Understanding Money and Finance : Social Security

Social Security

Social security mainly refers to a field of social welfare concerned with social protection, or protection against socially recognized needs, including poverty, old age, disability, unemployment, families with children and others. In fact, Social security refers to a slightly broader concept compared with social protection, but some publications use them interchangeably.

Social Security

The term can be used to refer to
social insurance, where people receive benefits or services in recognition of contributions to an insurance scheme. These services typically include provision for retirement pensions, disability insurance, survivor benefits, medical care, and unemployment insurance.
income maintenance - mainly the distribution of cash in the event of interruption of employment, including retirement, disability and unemployment
services provided by administrations responsible for social security. In different countries this may include medical care, aspects of social work and even industrial relations.
More rarely, the term is also used to refer to basic security, a term roughly equivalent to access to basic necessities - things such as food, clothing, shelter, education and medical care.
Contents:
1 Basic security
2 Social insurance
2.1 Government pension expenses
3 Income maintenance

Basic security

Social security is identified in the Universal Declaration of Human Rights of 1948: "art. 22 — Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality."

The Wresinski report identifies lack of basic security as "the absence of one of more factors that enable individuals and families to assume basic responsibilities and to enjoy fundamental rights".

The concept, however, is much older than that. It was born in France during the Age of Enlightenment, and figures in the Declaration of the Rights of Man and of the Citizen of 1789:
"Art. 2 — The goal of any political association is the conservation of the natural and imprescriptible [i.e., inviolable] rights of man. These rights are liberty, property, safety and resistance against oppression."

Social insurance

Before government-run social insurance programs were enacted, private groups had developed the concept of shared risk. In ancient Greece and Rome there were burial societies to which people contributed regularly to ensure that upon their deaths they would be buried with dignity. Some Medieval guilds had programs under which members contributed to funds which were drawn upon when members were no longer able to work, or died. In more recent times, some fraternal organizations and labor unions had similar programs.

The first state-run social insurance program paying retirement benefits was implemented in Germany in 1889 by Chancellor Otto von Bismarck. Bismarck sought to hold back the historical wave that was building in support of socialism across Europe at the time. His system was funded with payroll taxes paid by the employee and the employer, along with contributions from the government. It also included a disability benefit. Today such programs are common, though not universal, among developed countries. They often include features of the initial German system.

In the United Kingdom the first contributory pension scheme was enacted in 1911, enthusiastically supported by Winston Churchill who described the social insurance principle as "bringing the miracle of averages to the rescue of the millions". Subsequently, the Beveridge Report of 1942 offered the main alternative model. Beveridge attempted to make insurance the basis for a comprehensive, universal scheme covering all the main social needs. President Franklin Roosevelt described the ideal social insurance system as one which provided economic protection "from the cradle to the grave."

Social security is seen as providing assistance to retired workers, often in the form of a superannuation system that provides a pension from a fund to which workers and their employrers (and in most countries the government) have contributed throughout their working lives. Workers may also contribute to some form of insurance scheme that provides income and assistance in the event of injury or illness for them and their families. While the scheme may be compulsory, the contributions or historic income often determine the level of support provided, once basic eligibility criteria such as age or inability to work are established. In most of the developed "first world" countries, social security also includes a system of publicly funded medicine.

Government pension expenses
As a % of GDP during 2000 ([1]) ([2])
Italy 14%
France 12%
Germany 12%
Sweden 9%
Japan 8%
USA 4%
South Korea 2%
Hong Kong 2%

Income maintenance

Social security policy is usually applied through various programs designed to provide a population with income at times when they are unable to care for themselves. Income maintenance is based in a combination of five main types of program:
social insurance, considered above
means-tested benefits. This is financial assistance provided to those who have basic needs, such as food, clothing and housing, but are unable to afford those basic needs due to poverty or lack of income because of unemployment, sickness, disability, or caring for children. While assistance is often in the form of financial payments, those eligible for social welfare can usually access health and educational services free of charge. The amount of support is enough to cover basic needs and eligibility is often subject to a comprehensive and complex assessment of an applicant's social and financial situation.
non-contributory benefits. Several countries have special schemes, administered with no requirement for contributions and no means test, for people in certain categories of need - for example, veterans of armed forces, people with disabilities and very old people.
discretionary benefits. Some schemes are based on the discretion of an official, such as a social worker.
universal or categorical benefits, also known as demogrants. These are non-contributory benefits given for whole sections of the population without a test of means or need, such as family allowances or the Citizen's Pension in New Zealand.

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