www.ssc.org.na

Overview of Social Insurance in Namibia

Social Protection Conference July 2015

Presented by: DA Keendjeledavid.keendjele@ssc.org.na

30/06/2015 1

www.ssc.org.na

Presentation content1. Background

2. Social Insurance Context

3. Situation prior to independence

4. Social Security Research for Namibia

5. Creation of Social Security Insurance Funds/Schemes

6. Experience for Short term (ST) SSI schemes

7. Coverage by Schemes and Statistics (1996- 2014)

8. Admin lessons learned from ST Social Security Funds

9. Conclusion

30/06/2015 2

www.ssc.org.na

Background• Namibia was colonized for over 100 by Germany, GB

and SA.• Independence was attained on March 21, 1990, after

protracted liberation wars.• South Africa (SA) was the colonial master at the time

and the SA laws were applicable in Namibia. • Limited social insurance (employment injury protection)

was available through the Workmen’s Compensation Act, 30 of 1941.

• Social protection was not readily available to the majority workers.

30/06/2015 3

www.ssc.org.na

• Contract labour system was prevalent prior to independence.

• There was limited social insurance schemes through collective bargaining, e.g. occupational pensions schemes

• There was no legislation that offered social protection to workers for contingencies like maternity, sickness or disability other than as a result of employment injury.

• Private schemes that offered benefits to workers were not accessible or affordable to many workers.

• Coverage was limited and bias towards adverse selection.

30/06/20154

Background… (2)

www.ssc.org.na

Social Insurance Context• Research was carried by the ILO in 1992, gave rise to

the adoption of social insurance concept by GRN.• ILO recommended adoption of social insurance based

on its minimum standards.• Namibia Social Insurance was thus based on the

following principles:– It has to be financed by shared contributions between employer & employee– Participation is compulsory, with very few exceptions, e.g. ECF wage ceiling.– Contributions are accumulated in a Fund out of which benefits are paid– Surplus funds are invested to earn further income– The right to benefits is secured by member’s participation

• Future social insurance schemes likely to follow the above principles

30/06/2015 5

www.ssc.org.na

Social Security Research , 1992• First Namibian Labour Act was passed in 1992• Provision for Social security was not included

in the Labour Act, No 6 of 1992.• ILO did a study the implementation of Social

security and recommended its design • Recommendations from the ILO study were

used to draft the Social Security Act, 1994• Tripartite consultations followed on the design

30/06/2015 6

www.ssc.org.na

SSC Social Insurance Funds• The Social Security Act was passed into law in 1994.• A tripartite Social Security Commission was created to

be the Trustee of Social Insurance Funds.• With powers and duties of SSC, inter alia, to:-

– administer Social Security Funds and – advise Minister regarding the application of the Act

• SSC took over the administration of the Employees Compensation Fund with effect from 1 March 1995.

• Social Security Regulations were passed to enable the registration of members with Maternity-, Sick leave- and Death Benefit Fund, within 90 days as of 1 Nov, 1995.

30/06/2015 7

www.ssc.org.na

Experience for ST-SSI schemes• Regulations under the SSA placed obligation on employers to

register with the MSD Fund.• Employers were further obliged to deduct the prescribed

contributions from employees, add equal amount and pay such over to SSC within 30 days.

• SSC was obliged to issue membership certificates to registered members.

• SSC should also keep an active register of members of Funds.• A waiting period of six (6) months was set in the Reg(s) to

qualify for benefits under MSD.• Benefits are payable as lump sum or periodical up to 24

months. Thus Short-Term (ST).

30/06/2015 8

www.ssc.org.na

Experience for ST-SSI schemes..2• The rules for MSD and ECF needed different

approaches to administer, especially IT programs• MSD is straight forward and ECF is complex in nature;

– MSD has one rate for contributions of 1.8% shares equally.– ECF has many rates and various formulae for benefits

• Revenue collection is done once per annum under ECF while under MSD it is done monthly, without invoices.

• Employers and employees confuse the two funds and some register only with one fund

• Funeral grant and Death Benefits can both be paid, while provision to pay out of one fund is made under Sick leave and IOD cases.

30/06/2015 9

www.ssc.org.na

COVERAGE & FUNDS STATS

30/06/2015 10

MSD FUND EC ACCIDENT Fund ACCIDENT PENSIONFUND CASES

COVERED EMPLOYERS

25 270 (1996)68 800 (2014)

8 100 (1996) 57 931 (2014) N/a

COVERED EMPLOYEES

212 000 (1996)555 171 (2014) N/a Fund started in

1990

AVG. CLAIMS REPORTED, P.A.

6 800 (1996)*25 000 (2014)* Base year

5 000 (1996)4 500 (2014) 649 (Private)

326 (Public)

www.ssc.org.na

Admin Lessons for ST -SSI• There was a requirement for registration fee of N$10 per

member, which was later abolished.• Employees working for less than 3 days per week for

same employer were excluded till November 2008.• Employment practices of some employers contradicted

the provisions of SSA, e.g. “6 Cent” employees and utilizing annual vacation leave for maternity leave.

• Basic salary was defined to be not less than $300 and not more than $3000 per month. This remained static for some years, but now stands at $9 000 & N$10 500.

• There is a need to address the burden of double contributions paid by the self employed persons.

30/06/2015 11

www.ssc.org.na

Admin Lessons for ST –SSI..2• There is requirement to re-register each time you change

employment. This poses data capturing challenges.• Revenue is collected from employer and no individual

accounts for employees are kept by the fund.• Admin costs are shared by the active funds, in relation to

their size, as agreed with the Auditor General.• Benefits are not indexed but are reviewed on ad-hoc

basis, and on recommendation of the Actuary.• Pension increase follow the same process and these

remain static for some time.• GRN is the only exempted employer from the ECF.• Appeal mechanism from members still under developed.

30/06/2015 12

www.ssc.org.na

Conclusions• The need to reform SSI, expand coverage and update

legislation should remain the main focus.• The need is there to expand coverage of schemes to

more members, especially to the informal sector.• Lessons learned of short term administration of Social

Insurance can be used to implement long term SSI schemes.– E.g. Having adequate (IT) systems to administer long term

schemes prior to implementation thereof.

• Address the gaps in the social security safety net due to the absence of long term social insurance schemes.

• Need for National Social Policy to do all the above.

30/06/2015 13