Overview Most safety net programs have in place some kind of ‘exit’ strategy by which beneficiaries end their participation in the program. Exit policies may involve involuntary program exit (e.g. because an individual or household no longer meets the eligibility criteria as established by the program) or voluntary withdrawal from the program, which can occur when socioeconomic circumstances improve for beneficiaries so they accomplish program objectives and no longer need program benefits. The latter is closely related to the concept of “program graduation” in which households achieve economic independence from the program.
Recertification is a process used to reassess characteristics of existing beneficiaries/households to determine whether their eligibility (often in terms of socioeconomic status) has changed and, therefore, whether they should continue participating in the program. Recertification can occur in two ways: beneficiaries can notify program officials of any change in their qualification for the program (e.g. change in material welfare, birth or death of family member) or the program can run a periodic rescreening process for all beneficiaries.
A variety of exit policies can be employed to ensure that beneficiaries leave the program:
Age limits: In programs that have age limits for eligibility (e.g. child grants covering specific age groups), beneficiaries exit through natural attrition. As each age cohort moves out of the program, another can enter. In Colombia’s CCT Familias en Accion, households automatically stop receiving the nutrition subsidy when children turn 7 years old and the education benefit when children turn 18, but a system is being planned by which families who remain in extreme poverty can continue to benefit from the program through a recertification process.
Benefits for temporary conditions: Programs that target groups that represent, by definition, a temporary condition (e.g. pregnant women, temporarily disabled individuals) have built-in exit strategies. When beneficiaries cease to fit the categories included in the program, they automatically exit and others in that category can join.
Time limits: Some programs set time limits to ensure that benefits do not cause dependency or introduce perverse incentives (e.g. disincentive to work). For example, many public works programs limit participation to a specified number of days or a season with few work opportunities.
Declining benefit level: Reductions in benefit levels over time often accompany time limits and can help families prepare to become self-sufficient upon their exit from the program. Benefit reductions can be standardized (the same for all beneficiaries) or tailored to individual families based on formulas that adjust benefits as households increase their earned income. For example, Chile’s CCT Chile Solidario provides beneficiaries with direct cash transfers at a decreasing rate for a maximum of two years.
Benchmarks: The achievement of benchmarks, or specified outcomes associated with program goals, can also serve as signs of readiness for program exit. Benchmarks are usually defined based on the vulnerability criteria used by the program (e.g. income level, behavioral change, infrastructure built, etc.). In Ethiopia, for example, the benchmark used to end households’ participation in the Productive Safety Net Program is being able to meet their food needs for 12 months and withstand modest shocks. They are then considered food secure and must withdraw from the program.
Not all programs need to have explicit exit strategies. For example, safety nets aiming to protect vulnerable people (e.g. elderly poor, disabled persons) throughout their lives do not need to include ways for beneficiaries to stop benefiting from the program.
Exit strategies address budget limitation issues: programs cover a fixed number of beneficiaries in a given time period and, as these beneficiaries exit, more people in need enter and benefit from the program. This is especially of interest in the case of low-income countries, where there are significant budget constraints and large needy populations.
The frequency of recertification depends on how rapidly households move in and out of poverty, how sensitive the targeting systems are to these changes, the costs of recertification, and changes in country and program context (e.g. economic growth, change in social protection system, etc.). In places with little change in poverty dynamics, recertification on a regular basis might not be necessary.
Recertification and exit requires data (e.g. correct age of beneficiaries, disability status, date of enrollment, etc.) and systems to process the data (e.g. management information system).
Rules about recertification and exit should be clearly defined from the beginning of a program and explained to clients when they enroll.
Incentive-distorting mechanisms, such as reducing benefits based on income level, risk creating poverty traps by reducing beneficiary motivation to engage in productive activities. To mitigate this problem, programs can provide temporary support for beneficiaries who have recently exited the program.
Exit from safety net programs involves the controversial issue of long-term welfare improvement. It is important to consider the sustainability of improvement after beneficiaries exit programs, and whether structural social and economic conditions might cause them to fall back into poverty. In Mexico a study has tried to assess how these context-specific conditions may affect sustainability of improvement in beneficiaries’ welfare.