MANAGING SOCIAL SECURITY ORGANIZATIONS

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MANAGING SOCIAL SECURITY ORGANIZATIONS

• PRESENTATION DURING
• INTERNATIONAL SEMINAR
• FOR COUNTRY HEADS OF
• SOCIAL SECURITY ORGANIZATIONS
• OF ASIA-PACIFIC AND AFRICA
• NEW DELHI-INDIA 29TH-30TH OCTOBER 2007
• PRESENTED BY
  COMPILED BY
• B.N.SOM
  DR.MAHENDRA RAJU

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• 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. THATS WHERE WE ARE
  TALKING TODAY ON THIS SUJECT.

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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
• national policy
• national management and
• scheme management

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OBJECTIVES OF GOOD GOVERNANCE

• Strategic 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

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•  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

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Administrative obligationsMaking 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.

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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 institutional arrangements?3.How can
efficiency at the operational level be maximized?
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The stakeholdersThe following groups have an
interest in social security and thus should be
involved in the governance of those social
systems    the state     social security
institutions (both public and private),    
employers and workers as contributors   
beneficiaries
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Social security institutions Governance of
social security Institutional division of
responsibility -   Formulation of
national policy- Monitoring at macro
level -          Determines major policy
issues-          Finalizes legislation-         
 Overall financial supervision-          General
oversight 
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THE FUNDAMENTAL GOVERNANCE QUESTIONS

• 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?

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What is the most appropriate social security
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.

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What Problems are typically experienced in
strategic planning?

• Fragmented development
• Lack of coordination
• Inadequate planning
• Rigidity in the legislative process
• Conceptual rigidity

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• 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.

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• 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

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• 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

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• 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

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Rigidity 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

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Conceptual 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

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What are the most suitable institutional
arrangements for 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

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PROBLEMS WITH ADMINISTRATION AT THE OPERATIONAL
LEVEL

• Lack of transparency
• Schemes may not be accessible
• Limited coverage
• Maintaining accurate records
• Delays in processing benefit claims

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Problems with administration at 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?

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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

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Schemes 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

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Limited 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.

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Maintaining accurate records

• Most 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.

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Delays 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

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Bureaucratic procedures

• The administrative mechanisms may pose obstacle
  to the attainment of the overall objectives
• Because they involve excessive supervision/checkin
  g 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

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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.
• 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.

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• 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.

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THE UNIFICATION OF SOCIAL SECURITY 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

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Conclusions

• 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.

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• 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.

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conclusions

• 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.

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• 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

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• Sarve janah sukhino bhavanthu
• This is an ancient Indian wisdom from Vedas which
  only means
• Let all Human Beings live in Happiness
• Thank You
• THANK YOU