A/HRC/14/31 persons above a given age without the requirement of compulsory contributions; they are essential components of social assistance. Contributory and non-contributory schemes should be regarded as complementary and mutually reinforcing aspects of social protection. 29. Traditionally, States have privileged the establishment of contributory pension systems with the objective of achieving universal coverage once the formal sector expanded. Today, with a vast number of workers in the informal sector, this approach must be re-examined. Contributory systems have left the majority of the population unprotected when they reach old age. Estimates indicate that less than 20 per cent of older persons are covered by pensions today and only about 25 per cent of the labour force is currently contributing or accruing pension rights.19 30. This coverage gap particularly affects those living in extreme poverty. It is in countries with lower GDP per capita and among the least educated that coverage rates of existing contributory social security systems are lowest. Contributory systems cover 85 per cent of the labour force in almost all high-income member States of the Organization for Economic Cooperation and Development (OECD),20 but in several countries in sub-Saharan Africa, coverage can fall to below 5 per cent of the workforce.21 Even middle-income countries of Latin America that had established social security systems covering a significant proportion of the population saw coverage rates declining in the last decades following the liberalization of labour markets.22 31. Even in developed countries, contributory systems are often inadequate to protect the elderly: often benefits are too low to cover costs of living. Moreover, legislation related to compulsory retirement age can make it impossible for some older persons to find additional sources of income. 32. In the absence of contributory social security, social assistance and, in particular, the provision of non-contributory pensions to older persons plays a central role in bridging the existing protection gap. Studies conducted in countries that have established noncontributory schemes demonstrate their positive impact on poverty indicators. In OECD countries with good coverage of formal insurance and the longest experience in investing in this type of pension, poverty rates would be significantly higher without non-contributory schemes. The same is true for middle-income countries that have also invested in social pensions during recent decades.23 33. Social pensions are also important for addressing the particular vulnerabilities of women. Contributory systems tend to exacerbate gender inequalities: in many countries coverage rates for elderly men are twice those for their female counterparts.24 Even in countries with broader protection in contributory systems, older women are more likely to receive a lower pension due to a lower level of contributions (see sect. II C). 34. The benefit of social pensions may also reach beyond their direct beneficiaries and assist family members of the older person and any children in their care. In AIDS-affected countries, for example, where older persons are the primary caregivers of children orphaned by AIDS, social pensions may impact positively on child well-being. A study in South Africa found that children living with pensioners are, on average, 5 centimetres taller and 19 20 21 22 23 24 8 Closing the Coverage Gap, p. 23. Armando Barrientos, “New strategies for old-age income security in low income countries” (International Social Security Association, 2008), p. 4. Closing the Coverage Gap, p. 31. See “New strategies for old-age income security in low income countries”, p. 2. Closing the Coverage Gap, pp. 46–47. Ibid., p. 36. GE.10-12583