SOCIAL CONTRIBUTIONS AND BENEFITS (D.6)

4.83 Definition:

Social benefits are transfers to households, in cash or in kind, intended to relieve them from the financial burden of a number of risks or needs, made through collectively organised schemes, or outside such schemes by government units and NPISHs; they include payments from general government to producers which individually benefit households and which are made in the context of social risks or needs.

4.84 The list of risks or needs which may give rise to social benefits is, by convention, fixed as follows:

  1. sickness;
  2. invalidity, disability;
  3. occupational accident or disease;
  4. old age;
  5. survivors;
  6. maternity;
  7. family;
  8. promotion of employment;
  9. unemployment;
  10. housing ;
  11. education;
  12. general neediness.
4.85 Social benefits include:
  1. current and lump-sum transfers from schemes which receive contributions, cover the entire community or large sections of the community and are imposed and controlled by government units (social security schemes);
  2. current and lump sum transfers from schemes organised by enterprises on behalf of their employees, ex-employees or dependants (private funded and unfunded enterprises' schemes). Contributions may be made by employees or employers; they may also be made by self-employed persons;
  3. current transfers from government units and NPISHs which are not conditional on previous payment of contributions (assistance).
4.86 Social benefits exclude:
  1. insurance claims based on policies taken out solely on the own initiative of the insured, independently of his employer or government;
  2. insurance claims on policies taken out with the sole purpose of obtaining a discount, even if those policies follow from a collective agreement.
4.87 In order for an individual policy to be treated as part of a social insurance scheme, the eventualities or circumstances against which the participants are insured must correspond to the risks or needs listed in paragraph 4.84. above, and in addition, one or more of the following conditions must be satisfied:
  1. participation in the scheme is obligatory either by law for a specified category of worker, whether employees, self or non-employed, or under the terms and conditions of employment of an employee, or group of employees;
  2. the scheme is a collective one operated for the benefit of a designated group of workers, whether employees, self or non-employed, participation being restricted to members of that group;
  3. an employer makes a contribution (actual or imputed) to the scheme on behalf of an employee, whether or not the employee also makes a contribution.

4.88 Social insurance schemes are schemes in which workers are obliged, or encouraged, by their employers or by general government to take out insurance against certain eventualities or circumstances that may adversely affect their welfare or that of their dependants.

Social insurance schemes may be classified according to the following types:

  1. social security schemes, covering the entire community, or large sections of the community, that are imposed, controlled and financed by government units;
  2. private funded schemes, which consist of:
    (1) schemes in which the social contributions are paid to third parties (insurance enterprises, autonomous pension funds);
    (2) schemes in which employers maintain special reserves which are segregated from their other reserves, even though such schemes do not constitute separate institutional units from the employers. These are referred to as non-autonomous pension funds. The reserves are treated as assets that belong to the beneficiaries and not the employers.

  3. unfunded schemes in which employers pay social benefits to their employees, ex-employees or their dependants out of their own resources without creating special reserves for the purpose.
4.89 Social insurance schemes organised by government units for their own employees are classified as private funded schemes or unfunded schemes as appropriate and not as social security schemes.

4.90 Social contributions may be divided into actual contributions payable under the first two categories of schemes mentioned in 4.88. above and imputed contributions payable under unfunded schemes.

4.91 Social contributions may be divided into those that are compulsory by law and those that are not.