PRESENTATION BY THE GENERAL MANAGER, ADMIN & HR / SSNIT, APRIL, 2013

Introduction to Social Security Types of Social Security Schemes Principles of Social Security

1. Social Protection

- Social Security - Social Assistance - Social Risk Management

The International Labour Organization (ILO) in its convention 102 of 1952 set the minimum standards for Social Security. A series of public measures that society may take to protect its members against economic and social distress which may otherwise be caused by substantial loss of income as a result of old age, invalidity sickness, unemployment, employment injury, death of breadwinner, maternity, health (medical costs) and to help ease the financial burden on a family in the maintenance of children.

It is also concerned with the provision of safe working. environments as a protection against undue work related injuries.
The above serves as a guideline for countries assessing their social security legislation and considering improvement.

Cash benefits should be in the form of period payments, NOT LUMP SUMS.
The duration may be limited in respect of medical care and cash benefits for sickness, maternity and unemployment, but should be throughout the contingency in principle for contingencies such as employment injury, old age, permanent invalidity and survivorship. Cash benefits should replace lost earnings to a prescribed extent. The cost of benefits (and their administration) should be borne collectively in such a way that financial hardship to low wage-earners is avoided, and the economic situation of countries and classes of persons protected is taken into account.

Employees should not pay more than half the cost of social insurance schemes, excluding employment injury benefits which are financed wholly by employers. The state assumes at least general responsibility for the provision of benefits and for the proper administration of the scheme, and

Representatives of the participants in the scheme as Contributors and beneficiaries should be involved in the management of the schemes or be associated in an advisory capacity.

The four most popular basic mechanisms are: Provident Fund Welfare / Government Financed Schemes Social Insurance Schemes Employers Liability Schemes

It is based on the savings Based on the principle of individual equivalence. It is established by Law It is financed through employer/employee contributions It pays lump sum benefits even though such benefits could be used to purchase annuities

Benefits are return of contributions plus interest.

Fund (Reserves) are to be invested judiciously to ensure the payment of high interests.

 These schemes are more prevalent in the more developed economies. In a lot of cases they operate in addition to a Social Insurance Scheme to ensure social security protection for most members of the society, forming a sort of safety net for those who may not be covered by the Social Insurance Scheme. Financed by Governments. Exist in different forms such as Social Assistance. These are also established by law. In general there is a need test for cash benefits. Benefits are normally uniform. In universal schemes establishment of residence status may qualify one for benefit.

 Based on the principles of insurance (Risk pooling) and solidarity.

Used as partial funding Contract of generations.

An instrument for capital formation,

Pay-as-you-go General average premium.

Scaled Premium.

Major characteristics of a Social Insurance Scheme are It is established by law. It is financed through employer/employee contributions. Government may also contribute. It pays periodic (monthly) benefits

Benefits are related to insured earnings

There are no needs tests. Benefits are earned as a right by virtue of contributions. Reserves are to be judiciously invested.

 The Scheme must be self sustaining. An employment injury under this scheme is financed solely by employers contributions. Periodic adjustment of pensions to reflect prevailing economic conditions. (Indexation)

 Risk Pooling (risk distributed in a group) Solidarity (support from a group) Contract of Generations Annuity Certain / Guarantee

A public measure to prevent destitution. It is not a means to enrich an individual. It is not in competition with other pension schemes. Insured Earnings Replacement Ratio

Social Adequacy
Individual Equity

 Managers as Trustees
Timely/prompt receipt of contributions/arrears.

Liabilities of the Scheme. - Old Age Benefits - Invalidity Benefits - Deaths

THANK YOU