Social Security

1. Social Security

1. Mauritius maintains an extensive set of social policies and programmes consisting of free education, free health care, a basic retirement pension, assistance to families with special needs, low cost housing, subsidies for rice and flour, social aid transfers, and several micro-credit schemes.

2. Social Security benefits, more precisely pensions for old age and blindness, were introduced in 1950 subject to a means test administered by the then Public Assistance Department. The purpose was to help the poorest sections of the society. The initial rate was Rs 15 per month paid to all persons aged 65 and over and to blind persons aged 40 and over. The means test was surrounded by controversy from the beginning on account of whether the term income included casual earnings or not and the difficulty of checking the information provided on the prescribed forms. The test was finally abandoned in 1957. In the meantime, in 1953, the qualifying age for women was reduced to 60 while the rate was increased to Rs 20 a month. By the end of 1959, the number of pensioners had reached 26,795. Today, there are multiple rates for different age groups for basic retirement pension (BRP). A large number of social security schemes is operational. From a fairly simple, single-benefit system at its inception, social security payments have evolved into a multi-benefit and relatively complex scheme.

3. Social Security benefits can be classified as non-contributory benefits or contributory benefits. Non-contributory benefits are entirely financed by Government and are payable to Mauritian citizens under certain conditions. These benefits include:

(a) basic pensions, which cover the elderly, invalids, widows and orphans;

(b) allowances such as Social Aid, Food Aid, Unemployment Hardship Relief, Cyclone Refugee Allowance and Funeral Grant, which are payable to the low-income segment of the population; and

(c) inmates allowance and indoor relief payable to, or on behalf of, those Mauritians residing in government-subsidised institutions (such as old-people homes, infirmaries and orphanages) provided they would have otherwise benefited from a basic pension or from Social Aid.

4. Contributory benefits, on the other hand, are payable only to, or on behalf of, those persons (mainly employees of the private sector) who have paid contributions to the National Pensions Fund (NPF). The contributory pensions

include old age, invalidity, widows and orphans pensions in addition to industrial injury allowances. In the case of contributory benefits, the allowances payable vary according to the amount contributed to the NPF in respect of the insured worker. For those persons whose contributions are marginal, Government guarantees a minimum contributory pension.

5. However, the social security system in place has been slow to adjust to the rapid evolution and modernisation of the society. The social assistance programmes need to be more effectively targeted and efforts made to improve and consolidate the outreach of ongoing delivery of services to the most vulnerable groups. Government has adopted a more structured and coordinated approach to poverty reduction in general and social protection in particular, building on previous initiatives, modifying and supplementing as needed. It aims at modernising the current pension system to ensure its financial viability and equitable distribution. The goal is also to provide adequate care for the poor while offering the better-off adequate opportunities for self-sustenance. A white paper on the reform options is under preparation and will be circulated for wide consultation.

6. The reform of the social policy of Government aims at providing the countrys diverse society with the social infrastructure needed to meet the socio-economic objectives. The development objectives will ensure equitable access to quality education, enhance income generating opportunities, and foster social cohesion and stability. The social insurance objectives will insure against poverty in old age, provide incentives to individual savings, and cover sudden loss of income and disability. The social assistance objectives will guarantee a minimum level of socially acceptable expenditure needs, care for special vulnerable groups and prevent social exclusion.

Welfare Programmes

7. The key welfare programmes that provide an extended safety net for the majority of the population are described below:

(a) Social Aid

Social Aid (SA) is an income-tested scheme. It is payable to the head of a family, who is incapable of earning his living adequately and who has insufficient means to support himself and his dependents. Social Aid is payable to the poorer section of the population, including the dependents of prisoners and abandoned spouses, especially those with dependent children.

The allowance payable is calculated as the difference between the net income and the expected overall expenditure of the family.

A number of other benefits are equally payable to a SA beneficiary, which include the provision of free spectacles, wheelchairs and hearing aids. Furthermore, allowances are provided for payment of examination fees for SC, GCE, HSC and IVTB courses. Other allowances include refund of travelling for attendance of medical treatment, compassionate allowance for severe illness, carers allowance, and allowances to fire victims, cyclone refugees, and flood victims as well as bad weather allowance for fishermen. In 2003/04, some 16,300 families benefited from the Social Aid programme.

