One of the challenges of social security systems is compliance, getting employers, employees and the self-employed to fulfil their respective statutory obligations. The following contains content from Social Policy Highlight 20, a newsletter produced by the International Social Security Association (ISSA).
Common challenges that hinder the progress of contribution collection and compliance as identified by ISSA are:
- The absence of individual social security numbers/identification numbers thereby providing unique identifiers for all contributors/benefit recipients.
- Confidentiality restrictions that thwart efforts to match relevant data with other organisations.
- A lack of automation, which is necessary to alleviate problems of under-reporting of earnings, evasion and fraud.
- The ageing of an agency’s workforce which may lead to the loss of the institutional learning of a social security system.
- Non-compliant employers and employees who may make a rational choice to avoid paying contributions if enforcement measures are perceived as weak and/or if the economic gain of non-compliance is perceived to outweigh the financial cost and potential damage to reputations, be it through imposed penalties or sanctions.
Though there is no single best way to combat this problem, a recurrent argument has been made for the centralisation of contribution collection and compliance through a unified system for collecting social security contributions and taxes. It is argued, that centralisation of this nature is thought to bring economies of scale and help coordinate audit and record-keeping activities.
Understandably, since there is no agreement on the single best way for all countries to achieve good governance, there can be no agreement on the single best way to collect contributions.
However, complex interactive factors have been identified as a means of improving contribution collection which are: policy design and regulation, the extent of coverage and the makeup of the labour force, the organisational location of the collection entity, the degree of automation, cultural and political factors, as well as institutional history, which are all at play.
Social security organisations are contributing positively towards enhanced contribution collection and compliance by making necessary changes that lie within their institutional mandates. First and foremost, this is being done through a wider pursuit of improvements in administration and governance.
Additionally, as part of its strategic mandate to promote and develop social security, and in looking to promote the importance of good governance, the ISSA remains committed to developing tools and guidelines for social security organisations to pursue these aims further. To this end, the following conclusions are supplied towards the improvement of contribution collection and compliance.
Social security organisations can improve contribution collection and compliance by first working towards improvements in administration and governance.
These improvements in contribution collection and compliance should ensure that insured persons can fully access their right to benefits.
Higher levels of contribution income make more certain the financial sustainability of programmes and the adequacy of benefits, and also strengthen the legitimacy of social security as an institution and the values it represents.
By improving the financial health of programmes and by reducing the need for fiscal subsidies, finite state budget resources may then be redistributed in alternative ways to address broader national social security coverage priorities and social needs.
For further questions or if there is a particular aspect of Social Security that you would like discussed, be it from a local, regional or international perspective, please contact the Antigua & Barbuda Social Security Board, PO Box 1125 or email email@example.com.