Download - MANAGING SOCIAL SECURITY ORGANIZATIONS
MANAGING SOCIAL SECURITY MANAGING SOCIAL SECURITY ORGANIZATIONSORGANIZATIONS
PRESENTATION DURING INTERNATIONAL SEMINAR
FOR COUNTRY HEADS OF
SOCIAL SECURITY ORGANIZATIONSOF ASIA-PACIFIC AND AFRICA
NEW DELHI-INDIA 29TH-30TH OCTOBER 2007
PRESENTED BY COMPILED BY
B.N.SOM DR.MAHENDRA RAJU
“ IF A FREE SOCIETY
CAN NOT HELP THE MANY
WHO ARE POOR, IT CAN NOT SAVE THE FEW WHO ARE VERY RICH ”
- JOHN F. KENNEDY
THIS IS WHERE ANY GOVERNMENT HAS TO PROVE ITS EFFICACY IN ADMINISTERING SOCIAL
SECURITY INSTITUTIONS. THAT’S WHERE WE ARE TALKING TODAY ON THIS SUJECT.
MANAGING SOCIAL SECURITY MANAGING SOCIAL SECURITY ORGANISATIONORGANISATION
Governance and AdministrationGood governance is the key to an effective social security scheme
Good Governance also embraces the process of consultation and decision
making to determine the structure of the scheme
the institutional arrangement for its administration
implementation and supervision of social security schemes
There is interrelationship between national policy national management and scheme management
OBJECTIVES OF GOOD GOVERNANCEOBJECTIVES OF GOOD GOVERNANCEStrategic and macro policy objectives Analyze the choices which determine the overall structure of the social protection The respective roles of Govt/public and private players The type of schemes to be introduced Establish a process of policy formulation Balance the full range of social protection needs against
national resources Create a balance amongst national policy, public social
security schemes and individual private provisions Ensure widespread coverage and adequate benefits Achieve the desired level of income redistribution. Enact legislation to give effect to the policy decisions and
subsequent changes
Institutional arrangements
Establish institutional arrangements which are accountable for the implementation of social security programs
Ensure that contributors and beneficiaries have an opportunity to influence the decision-making process and to monitor the administration of social security schemes
Establish financial control mechanisms to monitor the allocation and management of resources
Administrative obligationsAdministrative obligationsMaking the structure workMaking the structure work
Ensure that contributions are collected and accounted for and that benefits are paid promptly
Minimize the cost of administration within the desired level of service
Ensure that contributors and beneficiaries are aware of their rights and their obligations
Establish a mechanism for monitoring and reviewing administrative performance.
When policy makers develop a strategy to provide When policy makers develop a strategy to provide effective ‘income replacement’ in respect of the effective ‘income replacement’ in respect of the contingencies of old age, invalidity and death, the contingencies of old age, invalidity and death, the policy process should address fallowingpolicy process should address fallowing
1.What is the most appropriate scheme for the 1.What is the most appropriate scheme for the country?country?
2.What are the most suitable institutional 2.What are the most suitable institutional arrangements?arrangements?
3.How can efficiency at the operational level be 3.How can efficiency at the operational level be maximized?maximized?
The stakeholdersThe stakeholders
The following groups have an interest in social security The following groups have an interest in social security and thus should be involved in the governance of those and thus should be involved in the governance of those social systems:social systems:
· the state· the state· social security institutions (both public and private),· social security institutions (both public and private),· employers and workers as contributors· employers and workers as contributors· beneficiaries· beneficiaries
Social security institutionsSocial security institutions
Governance of social security:Governance of social security:
Institutional division of responsibilityInstitutional division of responsibility - Formulation of national policy- Formulation of national policy-- Monitoring at macro level Monitoring at macro level - - Determines major policy issuesDetermines major policy issues- - Finalizes legislationFinalizes legislation- - Overall financial supervisionOverall financial supervision- - General oversightGeneral oversight
THE FUNDAMENTAL GOVERNANCE THE FUNDAMENTAL GOVERNANCE QUESTIONSQUESTIONS
The fundamental governance questions are:
what is the most appropriate social security pension
scheme for the country?
what problems are typically experienced in strategic planning?
what are the most suitable institutional arrangements for the administration of social security?
What is the most appropriate social security What is the most appropriate social security pension scheme for the country?pension scheme for the country?
