non contributory pension for the elderly in lebanon mounir rached, ph.d. vice president, lea may 31...
TRANSCRIPT
Lebanese Economic AssociationInternational Development Research Center-Canada
Non Contributory Pension for the Elderly in Lebanon
Mounir Rached, Ph.D. Vice president, LEA
May 31st, 2012
1
Contents Motive & objective
Current Social Security Schemes
A Non-contributory scheme for
the elderly2
I. Objectives
Secure a social safety scheme for the elderly
80% of elderly 65+ don’t have any pensions
Vulnerable segment- depend mostly on donations/family support
Prevalence of poverty among elderly
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2. Lebanon’s Social Security Scheme-NSSFMandatory
NSSF Branches:
employer Contribution
Health & Maternity Insurance (HMI) 7 %
Family & Educational Allowances (FEA) 6 %
End of Service Indemnity System (ESI) 8.5 %
Employee contribution 2 %
5
NSSF
Total cost 23.5% of wages
Relatively very expensive
Share of employer (91%) is very high Induces fraud- damages credibility of scheme
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NSSF -Indemnity benefits (ESI).
At retirementLump-sum payment1 month/year of service up to 20
yearsAfter 20 years of service, 1.5
months /year of service.Health scheme is terminatedAll benefits stop
7
NSSF Cont.
Health segment is in deficit
Subsidized by government: USD 100 million in 2012
8
Public Sector pensionGenerous but unsustainable pension scheme
budget cost contribution: 3.2% of GDP
Public employees’ contributions : 6% of wages
Accrual benefit rate per year: Civil Servants: 2.13% Military pensions: 2.66% 9
Lebanese Universities
Lebanese Universities (not comprehensive)
Contributions : 5-11% of employee’s earnings –
Benefit: end of service indemnity-one month for each year
10
Private School’s Solidarity Pension Fund
Annuity option – up to 85% of last salary
Indemnity Benefits: 1 month salary for 1st 10 years 2 months salary for each of the
following 20 years, 3 months salary for each year beyond
the 1st 30 years. Health benefits
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Cont.
Contribution: 6% of salary by members, 6% contribution by the school
B. The solidarity fund is a health and services plan.
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Syndicates Schemes
Lawyers, engineers, physicians, pharmacists, etc.
Defined percentage contribution
Benefit: pension & health
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3. A Non-contributory scheme for Lebanon- Background
Non-contributory pensions provide adequate protection for low-income and poor rural residents
40% of income per-capita/75% of minimum wage
Is complementary to the current Lebanese Social security scheme or revised scheme.
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Target
Targets low income groups by elimination
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3. Cont. International Experience:
Argentina : Reduced household poverty rate by 31% Reduced extreme household poverty rate by 67%
Costa Rica: The economic status of 15% of beneficiaries has
been improved
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3.Cont.. Bolivia:
Beneficiaries increased food consumption 165%
Brazil 80 to 90% of rural beneficiaries’ households, social
security benefits were responsible for at least 50% of the monetary household income
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3. Cont.. Based on International Experience, the Non-Contributory Scheme is able to provide the following;
Alleviate PovertyProvide Access to and substitution of social
servicesPromote the quality of lifeSupport of the local economy.
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3. Cont..
Improve HousingEnsure Agricultural development Reduce rural-urban migrationResponsible for Changes in social roles.Redistribute Regional income
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4. Budgetary Implication
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Population above 60 years old by age group, 2006,
2011
Age Group 2006 2011
60-64 112,736 124,148
65-69 97,813 102,301
70-74 77,877 82,973
75-79 52,083 59,068
80-84 28,110 32,903
85+ 16,099 17,434
Total 60-85+ 384,718 418,827
Total 65-85+ 271,982 294,679
Total population 3,784,779 4,055,922
60 + as percent of total 10.16 % 10.32%
65 + as percent of total 7.2 % 7.3%Source: H.A Abou Rizk, Population Conditions in Lebanon, 2003
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Option I: Full Coverage for 65+based on 2011 data
Pension
per person
Monthly
USD
Pension
per person
Annual
USD
Pension
per
capita
GDP
(%)
Total
cost
per
annum
USD
(000)
% of
GDP
75% of min wage337.5 4,050 38.118
1,193,44
92.8
50% 225 2,700 25.412 795,633 1.9
30% 135 1,620 15.247 477,379 1
Total pensioners 294,679
Percent of
population7.3
Minimum wage-
USD450
GDP 2011
USD(000)42,500,000
Population 4,000,000
Per capita GDP
USD10,625
Expenditure/GDP
31%
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Option II: for 65+
Pension
per person
Monthly USD
Pension
per person
Annual USD
Pension
per capita
GDP
(%)
Total cost
per annum
USD (000)
% of GDP
75% of min wage337.5 4,050 38.1 888,622 2.1
50% 225 2,700 25.4 592,415 1.4
30% 135 1,620 15.2 355,449 0.8
Total pensioners 294,679
Percent of
population7.3
Minimum wage-
USD450
GDP 2011-
USD(000)42,500,000
Population 4,000,000
Per capita GDP 10,625
Deductions:
Civil service
security
25466
49800
Net beneficiaries219,413
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Option V for 70+ Pension
per person
Monthly USD
Pension
per person
Annual USD
Pension
per capita
GDP
(%)
Total cost
per annum
USD (000)
% of GDP
75% of min wage 337.5 4,050 38.1 621184 1.5
50% 225 2,700 25.4 414123 1.o
30% 135 1,620 15.2 248,473 0.6
Total pensioners 192,378
Percent of population 4.8
Minimum wage-USD 450
GDP 2011- USD(000) 42,500,000
Population 4,000,000
Per capita GDP 10,625
Deductions:
Civil service beneficiaries 27,163
Syndicates 4,028
Residency requirement (5%) 7,808
Net beneficiaries 153,379 25
5. FinancingFrom the budget through stream- lining
expenditure
Transfers in 2012; LBP 3,728 billion = USD 2.4 billion
Pension cost (70+) USD 622 million 25% of transfers 2.5% of total government expenditure in 2012 4.2% of revenues 26
6. Administrative Arrangements
Integrated within the MOF
27
7. Health servicesGovernment health services through pub.
hospitals
Private schemes $ 70 to $ 80 annual cost
Government’s global health insurance plan
Separate health and pension schemes
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