This chapter discusses the historical evolution and key features of social insurance and considers its role in development. It pays special attention to social insurance pensions, which are widely used to meet the income needs of retired workers in Western countries and increasingly in the developing countries where populations are ageing. Other approaches to funding pensions such as social assistance and mandatory retirement savings schemes are also discussed. The chapter then reviews some of the challenges facing social insurance such as coverage, equity, administrative effectiveness and cost. Finally, the chapter considers future directions for social insurance. Contrary to the claims of market liberal critics who advocate the marketization of social insurance, it argues that the challenges facing these schemes can be resolved without abandoning their basic principles. With appropriate modifications, social insurance can make a positive contribution to development and help to promote social justice for the world’s people.
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