Transcript MANAGING SOCIAL SECURITY ORGANISATION

MANAGING SOCIAL SECURITY
ORGANIZATIONS
PRESENTATION DURING
INTERNATIONAL SEMINAR
FOR COUNTRY HEADS OF
SOCIAL SECURITY ORGANIZATIONS
OF ASIA-PACIFIC AND AFRICA
NEW DELHI-INDIA
PRESENTED BY
B.N.SOM
29TH-30TH OCTOBER 2007
COMPILED BY
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
ORGANISATION
Governance and Administration
Good 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
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national policy
national management and
scheme management
OBJECTIVES OF GOOD GOVERNANCE
Strategic and macro policy objectives
Analyze the choices which determine the
overall structure of the social protection
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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
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Establish institutional arrangements which are
accountable for the implementation of social security
programs
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Ensure that contributors and beneficiaries have an
opportunity to influence the decision-making process
and to monitor the administration of social security
schemes
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Establish financial control mechanisms to monitor the
allocation and management of resources
Administrative obligations
Making the structure work
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Ensure that contributions are collected and accounted for and
that benefits are paid promptly
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Minimize the cost of administration within the desired level of
service
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Ensure that contributors and beneficiaries are aware of their
rights and their obligations
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Establish a mechanism for monitoring and reviewing
administrative performance.
When policy makers develop a strategy to provide
effective ‘income replacement’ in respect of the
contingencies of old age, invalidity and death, the
policy
process
should
address
fallowing
1.What is the most appropriate scheme for the
country?
2.What
are
the most suitable
arrangements?
institutional
3.How can efficiency at the operational level be
maximized?
The stakeholders
The following groups have an interest in social security
and thus should be involved in the governance of those
social systems:
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the state
social security institutions (both public and private),
employers and workers as contributors
beneficiaries
Social security institutions
Governance of social security:
Institutional division of responsibility
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Formulation of national policy
Monitoring at macro level
Determines major policy issues
Finalizes legislation
Overall financial supervision
General oversight
THE FUNDAMENTAL GOVERNANCE QUESTIONS
The fundamental governance questions are:
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what is the most appropriate social security pension
scheme for the country?
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what problems are typically experienced in strategic
planning?
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what are the most suitable institutional arrangements for
the administration of social security?
What is the most appropriate social security
pension scheme for the country?
Governance at the strategic or macro policy level
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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.
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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
experienced in strategic planning?
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Fragmented development
 Lack of coordination
 Inadequate planning
 Rigidity in the legislative process
 Conceptual 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 :
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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
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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
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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 :
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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 in
developing 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 process
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The social security legislation often represents a major
obstacle to ensure that social security provisions remain
valid in changing circumstances
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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.,
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coverage
contribution rates
compliance
benefit parameters
minimum benefit etc
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Conceptual rigidity
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The development of most social security schemes is
influenced by experience elsewhere
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This may be based on the emergence of new concepts
or reactions to new problems, or it may reflect political
or economic influence
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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
the administration of social security?
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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 AT
THE OPERATIONAL LEVEL
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Lack of transparency
 Schemes may not be accessible
 Limited coverage
 Maintaining accurate records
 Delays in processing benefit claims
Problems with administration
at the operational level
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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 :
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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 :
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 accessible
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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
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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 coverage
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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:
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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 records
Most social insurance schemes require employers
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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
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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 claims
Possible reasons for delays
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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
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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 procedures
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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
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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
more 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.
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Where the administration is entrusted to the private sector,
significant supervision will be needed by a public sector
body.
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Social security schemes financed by employers’ and
workers’ contributions should safeguard the interests of
their contributors and beneficiaries
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They should have the opportunity to participate in the
supervision of their scheme.
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Nevertheless there are no clear indications
that large-scale privatization would result in
more effective systems
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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
SECURITY SCHEMES
The unification approach is the reverse of the
specialization approach and derives its appeal
from fallowing arguments:
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Where the social security system is fragmented between
different sections of the population or different risks with
duplicated functions and inconsistencies
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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
Conclusions
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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
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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
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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
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It is difficult to restructure social security institutions once
they have been established
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The exception is where there is a climate of radical reform,
such as has existed in recent years in central and eastern
conclusions
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In any event many of the weaknesses in the governance of
social security would not necessarily be solved by
privatization, specialization or unification
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They may only appear in another form or be replaced by
different problems
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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
Sarve janah sukhino
bhavanthu
This is an ancient Indian wisdom from Vedas
which only means
“ Let all Human Beings live in
Happiness”
Thank You