qualify by age, it is yet to take effect. 3) Enrolment Within seven days of the approval of the final list of beneficiaries, the Upazila Social Services Officers (USSOs) and District Social DSS issues a bill to Chief Services Officers (DSSOs) are expected to issue a ‘passbook’ Accounts Officer (CAO) to each beneficiary, with the beneficiary’s photo attested by a Government official, and arrange to open the beneficiary’s accountxii with a bank designated to provide payments for OAA – currently, Sonali, Janata, Agrani, Bangladesh Krishi Unnayan and Rajshahi Krishi Unnayan Banks or any other DSS CAO issues check for designated payment service provider (PSP). The beneficiary each program account number is labelled ‘Old Age’ for ease of identification. USSOs/DSSOs maintain a register of beneficiaries which is updated every quarter – i.e. to note any dropouts, deaths, and replacements, prior to making payments. Treasury allocates check 4) Payment amounts to Sonali Bank The beneficiary payment process under OAA has two parts like other cash transfer programs: “cash-in” (fund deposit to individual bank accounts by government) and “cash-out” (cash withdrawal from individual bank accounts by beneficiaries). Sonali Bank divides the The cash-in process starts with release of funds from MoSW amount and transfers to the followed by Treasury allocation to (State-owned) Sonali Bank head offices of each payee bank for the amount of benefit payments budgeted for a quarter. Sonali Bank then transfers the funds to four other state-owned banks and each of these five banks then transfer funds to their upazila or district branches based on advice from DSS. At the Each payee bank transfers funds to local branches, the funds are deposited in an account, jointly upazila branches, in the acocunt jointly administered by UNO and USSO for rural areas, and by the administered by the USSO/UNO or DSSO/DD. Deputy Director (DD), Social Services, and DSSO for urban areas. Based on the list of beneficiaries received from the USSO and DSSO, the local bank branch then transfers benefits to individual beneficiary accounts. The entire cash-in process The local branch transfers (figure 4) often takes months every quarter. funds to individual beneficiary accounts based on list from USSO The cash-out process involves the physical presence of from the joint account beneficiaries arriving at the bank branch with their passbooks. In case a beneficiary is unable to come due to sickness, disability or cultural restrictions on female beneficiaries, a nominee can collect the payment, authorized by a locally elected representative for every payment cycle. Following the Figure 4: Payment (cash-in) process of OAA 6 PROGRAM BRIEF death of a beneficiary, the nominee can also collect payments intervention mostly focused on forming citizen and civil society for three months (including the month of death) to facilitate forums that work to generate awareness of rights, play the role funeral expenses. of a neutral oversight body over safety net operations and also collate concerns and grievances from marginalized people Even though beneficiaries can draw benefits any day in theory, for ten of the large safety net programs of the Government the practice is not encouraged by local banks to manage including OAA. This pilot has yielded important lessons on transaction schedules and plan workload. They designate the need for such interventions to be integrated with existing specific days to issue payments to beneficiaries, each quarter. Government channels for more effective grievance redress. The withdrawal date is announced through words of mouth from USSOs, USWs and others involved. However, with a large number of beneficiaries per union, not all beneficiaries queuing up for payment may be served on the same day and PROGRAM OUTCOMES many of them have to return the next day, inflicting additional financial costs and physical exertion. Long queues also mean Multiple evaluations on the OAA provide suggestive evidence that beneficiaries have to wait several hours with little or no of several positive outcomes of the program, despite the food, and no place to rest, which may be significant burden to relatively low amount of allowance. Some of those outcomes the elderly. are described below (figure 5). xiii Such capacity constraints and manual processes also hamper Food consumption: Most of the allowance amount banks’ ability to verify beneficiary details while issuing is reportedly spent on food consumption, and many payments, sometimes resulting in erroneous payments. The beneficiaries reported an increase in their household food timely update of payment records is also lacking, which makes consumption, with a greater protein intake in comparison it difficult for beneficiaries to collect allowances for payment with non-beneficiary households. Increase in body mass was cycles they have missed to appear for. Moreover, reconciliation also cited as an outcome by many beneficiaries. hardly takes place and DSS is not refunded the leftover amount due to banks’ inability to account for how many beneficiaries have actually collected payments. Such constraints could tte % od create systemic loopholes for leakage and scope for rent Be 3.5 r fo seeking by those involved in the payment process. 7 5) Grievance Complaints can be filed with the Union or Ward Committee that undertakes the primary selection of beneficiaries; implying a 18 .2% conflict of interest. If the Committee fails to come up with a etter e B thcar mitigation measure, the grievance escalates sequentially upto heal the central level; though the implementation guidelines do not define specific procedures. Anecdotal evidence suggests that complaints are few and those filed are usually lodged with Ward Members or Union Chairmen. However, there is little evidence of their resolution. 