Social insurance

Social insurance is any government-sponsored program with the following four characteristics:

  • the benefits, eligibility requirements and other aspects of the program are defined by statute;
  • explicit provision is made to account for the income and expenses (often through a trust fund);
  • it is funded by taxes or premiums paid by (or on behalf of) participants (but additional sources of funding may be provided as well); and
  • the program serves a defined population, and participation is either compulsory or so heavily subsidized that most eligible individuals choose to participate.[1]

Social insurance has also been defined as a program whose risks are transferred to and pooled by an often government organisation legally required to provide certain benefits.[2]

In the US, programs that meet these definitions include Social Security, Medicare, the Pension Benefit Guaranty Corporation program, the Railroad Retirement Board program and state-sponsored unemployment insurance programs.[1] The Canada Pension Plan (CPP) is also a social insurance program.

The World Bank's 2019 World Development Report on The Changing Nature of Work[3] considers the appropriateness of traditional social insurance models that are based on steady wage employment in light of persistently large informal sectors in developing countries and the decline in standard employer-employee relationships in advanced countries.

Social insurance is a public insurance that provides protection against economic risks. Participation in social insurance is compulsory. Social insurance is considered to be a type of social security.

Social insurance differs from public support in that individuals’ claims are partly dependent on their contributions, which can be considered as insurance premium. If what individuals receive is proportional to their contributions, social insurance can be considered a government "production activity" rather than redistribution. Given that what some receive is far higher than what they attribute (on an actuarial basis), there is a large element of redistribution involved in government social insurance programs. The largest of these programs is Old age. Survivors' and Disability Insurance Program (OASDI). It provides income not only for pensioners. But also to their survivors (especially widows and widowers) and people with disabilities. Other major social insurance schemes are workers' compensation, which provides compensation for workers injured at work, unemployment insurance providing temporary benefits after job loss, and Medicare. The Medicare Program, which provides medical services in old age (like Medicaid), has grown rapidly since its first introduction in 1965 and is now the second largest program. Social security and Medicare are sometimes called middle class programs because the middle class are the main beneficiaries and benefits are not provided on a need basis, but when people satisfy a certain requirement, for example age. As soon as they satisfy the criteria, they can receive benefits.

Similarities to private insurance

Typical similarities between social insurance programs and private insurance programs include:

  • Wide pooling of risks;
  • Specific definitions of the benefits provided;
  • Specific definitions of eligibility rules and the amount of coverage provided;
  • Specific premium, contribution or tax rates required to meet the expected costs of the system.[4]

Differences from private insurance

Typical differences between private insurance programs and social insurance programs include:

  • Private insurance programs are generally designed with greater emphasis on equity between individual purchasers of coverage, and social insurance programs generally place a greater emphasis on the social adequacy of benefits for all participants.[4]
  • Participation in private insurance programs is often voluntary; if the purchase of insurance is mandatory, individuals usually have a choice of insurers. Participation in social insurance programs is generally mandatory; if participation is voluntary, the cost is heavily subsidised enough to ensure essentially universal participation.[4]
  • The right to benefits in a private insurance program is contractual, based on an insurance contract. The insurer generally does not have a unilateral right to change or terminate coverage before the end of the contract period (except in such cases as nonpayment of premiums). Social insurance programs are not generally based on a contract but on a statute, and the right to benefits is thus statutory rather than contractual. The provisions of the program can be changed if the statute is modified.[4]
  • Individually purchased private insurance generally must be fully funded. Full funding is a desirable goal for private pension plans as well, but is often not achieved. Social insurance programs are often not fully funded, and some argue that full funding is not economically desirable.[4] Most international systems of social insurance are funded on an ongoing basis without reference to future liabilities. That is seen as a matter of solidarity between generations and between the sick and the healthy as a part of the social contract. The current generation of healthy working people pay something now to meet the health care and living costs of those who are currently temporarily incapacitated through sickness or who have ceased work through old age or disability. The main exception is in the United States, where the two largest programs, Medicare and Social Security programs, the administrators have historically collected more in social premiums than they have paid out as social benefits. The difference is retained in a trust fund. In both programs, US government actuaries periodically attempt to predict up to 70 years in advance the longevity of the fund and must estimate the future rates of contributions and pensions, the types of health care needs of the beneficiaries, and what that might cost. No other country in the world does so. Despite the US programs being in considerable surplus, the political argument is often that these programs are "going bankrupt" or that politicians have spent the money on other things.

