Universality and Selectivity in Income Support: An Assessment of the Issues

Abstract

Since the 1980s, the scale and growth of social expenditure has come into question in most industrial nations. The large share of this expenditure devoted to the support of the aged, amidst growing numbers of old and very old people, has put age pensions at the centre of this discussion. At issue is the question of how best to achieve income adequacy among the aged at least cost to government. Should pensions be paid only to those with relatively few resources of their own, so that scarce public funds can go to the people who need them most? Or is it more just, and are pensions more willingly funded, when everyone can expect to get one when they reach the official retirement age? The choice between universal and selective (means-tested) benefits is a classic question in social policy, made newly relevant by the restructuring of western welfare states in the 1980s and 1990s. This report examines this issue in a comparative analysis of income support for the aged in six countries whose systems give varying weight to the principles of universality and selectivity. The countries included, in addition to Australia, are Germany, Norway, Sweden, the United Kingdom and the United States.