Governance at the strategic or macro policy level
The design and implementation of a social security pension scheme is a major step in the socioeconomic development of any country and the process requires careful planning.
There will inevitably be both short-term and long-term
implications for economic and fiscal performance as well as for the Labour market and, more directly, for the overall level of social protection and living standards.
What Problems are typically What Problems are typically experienced in strategic planning?experienced in strategic planning?
Fragmented developmentLack of coordinationInadequate planningRigidity in the legislative processConceptual rigidity
Fragmented development In many countries social protection schemes have
developed on a piecemeal basis often in response to particular issues or problems rather than as part of a national long-term strategy
Such as : Ministry of Labour may be responsible for the direct
administration of a workers’ compensation scheme, Social insurance pension scheme
The ministry of Health may supervise a health insurance scheme
The Ministry of Defence may administer a pension scheme for members of the armed forces
Civil Service Department may administer a pension scheme for public servants.
There may be many occupational or private pension arrangements supervised by
the Ministry of Finance or a regulatory body
Achieving policy coherence and consistency in this situation will be difficult
Among several government departments and public agencies
There may be an overall lack of policy cohesion resulting in inconsistencies between the different provisions
It may be difficult to determine the respective roles of the employees, employers and beneficiaries in the financing and provision of social protection
There may be overlaps at the operational level between the various sub-systems
Lack of coordination results in :
The absence of a national mechanism for monitoring the overall performance of the social protection
Problems and proposals for reform in the broader context Coordinating policy development at the macro level Coordinating policy implementation at the micro level
The problems of fragmentation and lack of coordination have been evident form ILO technical cooperation activities in many countries for example in
India, Indonesia, Malaysia and the Philippines in Asia Nigeria, Tanzania and Zambia in Africa etc
Inadequate planning :
Increased levels of social protection may be desirable but can they be sustainable who will bear the burden ? Policy making often takes place under pressure without adequate consultation or preliminary study and evaluation The process of reform is difficult to manage indeveloping countries and countries in transition, where the decision-making process is often
determined by political considerations without adequate regard to the
technical/actuarial implications
Rigidity in the legislative processRigidity in the legislative process The social security legislation often represents a major
obstacle to ensure that social security provisions remain valid in changing circumstances
It may prove difficult to ensure that the fallowing critical
aspects remain valid if the process for legislative change is cumbersome and the system is overburdened viz.,
coverage contribution rates compliance benefit parameters minimum benefit etc
Conceptual rigidityConceptual rigidity
The development of most social security schemes is influenced by experience elsewhere
This may be based on the emergence of new concepts or reactions to new problems, or it may reflect political or economic influence
Experience thus illustrates the need for each country to develop a social protection which reflects its particular national circumstances and to take advantage of foreign experience and expertise with caution
What are the most suitable institutional arrangements for What are the most suitable institutional arrangements for the administration of social security?the administration of social security?
Institutional arrangements have a direct bearing on the effectiveness of that governance
But what works in one country does not necessarily do so in another
Just as the scheme must be designed to suit the circumstances of the people, the institutional arrangements will reflect the level of development ,the political situation in the country
In many countries these institutional arrangements were devised to administer a scheme for a particular occupational group, such as civil servants, the armed forces, teachers and lawyers etc
The subsequent development of social security and the extension of coverage has sometimes been built around these initial schemes
PROBLEMS WITH ADMINISTRATION PROBLEMS WITH ADMINISTRATION AT THE OPERATIONAL LEVELAT THE OPERATIONAL LEVEL
Lack of transparencySchemes may not be accessibleLimited coverageMaintaining accurate recordsDelays in processing benefit claims
Problems with administration Problems with administration at the operational levelat the operational level
In many countries the degree of autonomy accorded to the social security institution in the legislation does not exist in practice
This reflects a lack of confidence in the management of the institution
But both the structure and the performance of
the scheme should reflect a broad consensus :
in favor of its objectives and in support of the way that it is administered
In this context, where do problems arise?
Lack of transparency :Lack of transparency :
There is often a lack of transparency in the administration of social security provisions
This weakness applies to the failure to explain adequately the broad concepts and objectives of the
scheme to the failure to advise the insured persons how their pension
records are progressing or what is happening to the contributions that they have paid.