Difference from welfare

With social insurance, the beneficiary's contributions to the program are taken into account. A welfare program pays recipients based on need, not contributions. In the US, Medicare is social insurance, and Medicaid is welfare.

See also


  1. ^ a b "Social Insurance", Actuarial Standard of Practice No. 32, Actuarial Standards Board, January 1998.
  2. ^ Margaret E. Lynch, Editor, Health Insurance Terminology, Health Insurance Association of America, 1992, ISBN 1-879143-13-5.
  3. ^ World Bank World Development Report 2019: The Changing Nature of Work.
  4. ^ a b c d e Robert J. Myers, Social Security, Third Edition, Richard D. Irwin, Inc., 1985, ISBN 0-256-03307-2.
Beveridge Report

The Beveridge Report, officially entitled Social Insurance and Allied Services (Cmd. 6404), is a government report, published in November 1942, influential in the founding of the welfare state in the United Kingdom. It was drafted by the Liberal economist William Beveridge, who proposed widespread reforms to the system of social welfare to address what he identified as "five giants on the road of reconstruction": "Want… Disease, Ignorance, Squalor and Idleness". Published in the midst of World War II, the report promised rewards for everyone's sacrifices. Overwhelmingly popular with the public, it formed the basis for the post-war reforms known as the Welfare State, which include the expansion of National Insurance and the creation of the National Health Service.

Disability insurance

Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work. For example, the worker may suffer from an inability to maintain composure in the case of psychological disorders or an injury, illness or condition that causes physical impairment or incapacity to work. It encompasses paid sick leave, short-term disability benefits (STD), and long-term disability benefits (LTD). Statistics show that in the US a disabling accident occurs, on average, once every second. In fact, nearly 18.5% of Americans are currently living with a disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.

Kela (Finnish institution)

Kela, abbr. from Finnish: Kansaneläkelaitos, Swedish: Folkpensionsanstalten (Fpa), English: The Social Insurance Institution (SII), is a Finnish government agency in charge of settling benefits under national social security programs. Kela was founded in 1937 to handle retirement pay. In the 1980s and 1990s, its role was expanded to handle other fields like child benefits, unemployment benefits, sickness benefits, health insurance and student financial aid.

Kela is funded from compulsory payments to some of the administered schemes (24 % 2015) and by taxation. Coverage under the schemes is given to all permanent residents of Finland. Kansaneläkelaitos/Folkpensionsanstalten literally means "People's Pension Institute", reflecting its original function as the national provider of retirement benefits.

Ministry of Labour and Social Affairs (Greece)

The Ministry of Labour and Social Affairs (Greek: Υπουργείο Εργασίας και Κοινωνικών Υποθέσεων) is a government department of Greece. The incumbent minister is Giannis Vroutsis of New Democracy.


A pension (, from Latin pensiō, "payment") is a fund into which a sum of money is added during an employee's employment years, and from which payments are drawn to support the person's retirement from work in the form of periodic payments. A pension may be a "defined benefit plan" where a fixed sum is paid regularly to a person, or a "defined contribution plan" under which a fixed sum is invested and then becomes available at retirement age. Pensions should not be confused with severance pay; the former is usually paid in regular installments for life after retirement, while the latter is typically paid as a fixed amount after involuntary termination of employment prior to retirement.

The terms "retirement plan" and "superannuation" tend to refer to a pension granted upon retirement of the individual. Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. Called retirement plans in the United States, they are commonly known as pension schemes in the United Kingdom and Ireland and superannuation plans (or super) in Australia and New Zealand. Retirement pensions are typically in the form of a guaranteed life annuity, thus insuring against the risk of longevity.

A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions. Occupational pensions are a form of deferred compensation, usually advantageous to employee and employer for tax reasons. Many pensions also contain an additional insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries. Other vehicles (certain lottery payouts, for example, or an annuity) may provide a similar stream of payments.

The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree.

Personal Public Service Number

The Personal Public Service Number (PPS Number) (Irish: Uimhir Phearsanta Seirbhíse Poiblí, or Uimh. PSP) is an identifier issued by the Client Identity Services section of the Department of Employment Affairs and Social Protection, on behalf of the Minister for Social Protection in Ireland.

The PPS Number was known as the Revenue and Social Insurance Number (RSI No) until 1998. RSI Numbers were first issued in April 1979 as a replacement for the separate PAYE Number and Social Welfare Insurance Number which had been used for income tax and social welfare purposes respectively until then. The PAYE Number was issued by the Revenue Commissioners and these numbers were transferred to the RSI No system as a basis for the unified system.

