The COVID-19 pandemic has underlined the importance of safety, health and well-being, and the role that social security institutions play to support their beneficiaries in navigating through the pandemic. By promoting a prevention culture, governments, workers, employers and social security institutions contribute to building a safer, healthier and more productive working environment. A healthy workforce also contributes to the sustainability of social security systems.
Error, Evasion and Fraud in Social Security Systems
Contribution Collection and Compliance
Information and Communication Technology
Social security evasion and fraud issues have high social and economic cost, create imbalances in social security accounts and ultimately lead to economic distortions that are not favourable to the functioning and competitiveness of the national economy. They also have a political impact because they undermine the reputation of the institutions that administer the social security programmes. It is estimated that evasion and fraud cause a 3 to 5 per cent income shortfall in social security systems and amount to up to 2 per cent of the gross domestic product of OECD countries (RAND Europe, 2014). These figures are likely to be higher in countries with less formal economies.
Non-contributory pensions, also known as social pensions, are an important component of rights-based universal social protection systems. They allow extending pension coverage relatively rapidly to elderly persons who are not covered by contributory schemes. Usually financed by general revenues and providing relatively modest benefits, eligibility for social pensions is often conditional on low income or certain other criteria.
No one could have imagined nor anticipated the global disruptions that happened in 2020. For many social security institutions, the severe health risks and safety protocols of the pandemic required a seismic shift of operations to digital technologies. In one fell swoop, teleworking, online platforms and mobile apps replaced the face-to-face, paper-based transactions of social security. The blending of human insight with digital technologies is the ace in the sleeve of every chief executive officer (CEO). Through an astute blending of human-and-digital solutions, social security continues to deliver on its mandate by ably navigating the first and succeeding waves of the pandemic.
The closure of childcare centres and schools resulting from the COVID-19 lockdown measures has imposed a heavy strain on families, both on the children and their parents, and especially the mothers. The pandemic exposed yet again the preponderance of women in childcare and housework, raising once more the serious challenges of gender equality, women’s rights to social security as well as their financial security and overall well-being (Doucet, Mathieu and McKay 2020, p. 277).
Social protection systems have been one of the most effective instruments to mitigate the social, economic and health impact of the COVID-19 crisis. Governments worldwide moved swiftly to extend and adapt existing schemes and create new benefits to protect employment, prevent poverty and facilitate health-related restrictions. Social security institutions innovated to respond rapidly to the demands from governments and the public, and delivered existing and new benefits in an unprecedented and difficult context.
As part of the wider economic stimulus packages to respond to the second wave of COVID-19, governments continue to temporarily defer the collection of social security contributions (SSC), or to exempt from or reduce the contribution payments of some population groups. To date, 68 countries have introduced at least one of these measures (ISSA Coronavirus Country Measures Monitor). An April 2020 communication from the European Commission supported these as a “valuable tool to reduce the liquidity constraints of undertakings and preserve employment” during the COVID-19 crisis (EC 2020a).
The COVID-19 pandemic is further exposing significant challenges in many health and long-term care (LTC) systems driven by ageing societies. The need for strategies and solutions to support policymakers and social security institutions in facing the LTC challenge is fundamental to guarantee that no older person is left behind.
At the onset of the COVID-19 crisis, the immediate response of governments has been massive in both scale and coverage, to cushion the health, social and economic impacts of the pandemic. A raft of emergency measures were urgently implemented including ad hoc income transfers and unemployment benefits, targeted subsidies, free COVID-19 tests, subsidized health care and other support programmes. In many countries, governments have relied on social security institutions to distribute these subsidies and benefits, including to the most vulnerable groups especially low-income earners, informal sector workers, women, migrants and the youth.
Originally aimed at safeguarding the value of financial assets and ensuring the financial viability and long-term sustainability of pension schemes, investing social security reserve funds has surged to become a core business process in social security administration. At the onset, investment decisions were informed essentially by the investors’ quest for capital and guided by the fundamental principles of safety, liquidity and yields with a predominant focus on financial instruments and/or financial markets (Cichon et al. 2004).