A social pension is a stream of payments from state to an individual that starts when someone retires and continues to be paid until death.^[1] It is a part of the pension system of most developed countries, specifically the so-called zero or first pillar of the pension system, which is a part of the state social security system.^[2] The social pension is different from other types of pensions are not funded directly by the individual's former contributions of an individual.

The need for a social pension dates back to the Industrial Revolution, when the new economic system boosted the mobility of workers, but loosened ties between family members, whose solidarity was protecting people from personal economic deprivation. This, along with impractical voluntary thrift and insurance, resulted in many workers retiring without any source of income.^[3]

The first attempt at cash transfers to the elderly population was seen at the end of the 19th century. One of the first countries that introduced a social pension was Germany in 1889, when Chancellor Otto von Bismarck enacted a policy to connect^{[clarification needed]} ordinary workers in the newly created German state and granted every worker who reached the age of 65 a small flat pension.^[3] At first it was funded by taxes on the tobacco monopoly.

In the 1890s Denmark (1891) and New Zealand (1898) adopted social pensions, and were followed in the early 20th century by Australia (1908) and Sweden (1913), along with many other countries. Throughout the 20th century, most countries were deciding between two paths based on the strategy of the system – a minimum pension for the elderly or securing income maintenance either by taxed subsidized voluntary pension and compulsory income-related pension.^[4] This resulted in convergence to a dual system where both of those strategies were included.

Today, more than 100 countries^[5] provide social pension to their citizens in various forms and on average OECD countries spend 7 – 8 per cent of their GDP on pensions for elderly care.^[6]

The reasons for implementing a social pension and government involvement include issues that arise when individuals voluntarily save insufficient funds for retirement or when market failures create societal inequalities.^[7] Common social pensions worldwide include orphan's pensions, which protect minors who have lost parents and are too young to work, and widow's pensions, which support non-working spouses without the skills or qualifications for the mainstream job market. Another factor might be individuals' shortsightedness, leading to inadequate savings or additional income for retirement. This may also relate to an information gap, where individuals cannot accurately evaluate the financial stability of savings and insurance companies or the effectiveness of investment programs. Additionally, insurance market failures, such as moral hazard or adverse selection, can prevent the availability of insurance against risks like longevity or disability.

Financing the social pension is a part of national, fiscal, and public finance policies and therefore is linked to the general government budget. Generally, the social pension schemes as a part of the first pillar of pension systems use the pay-as-you-go scheme (PAYG), which collects contributions in the form of social security taxes^[8] every year in an amount which should be equal to the expected expenditures in the same year. This means that the system does not accumulate any reserves and if so, then only to avoid liquidity problems.^[9] The PAYG system is sometimes subject to demographic and political problems (e. g. aging of population).^[10]

1. Universal pension (also referred to as "demogrant", "categorical pension" or "citizens pension") is a pension where the only criteria for receiving it is age and citizenship, resp. residence. Some countries are specifying these criteria further, like The Netherlands which requires 50 years of residency between ages of 15 and 65 for a full pension and discounts it for every missing year by 2 per cent. This type of pension might be taxable.^[11]
2. Universal minimum pension overlaps the universal pension. The main difference is that the purpose of this system is to grant additional financial resources to those who did not or could not secure themselves income high enough from the contributory second pillar of the pension scheme, and therefore grants them minimum base income when they retire. The voluntary third pillar is not accounted for in this case. This system was first developed in Sweden in 1913. In addition, some countries, like Norway or Finland, have introduced a "taper" which grants pensioners some additional non-contributory income, even if they already earn the minimum pension. For example, in Finland with a 50% taper, you can earn a pension double the amount of the minimum pension before you lose the right to the non-contributory benefit.
3. Recoverable social pension is a universal pension in terms of eligibility. The difference is that this pension is added to other taxable income and is subject to recovery by a surcharge.
4. Social assistance pension covers all other types of social pension. It can be further divided by its means test, based on whether it is applied only on the individual or his entire household. Since the most important test considers the total income and assets possessed by an individual or the household, there can be a huge difference between those two types. In the individual means test, only the wealth of the individual matters and therefore it can better address individual poverty issues. The household means test considers the capability of other family members to take care of their retired family members.

Since 2000, the coverage of legal and effective social pension has been constantly increasing, especially in recent years.^[12] Between 2015 and 2017 more than 90% of the elderly population were receiving their benefits in 34 countries. The number of countries where the effective social pension coverage was less than 20% fell to 36. In the same period, universal social pensions were established in many developing countries in Africa (Botswana, Lesotho, Namibia and Zanzibar), Asia (East Timor), and Latin America (Bolivia). In contrast, Azerbaijan, Albania and Greece experienced a reduction in social pension coverage by 12-16%

• Guaranteed minimum income
• Old Age Security
• Social insurance
• Social protection floor
• Social protection
• Social safety net
• Welfare
• Welfare culture
• Welfare state