Today, the PPS Number is used for accessing a wide range of public services in Ireland. The Department of Employment Affairs and Social Protection maintains a list of bodies that are legally authorised to use the PPS Number[1]

Everyone born in Ireland from 1971 onwards has a PPS Number: it is now assigned as part of the birth registration process. Similarly, a PPS Number has been assigned to anyone who has worked or received a Social Welfare payment in Ireland since 1979.[2]

Public pensions in Greece

Public pensions in Greece are designed to provide incomes to Greek pensioners upon reaching retirement. For decades pensions in Greece were known to be among the most generous in the European Union, allowing many pensioners to retire earlier than pensioners in other European countries. This placed a heavy burden on Greece's public finances which (coupled with an aging workforce) made the Greek state increasingly vulnerable to external economic shocks, culminating in a recession due to the 2008 financial crisis and subsequent European debt crisis. This series of crises has forced the Greek government to implement economic reforms aimed at restructuring the pension system and eliminating inefficiencies within it. Measures in the Greek austerity packages imposed upon Greek citizens by the European Central Bank have achieved some success at reforming the pension system despite having stark ramifications for standards of living in Greece, which have seen a sharp decline since the beginning of the crisis.In proportion to their respective GDPs, the Greek government has historically spent more on their pension system than other European countries. In 2014, Greece spent around fourteen billion euros from the state budget on the pension system. This amount accounts for 7 (or so) percent of its annual GDP. Despite the increased levels of government spending on the pension policy, Greek workers were still expected to heavily contribute to their pensions. The combination of government involvement and worker contributions created a Bismarckian welfare state in which the focus was on income maintenance based on employee and employer contribution (instead of poverty prevention). The mixture of economic crisis and inefficient social redistribution concentrated on pensions has decimated Greece's ability to pursue other forms of social insurance. Greece spends 2% of its GDP on benefits such as housing, family, and poverty relief, signifying that the Greek government spends around 3.5 times more on the public pension system than on other forms of welfare and social insurance. Furthermore, a significant portion of the Greek population relies on their pensions as the main form of income for their family. As of 2017, nearly one in two families in Greece stated that the money from pensions is the dominant source of salary.While Greece has historically given generous pensions at early retirement ages compared to the European average, it has also historically suffered from unequal distribution of pensions and social benefits with already well-paid workers having a major advantage. Before the economic crisis, in 2008, social wealth redistribution mostly benefited pensioners and social insurance programs while low-income families received less than 10% of available cash benefits. Given that the 2010 pension reforms placed additional financial burden on impoverished and aging demographics, the full scope of the reforms could not be implemented due to the fear of further exclusion and impoverishment. Greece's pension reform in 2016 was partially intended to address these issues, and some analysts predict that it has opened the door to further reforms in the near future.

Revenue stamps of Gibraltar

The British colony of Gibraltar issued revenue stamps from 1884 to 1976.

Right to social security

The right to social security is recognized as a human right and establishes the right to social security assistance for those unable to work due to sickness, disability, maternity, employment injury, unemployment or old age. Social security systems provided for by states consist of social insurance programs, which provide earned benefits for workers and their families by employment contributions, and/or social assistance programs which provide non-contributory benefits designed to provide minimum levels of social security to persons unable to access social insurance.

Secretary of State for Work and Pensions

Her Majesty's Principal Secretary of State for Work and Pensions, or informally Work and Pensions Secretary is a post in the British Cabinet, responsible for the Department for Work and Pensions. It was created on 8 June 2001 by the merger of the Employment division of the Department for Education and Employment and the Department of Social Security.The Ministry of Pensions was created in 1916 to handle the payment of war pensions to former members of the Armed Forces and their dependants. In 1944 a separate Ministry of National Insurance (titled the Ministry of Social Insurance until 17 November 1944) was formed; the two merged in 1953 as the Ministry of Pensions and National Insurance. In 1966 the Ministry was renamed the Ministry of Social Security, but this was short-lived, as the Ministry merged with the Ministry of Health in 1968 to form the Department of Health and Social Security. Confusingly, the Secretary of State responsible for this Department was titled the Secretary of State for Social Services. The Department was de-merged in 1988, creating the separate Department of Health and Department of Social Security.