(b) Food Aid

The Food Aid Scheme was introduced in March 1993 when government subsidy on rice and flour was temporarily discontinued. Under the Food Aid Scheme, the monthly stipend has recently been increased from Rs 30 to Rs 50 for the purchase of rice and flour. The scheme covers the needy, which comprises the following:

recipients of Social Aid and their dependents; beneficiaries of Unemployment Hardship Relief; and needy beneficiaries of the basic pension under the National Pensions

Act, i.e., beneficiaries of Basic Retirement Pension, Basic Widows Pension, Basic Invalids Pension and Basic Orphans pensions, who would otherwise have qualified to receive social aid.

In 2003/04, Rs 17.4 million were provided under the Food Aid programme, in addition to the subsidy on rice and flour.

(c) Indoor Relief

Indoor relief is the grant paid to an institution in respect of every inmate, who would have otherwise benefited from a basic pension or from Social Aid. A relief of about Rs 30 million was provided in 2003/04.

(d) Inmates Allowance

Inmates Allowance refers to the pocket money given to certain residents of government-subsidized institutions and of the only government psychiatric hospital, Brown Sequard Hospital. The number of persons, who received

such pocket money, was around 900 in 2003/04 with a total disbursement of Rs 4.7 million.

(e) Unemployment Hardship Relief

The Unemployment Hardship Relief (UHR) is payable to unemployed heads of families whose family income is not sufficient to meet the needs of the members. The head should be registered as unemployed at the Employment Exchange and be willing and able to take up employment and be actively looking for work. A disabled person, who can work but has not been able to find a job, receives a UHR in addition to his Basic Invalids Pension. In 2003/04, the total amount of benefits disbursed was Rs 2.4 million.

(f) Funeral Grant

The funeral grant covers the funeral expenses of low-income families. Around Rs 5.4 million were provided for the grant in 2003/04.

(g) Charitable institutions

Charitable institutions raise funds, collect donations and receive subsidies from Government (capitation grant), which enable them to provide care, protection and assistance to children and elderly sick people.

Pension Issues

8. Mauritius has a well functioning, albeit quite generous, three-tier pension system, which provides non-contributory basic pensions to elderly, widows, invalids and orphans, requires mandatory participation in an earnings-related system for private and public sector employees in separate schemes, and provides for supplementary pensions on a voluntary basis.

9. The first tier, namely the basic retirement pension scheme, which is subject to residence test, has a strong poverty reduction and redistributive effect. In June 2004, the number of beneficiaries stood at 119,448 accounting for Rs 3,074 million or 1.9% of GDP. By the year 2041, the number of beneficiaries is projected to increase to 354,000. The current pay-as-you-go system has 7.2 workers subsidising every retiree. By 2041, the ratio would decline to 2.4. The system needs reforms for at least two reasons:

(a) the active working population is shrinking while the number of retired people is increasing; and

(b) the economic weight of pension, today equivalent to 1.9% of GDP, will rise to 3-5% in 2041 to become a major burden on government finances.

10. The second tier, which is mandatory, is made up of two contributory schemes (one for the private sector and the other for parastatal bodies) and a non-contributory one for civil servants and local authorities (except for Service Family Protection Schemes for survivors, which are contributory). Contribution to the National Pensions Fund (NPF) is mandatory for private sector employees as well as employers. The Civil Service Pension Scheme as well as the scheme for local authorities is non-contributory. Parastatal pension funds, to which contributions are made by employers only, offer benefits similar to those provided by the civil service scheme and the public corporations contribute to the appropriate fund. All employees, that is, those of the private sector, civil service and statutory bodies also benefit from the National Savings Fund (NSF), which provides a lump sum at retirement. Contributions to the NSF are made by employers only.

11. The mandatory schemes for private sector employees will also be subject to the pressure of the ageing population. It would mean lesser people contributing to the National Pension Scheme while a larger number of members would become eligible for pension benefit payments. These pensions will, moreover, have to be paid over a longer period of time in view of longer life expectancy of Mauritians in the coming decades. Assuming current level of employment, preliminary projections indicate that by 2010 the number of civil service pensioners will represent 75% of the number of employees and by 2025 there will almost be as many pension beneficiaries as employees in the civil service. As for the Civil Service Pension Scheme, payments will be equivalent to nearly 35% of the wage bill of the Civil Service by 2025 compared with 20-25% presently.

12. The third tier comprises private voluntary occupational schemes and pension schemes provided by insurance companies to individuals. These schemes are promoted under the present tax system. Most of the voluntary occupational schemes are Defined Benefit (DB) schemes. There are at present over 1,000 private occupational pension funds covering about 10,000 employees.

Pension Reform

13. With increasing longevity, there will be a larger number of people entitled to the BRP for a much longer period. Given the substantial budgetary resources required for social security payments, it is essential to undertake the reform with a view to meeting these payments within a realistic macroeconomic framework. In this context, the main policy objectives will be to ensure the

sustainability and fairness of the system, to make a significant dent on poverty, and to adopt a client-oriented approach.