20 M ha one .2 There was an effort to empower citizens for better vin y w % accountability and a grievance pilot -- Strengthening g t ith o w ou Government Social Protection Systems for the Poor (SGSP), or t implemented by a national NGO Manusher Jonno Foundation k (MJF) and twelve partner NGOs across a hundred union parishads and eight municipalities -- is a good example. The Figure 5: Reasons for satisfaction of OAA beneficiaries Source: Paul-Majumder and Begum 2008 7 Old Age Allowance PROGRAM BRIEF Health care: It was reported that following the allowance • The beneficiary selection process has scope to be more there is greater health awareness and beneficiaries spend objective and pro-poor. There is also significant scope for more on health care than non-beneficiaries. Beneficiaries are wider availability of information to further improve the also more likely to self-report illnesses than non-beneficiaries. application and selection processes. Income generating activities: Some beneficiariesxv reported • The payment process has scope for more efficiency and investing their benefits for income generating activities. transparency, to enhance the convenience of the old, often sick beneficiaries, by increasing the number of payment Focus on women: Social norms in Bangladesh infer that access points, closer to where beneficiaries live. Moreover, women are dependent on male members of the family for their transparency of the payment process can be enhanced by economic and social wellbeing. Women’s economic activities greater security measures such as biometric authentication. and the ability to save for old age are therefore limited. At old age, women’s vulnerability increases further especially when • The grievance process can be strengthened to be more traditional sources of family support erode. Moreover, women accountable and provide reassurance to potential tend to live longer inferring a longer old age with relatively complainants about timely resolution and minimal chances higher physical and mental health vulnerabilities than those of backlash. of men. As a result, the OAA favors women more by including women aged sixty-two years and up as opposed to the sixty- five-year minimum age for male beneficiaries. WORLD BANK SUPPORT Social esteem: A smaller share of beneficiaries reported suffering from loneliness, social deprivation, negligence by In recognition of such needs, the Government of Bangladesh, children than non-beneficiaries. Many were also receiving with the financial and technical support from the World more attention and care from family members and better Bank, has initiated the Cash Transfer Modernization Project. food in most instances. It appears that a significant boost in The Project was approved by the Bank’s Board of Executive self-esteem emerged from the access to cash for personal use, Directors in January 2018. especially during times of crisis; improved ability to contribute to the household enhanced their sense of usefulness. One The Project aims to improve the transparency and efficiency study found that in rural areas, half the beneficiaries were still of OAA and other major cash transfer programs for vulnerable the head of the household and were able to use the allowance populations by modernizing service delivery. The Project for subsistence needs of the family. provides technical assistance to DSS and financial support for the OAA program. CHALLENGES AND WAY FORWARD The OAA has been a commendable initiative in Bangladesh with important and potentially greater impacts. Nevertheless, challenges continue to affect program effectiveness. Most of them have been discussed throughout the document. Overall, the program needs to transition to a centralized, automated, and rule-based decision-making system to improve governance and beneficiary experience. Below is a summary of the key challenges: 8 PROGRAM BRIEF i Population aged sixty-two years and above, Population Census, 2011 ii World Population Projections; Bos, Massiah and Bulatao, 1994 iii ADB, 2012. iv Part of Union, the lowest tier of the administrative hierarchy. v The National Social Security Strategy (NSSS) 2015, based on Household Income Expenditure Survey (HIES) 2010, estimated that about 30 percent of the old age population of Bangladesh are covered by pensions. vi Analysis based on HIES, 2016, BBS. Based on the government’s classification for social security program, the civil servant’s pension (Pensions for Retired Government and their Families) and Honorarium for Freedom Fighters are vii larger social security programs than the OAA. However, these programs are not poverty targeted and thus not part of the anti-poverty program. viii BIDS, IFPRI, and Maxwell Stamp ix Shirin 2008; RED/BRAC 2007 x The Old Age Allowance program of Bangladesh: An evaluation BIDS, 2013; The Status of Food Security in the Feed the Future Zone and other Regions of Bangladesh: Results from the 2011-12 Bangladesh Integrated Household Survey, IFPRI, USAID. xi Information from DSS, 2018 The account is opened with BDT 10 as part of a Bangladesh Bank’s initiative for to increase financial inclusion. This account, requiring only the minimum initial balance of BDT 10 to be xii maintained, and is becoming a standard bank account for poor and vulnerable individuals in Bangladesh. xiii Paul-Majumder and Begum 2008 xiv Begum, 2010 xv about 12 percent of male and 16 percent of female beneficiaries reported such investment according to a study -- Small Scale Old Age and Widow Allowances for the Poor in Rural Bangladesh: An Evaluation, July2008, Research Monograph Series No. 36, BRAC For more information: Overview on Bangladesh’s safety net program: This Program Brief has been prepared World Bank. 2016. Bangladesh Social by Rubaba Anwar, Yoonyoung Cho and https://bit.ly/2stPrtU Protection and Labor Review: Towards Smart Ashiq Aziz, Social Protection & Jobs Global Social Protection and Jobs for the Poor. Practice, World Bank, with the kind support Bangladesh Development Series,no. 33;. of the Korea-World Bank Partnership World Bank, Dhaka, Bangladesh. Facility (KWPF). © World Bank. https://bit.ly/2TWVVx9 World Bank Office Dhaka Plot- E-32, Agargaon, Sher-e-Bangla Nagar Dhaka-1207, Bangladesh Tel: 880-2-5566-7777, Fax: 880-2-5566-7778 www.worldbank.org/bangladesh 9