Social Insurance Fund of the Russian Federation

Social Insurance Fund of the Russian Federation (Russian: Фонд социального страхования Российской Федерации) is one of the state budget funds, created to provide for the compulsory social security of Russian citizens. Created on January 1, 1991 a joint decree of the Council of Ministers of the Russian Federation and the Federation of Independent Trade Unions of Russia № 600/9-3 from December 25, 1990.

The activities of the fund is governed by the Budget Code of the Russian Federation and the Federal Law "On the basis of compulsory social security", as well as other laws and regulations.

Social Insurance Number

A social insurance number (SIN) is a number issued in Canada to administer various government programs. The SIN was created in 1964 to serve as a client account number in the administration of the Canada Pension Plan and Canada's varied employment insurance programs. In 1967, Revenue Canada (now the Canada Revenue Agency) started using the SIN for tax reporting purposes. SINs are issued by Employment and Social Development Canada (previously Human Resources Development Canada).

The SIN is formatted as three groups of three digits (e.g., 123-456-789).

The top of the card has changed over the years as the departments that are responsible for the card have changed:

Manpower and Immigration

Employment and Immigration Canada

Human Resources Development Canada

Government of CanadaThe 2012 Canadian federal budget contained provisions to phase out the Social Insurance Number cards because they lacked modern security features and could be used for identity theft. As of 31 March 2014, Service Canada no longer issues plastic SIN cards. Instead, an individual will receive a paper "Confirmation of SIN letter".

Social security

Social security is "any government system that provides monetary assistance to people with an inadequate or no income." In the United States, this is usually called welfare or a social safety net, especially when talking about Canada and European countries.

Social security is asserted in Article 22 of the Universal Declaration of Human Rights, which states:

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.

In simple terms, the signatories agree that the society in which a person lives should help them to develop and to make the most of all the advantages (culture, work, social welfare) which are offered to them in the country.Social security may also refer to the action programs of an organization intended to promote the welfare of the population through assistance measures guaranteeing access to sufficient resources for food and shelter and to promote health and well-being for the population at large and potentially vulnerable segments such as children, the elderly, the sick and the unemployed. Services providing social security are often called social services.

Terminology in this area is somewhat different in the United States from in the rest of the English-speaking world. The general term for an action program in support of the well being of poor people in the United States is welfare program, and the general term for all such programs is simply welfare. In American society, the term welfare arguably has negative connotations. In the United States, the term Social Security refers to the US social insurance program for all retired and disabled people. Elsewhere the term is used in a much broader sense, referring to the economic security society offers when people are faced with certain risks. In its 1952 Social Security (Minimum Standards) Convention (nr. 102), the International Labour Organization (ILO) defined the traditional contingencies covered by social security as including:

Survival beyond a prescribed age, to be covered by old age pensions;

The loss of support suffered by a widowed person or child as the result of the death of the breadwinner (survivor’s benefit);

Responsibility for the maintenance of children (family benefit);

The treatment of any morbid condition (including pregnancy), whatever its cause (medical care);

A suspension of earnings due to pregnancy and confinement and their consequences (maternity benefit);

A suspension of earnings due to an inability to obtain suitable employment for protected persons who are capable of, and available for, work (unemployment benefits);

A suspension of earnings due to an incapacity for work resulting from a morbid condition (sickness leave benefit);

A permanent or persistent inability to engage in any gainful activity (disability benefits);

The costs and losses involved in medical care, sickness leave, invalidity and death of the breadwinner due to an occupational accident or disease (employment injuries).People who cannot reach a guaranteed social minimum for other reasons may be eligible for social assistance (or welfare, in American English).

Modern authors often consider the ILO approach too narrow. In their view, social security is not limited to the provision of cash transfers, but also aims at security of work, health, and social participation; and new social risks (single parenthood, the reconciliation of work and family life) should be included in the list as well.Social security may refer to:

social insurance, where people receive benefits or services in recognition of contributions to an insurance program. These services typically include provision for retirement pensions, disability insurance, survivor benefits and unemployment insurance.

services provided by government or designated agencies responsible for social security provision. In different countries, that may include medical care, financial support during unemployment, sickness, or retirement, health and safety at work, aspects of social work and even industrial relations.

basic security irrespective of participation in specific insurance programs where eligibility may otherwise be an issue. For instance, assistance given to newly arrived refugees for basic necessities such as food, clothing, housing, education, money, and medical care.A report published by the ILO in 2014 estimated that only 27% of the world's population has access to comprehensive social security.