The problem of lack of transparency applies particularly acute in the case of pensions
since the contribution rates are the highest benefit may not be payable for 30 years-on retirement People inevitably wonder what is happening to their contributions
Schemes may not be accessibleSchemes may not be accessible
Many schemes are also too inaccessible to their contributors and beneficiaries.
This may be because the Organisation is highly centralized
Because it has not yet been possible to establish a network of branch offices or To make their systems technology driven
This feeling may be compounded both By the attitude of the staff to the public and By the lack of facilities for public information and
reception
Limited coverageLimited coverage
The coverage of many schemes is very limited often only a minority of the Labour force being insured Even when the legislation prescribes mandatory coverage,
problems arise in achieving this Many schemes experience difficulty in:
Identifying and registering both employers and insured persons.
In allocating a social security number and in ensuring that this number is applied to that individual regardless of change of employment.
Maintaining accurate recordsMaintaining accurate recordsMost social insurance schemes require
employers to regularly submit details about the employment and earnings of insured persons to provide the basis for determining entitlement to a pension
This depends on the continuous cooperation of employers and workers and on efficiency within the social security administration.
Delays, omissions and mistakes in the information create bottlenecks, often compounded by administrative problems such as the shortage or breakdown of computer processing.
Delays in processing benefit claimsDelays in processing benefit claims
Possible reasons for delays Inefficient data gathering Inaccurate data compilation Improper data processing
Delays in benefit claims result in Irritating enquiries by both employers and insured persons seeking information Even though which has already been provided But not satisfactorily And basing on data not properly recorded or Basing on data which cannot be found or not verifiable
Bureaucratic proceduresBureaucratic procedures The administrative mechanisms may pose obstacle to the
attainment of the overall objectives Because they involve excessive supervision/checking and
limited delegation. There is a tendency in some schemes to develop
procedures which are designed to reduce all risk of error abuse or internal fraud where the overall level of service suffers and
even the introduction of computerization may only serve to provide another layer of bureaucracy in which records and procedures are duplicated
Making Public Social Security institutions Making Public Social Security institutions more effectivemore effective
Whether the structure of the social security scheme is private or public, the state must play a major role in ensuring that it meets its objectives.
Where the administration is entrusted to the private sector, significant supervision will be needed by a public sector body.
Social security schemes financed by employers’ and workers’ contributions should safeguard the interests of their contributors and beneficiaries
They should have the opportunity to participate in the
supervision of their scheme.
Nevertheless there are no clear indications that large-scale privatization would result in more effective systems
Instead it may be more appropriate, in the reform process, to give priority to addressing the weaknesses in the public institution which limit their effectiveness.
THE UNIFICATION OF SOCIAL THE UNIFICATION OF SOCIAL SECURITY SCHEMESSECURITY SCHEMES
The unification approach is the reverse of
the specialization approach and derives its appeal from fallowing arguments:
Where the social security system is fragmented between different sections of the population or different risks with duplicated functions and inconsistencies
From the viewpoint of employers and insured persons it may be
argued that there should be one point of contact form social security obligations and entitlements
ConclusionsConclusions Issues of governance lie at the heart of the debate on how to
best provide more effective social protection. But the debate is distorted by arguments and counter
arguments for and against a firm adherence to the role of the state
There are many systems of administration in the spectrum between reliance on private insurance and direct administration by central government
It is difficult, and probably inappropriate, to try to reach any general conclusion as to which system is best.
To some extent the debate about the relative merits of private and public management is a false one:
There is only good management and bad management.
conclusions But it has to be conceded that much needs to be done to
achieve the right balance and too provide the right basis for effective governance
Where public accountability systems exist with a sophisticated democratic framework of public scrutiny the objectives of a social security system can be achieved through direct public management
It is difficult to restructure social security institutions once
they have been established The exception is where there is a climate of radical reform,
such as has existed in recent years in central and eastern Europe.
conclusionsconclusions
In any event many of the weaknesses in the governance of social security would not necessarily be solved by privatization, specialization or unification
They may only appear in another form or be replaced by different problems
For many countries, therefore, the most realistic and
effective approach would be to seek improvement within the present structure with a balanced middle level path.
“ The best government is not
that which renders men the happiest, but that which renders the greatest
number happy ” - Duclos
This maxim applies specially relevant now for every government to extend social security benefits
to all and see that they are administered efficiently so that all
the people of the country are happy