14. With a view to modernising the pension system and reducing the eventual fiscal risk, Government is reviewing the functioning of the three pillars of the system and examining reform options and the sequencing of the reforms. The reform process has already been initiated with the targeting of the basic retirement pension. Reforms of the second and third pillars will essentially touch on the technical aspects of individual contributions to the NPS, asset management of the NPF and the introduction of a sound regulatory and supervisory framework, which together will render the two pillars economically sound and attractive. It is expected that a better earnings-related system will evolve from the reforms of the second and third pillars, which will then complement the undergoing reform of the first pillar. Some studies have been commissioned and their findings would provide inputs for the White Paper in view of national consultations.

15. Government is committed to continuing reforms in the pension system in order to ensure that, on retirement, pensioners get a decent level of pension and that the working population does not pay too heavy a price towards making the system financially sustainable. It is a comprehensive and long term process. It requires examining all the issues involved in reforming the system and building a national consensus through close and extensive consultations centred on (a) guaranteeing benefits to those already retired, (b) offering workers options of staying in the pay-as-you-go system or opting out voluntarily, (c) introducing a new restructured defined contribution pension system for new entrants, and (d) establishing a regulatory and supervisory framework for occupational private pension schemes.

SUMMARY OF MEDIUM TERM EXPENDITURE FRAMEWORK PROGRAMMES OF SOCIAL SECURITY(Rs MILLIONS)

Government Allocation

Direct Revenue Total









Code Programme

06-101 Deprt'al Mgt-Social Security 43.9 0.0 43.9 44.6 0.0 44.6 46.0 0.0 46.0 47.4 0.0 47.4 49.0 0.0 49.0

06-102 Social Aid & National Solidarity 845.9 0.0 845.9 918.9 0.0 918.9 1,012.6 0.0 1,012.6 1,005.9 0.0 1,005.9 1,028.7 0.0 1,028.7

06-103 National Pensions 4,591.5 0.0 4,591.5 5,031.9 0.0 5,031.9 5,612.8 0.0 5,612.8 5,987.6 0.0 5,987.6 6,397.6 0.0 6,397.6

06-104 Social Welfare 117.1 0.0 117.1 129.4 0.0 129.4 135.3 0.0 135.3 140.3 0.0 140.3 147.3 0.0 147.3Total 5,598.3 0.0 5,598.3 6,124.8 0.0 6,124.8 6,806.7 0.0 6,806.7 7,181.2 0.0 7,181.2 7,622.6 0.0 7,622.6

2007/08

Projected

2005/06

Projected

2006/07

Projected

2003/04

Actual

2004/05

Revised

MEDIUM TERM EXPENDITURE FRAMEWORK

Actual Rev Est

2003/4 2004/5 2005/6 2006/7 2007/8

Expenditure Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Recurrent Items Staff Costs 25,541 27,230 27,998 29,333 30,876 Goods and Services 17,202 16,900 16,962 17,081 17,150 Transfer Payments 0 0 0 0 0Total Recurrent 42,743 44,130 44,960 46,414 48,026Capital Items Construction 0 0 0 0 0 Improvement/Extension 0 0 0 0 0 Vehicles, Equipment and Furniture 1,134 500 1,000 1,000 1,000 Other Capital 0 0 0 0 0Total Capital 1,134 500 1,000 1,000 1,000Total Expenditure, by Economic Classification 43,877 44,630 45,960 47,414 49,026

Revenue, by SourceCentral Government Allocation 43,877 44,630 45,960 47,414 49,026

Expenditure, by Activity Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Programme Management and Administration 22,350 23,895 24,638 25,933 27,426Provision for Travelling and Transport 3,191 3,335 3,335 3,400 3,450Provision for Rent 9,328 9,200 9,200 9,430 9,666Provision of Communication Services 5,147 4,530 4,920 5,043 5,169Other Provisions 3,861 3,670 3,867 3,608 3,315Total Expenditure, by Activity 43,877 44,630 45,960 47,414 49,026

Programme, by Economic Classification

Ministry of Social Security, National Solidarity and Senior Citizens Welfare & Reform Institutions

Programme 06-101: Departmental Management

Medium Term Estimates

Programme, by Activity


2003/4 2004/5 2005/6 2006/7 2007/8

Posts (Number)Managerial / Administrative / Technical staff 21 21 21 21 21Support staff 100 96 100 100 100Other staff 29 29 30 30 30

