Social security explained
Social security primarily refers to a social insurance program providing social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may 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 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.
See main article: Social insurance. Actuaries define social insurance as a government-sponsored insurance program that is defined by statute, serves a defined population, and is funded through premiums or taxes paid by or on behalf of participants. Participation is either compulsory or the program is heavily enough subsidized that most eligible individuals choose to participate.
In the U.S., programs that meet this definition include Social Security, Medicare, the PBGC program, the railroad retirement program and state-sponsored unemployment insurance programs.
This 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 for those who are unable to cover basic needs, such as food, clothing and housing, 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. See also, Income Support.
- 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 public pension in New Zealand (known as New Zealand Superannuation). See also, Alaska Permanent Fund Dividend.
Social protection refers to a set of benefits available (or not available) from the state, market, civil society and households, or through a combination of these agencies, to the individual/households to reduce multi-dimensional deprivation. This multi-dimensional deprivation could be affecting less active poor persons (e.g. the elderly, disabled) and active poor persons (e.g. unemployed). This broad framework makes this concept more acceptable in developing countries than the concept of social security. Social security is more applicable in the conditions, where large numbers of citizens depend on the formal economy for their livelihood. Through a defined contribution, this social security may be managed. But, in the context of wide spread informal economy, formal social security arrangements are almost absent for the vast majority of the working population. Besides, in developing countries, the state's capacity to reach the vast majority of the poor people may be limited because of its limited resources. In such a context, multiple agencies that could provide for social protection is important for policy consideration. The framework of social protection is thus capable of holding the state responsible to provide for the poorest sections by regulating non-state agencies.
- ‘Reforming European Pension Systems’ (Arun Muralidhar and Serge Allegreza (Eds.)), Amsterdam, NL and West Lafayette, Indiana, USA: Dutch University Press, Rozenberg Publishers and Purdue University Press
- Modigliani, Franco. Rethinking pension reform / Franco Modigliani, Arun Muralidhar. Cambridge, UK ; New York : Cambridge University Press, 2004.
- Muralidhar, Arun S. Innovations in pension fund management / Arun S. Muralidhar. Stanford, Calif. ; [Great Britain] : Stanford Economics + Finance, c2001.
- ‘The Three Pillars of Wisdom? A Reader on Globalization, World Bank Pension Models and Welfare Society’ (Arno Tausch, Editor). Nova Science Hauppauge, New York, 2003
Notes and References
- http://www.actuarialstandardsboard.org/pdf/asops/asop032_062.pdf "Social Insurance,"