State Social Protection Fund (Azerbaijan)

The State Social Protection Fund of Azerbaijan Republic (Azerbaijani: Azərbaycan Respublikası Dövlət Sosial Müdafiə Fondu) is a governmental agency within the Cabinet of Azerbaijan in charge of regulating activities in the sector of social insurance and provision of pensions to citizens of Azerbaijan Republic. The agency is headed by Salim Muslumov.

Swedish Social Insurance Agency

The Swedish Social Insurance Agency (Swedish: Försäkringskassan) is a government agency that administers social insurance in Sweden.

Taxation in Gibraltar

Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. It is a well known and regulated international finance centre and has been a popular jurisdiction for European offshore companies. The financial sector, tourism, shipping services fees, and duties on consumer goods generate revenue.The law of Gibraltar is based on English law, but is separate from the UK legal system. Non-resident businesses do not pay income tax unless the source of this income is Gibraltar proper. There is no tax on capital income.In Gibraltar there is no capital gains tax, wealth tax, sales tax or value added tax. Import duty is payable on most items at 12% The main tax for companies is Corporation Tax, and Social insurance contributions. There are also stamp duties on certain transactions, and property taxes ('rates').

Non-resident companies can take advantage of a number of offshore regimes in order to reduce taxation, although in line with the elimination of unfair tax practices this is being phased out. Individuals pay quite high taxes on their income in Gibraltar unless they are able to take advantage of high-net-worth individual status or gain exemption as an expatriate executive. Import duties are quite high on some items.

Assessment and collection of tax is administered by the Commissioner of Income Tax; the tax year runs from 1st July to the following 30 June.

The information in this article is taken from the publication "Gibraltar Tax facts". It may be incorrect or out of date. For the latest data see the Government of Gibraltar website listed in external links.

Vera Bergkamp

Vera Alida Bergkamp (born 1 June 1971) is a Dutch politician of the Democrats 66 (D66) party serving as a member of the House of Representatives since 20 September 2012. She was elected in the 2012 general election and reelected in 2017.

Prior to being elected she worked as director of human resources for the Sociale Verzekeringsbank ("Social insurance bank"), a Dutch quango responsible for administering, among other things, several state benefits, such as the AOW state pension, and the Dutch child benefit payments. In addition she is the Director of COC Nederland (the oldest LGBT rights organisation in the world), and serves as a municipal councilor for Amsterdam-Centrum, a sub-municipality (deelgemeente) of Amsterdam.

Bergkamp studied public administration and political science at the Vrije Universiteit Amsterdam.

William Beveridge

William Henry Beveridge, 1st Baron Beveridge, (5 March 1879 – 16 March 1963) was a British economist who was a noted progressive and social reformer.

He is best known for his 1942 report Social Insurance and Allied Services (known as the Beveridge Report) which served as the basis for the post-World War II welfare state put in place by the Labour government elected in 1945. He was considered an authority on unemployment insurance from early in his career, served under Winston Churchill on the Board of Trade as Director of the newly created labour exchanges and later as Permanent Secretary of the Ministry of Food. He was Director of the London School of Economics and Political Science from 1919 until 1937, when he was elected Master of University College, Oxford. Beveridge published widely on unemployment and social security, his most notable works being: Unemployment: A Problem of Industry (1909), Planning Under Socialism (1936), Full Employment in a Free Society (1944), Pillars of Security (1943), Power and Influence (1953), and A Defence of Free Learning (1959).

Withholding tax

A withholding tax, or a retention tax, is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, withholding tax applies to employment income. Many jurisdictions also require withholding tax on payments of interest or dividends. In most jurisdictions, there are additional withholding tax obligations if the recipient of the income is resident in a different jurisdiction, and in those circumstances withholding tax sometimes applies to royalties, rent or even the sale of real estate. Governments use withholding tax as a means to combat tax evasion, and sometimes impose additional withholding tax requirements if the recipient has been delinquent in filing tax returns, or in industries where tax evasion is perceived to be common.

Typically the withholding tax is treated as a payment on account of the recipient's final tax liability, when the withholding is made in advance. It may be refunded if it is determined, when a tax return is filed, that the recipient's tax liability to the government which received the withholding tax is less than the tax withheld, or additional tax may be due if it is determined that the recipient's tax liability is more than the withholding tax. In some cases the withholding tax is treated as discharging the recipient's tax liability, and no tax return or additional tax is required. Such withholding is known as final withholding.

The amount of withholding tax on income payments other than employment income is usually a fixed percentage. In the case of employment income the amount of withholding tax is often based on an estimate of the employee's final tax liability, determined either by the employee or by the government.

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