Posts, Total 150 146 151 151 151Programme Indicators

Ratio of employees of administration to the Ministry 13.2% 12.7% 12.7% 12.5% 12.5%Number of draft bills submitted to Parliament 2 4 2 2 2Total overtime as a percentage of total personal emoluments 2.2% 2% 2% 2% 2%

Posts and Programme Indicators


Programme 06-101: Departmental Management


Actual Rev Est2003/4 2004/5 2005/6 2006/7 2007/8

Expenditure Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Recurrent Items Staff Costs 51,165 52,100 53,565 56,072 58,813 Goods and Services 17,959 20,295 45,075 45,428 45,681 Transfer Payments 765,457 829,390 848,095 867,395 892,195Total Recurrent 834,581 901,785 946,735 968,895 996,689Capital Items Construction 8,233 7,500 58,700 30,000 25,000 Improvement/Extension 54 100 200 0 0 Vehicles, Equipment and Furniture 0 0 0 0 0 Other Capital 2,993 9,500 7,000 7,000 7,000Total Capital 11,280 17,100 65,900 37,000 32,000Total Expenditure, by Economic Classification 845,861 918,885 1,012,635 1,005,895 1,028,689

Revenue, by SourceCentral Government Allocation 845,861 918,885 1,012,635 1,005,895 1,028,689

Expenditure, by Activity Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Programme Management and Administration 43,368 44,600 45,565 47,612 49,991Provision for Rent 3,114 3,320 3,320 3,320 3,320Provision for Travelling and Transport 7,797 7,500 7,500 7,550 7,600Grant to NATRESA 21,493 24,500 29,000 27,000 28,000Ilois Welfare Fund 2,300 2,300 2,300 2,300 2,300Rice and Flour Subsidies 395,974 425,000 425,000 425,000 425,000Social Aid and Other Social Aid Eligibility Determination 220,700 241,500 261,000 276,500 293,500Grant in Aid to Charitable Institutions 35,571 40,000 42,500 45,000 47,700Cash Assistance to Fisherman 35,644 36,300 39,000 41,300 43,800Welfare of Vulnerable Groups and Seniors 16,696 16,000 16,000 16,000 16,000Provision for Assistance and Training of Disabled Persons 13,497 11,500 13,700 14,000 14,200Contribution to Local Organisations 4,800 5,200 5,550 5,600 5,700NGOs Trust Fund 14,300 16,850 18,000 19,050 20,350Provision for Funeral Grants 5,425 6,000 6,000 6,000 6,000Allowances for Medical Boards and Domiciliary Visits 0 8,500 19,500 19,500 19,500Free Vaccination 0 0 6,000 6,000 6,000Construction 8,286 7,600 40,000 30,000 25,000Other Provisions* 16,896 22,215 32,700 14,163 14,728Total Expenditure, by Activity 845,861 918,885 1,012,635 1,005,895 1,028,689* Other provisions for FY2003/04 and 2004/05 include expenditure on African Union Ministerial Conference

Ministry of Social Security, National Solidarity and Senior Citizens Welfare & Reform InstitutionsProgramme 06-102: Social Aid and National Solidarity





2003/4 2004/5 2005/6 2006/7 2007/8


Posts, Total 361 361 362 364 364

Programme IndicatorsNumber of recipients: - low income 10,953 11,000 11,200 11,400 11,500 - unemployed 402 425 450 475 480 - disabled 5,393 5,500 5,700 5,900 6,000 - fishermen 2,226 2,240 2,250 2,260 2,270Number of charitable institutions receiving transfers 25 25 26 27 28Number of local NGOs receiving transfers 41 44 44 45 46


Ministry of Social Security, National Solidarity and Senior Citizens Welfare & Reform InstitutionsProgramme 06-102: Social Aid and National Solidarity


Actual Rev Est2003/4 2004/5 2005/6 2006/7 2007/8

Expenditure Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Recurrent Items Staff Costs 79,142 84,720 85,700 90,399 95,382 Goods and Services 12,103 16,872 16,810 16,856 16,903 Transfer Payments 4,500,290 4,930,308 5,510,310 5,880,310 6,285,310Total Recurrent 4,591,535 5,031,900 5,612,820 5,987,565 6,397,595Capital Items Construction 0 0 0 0 0 Improvement/Extension 0 0 0 0 0 Vehicles, Equipment and Furniture 0 0 0 0 0

Other Capital 0 0 0 0 0Total Capital 0 0 0 0 0Total Expenditure, by Economic Classification 4,591,535 5,031,900 5,612,820 5,987,565 6,397,595

Revenue, by SourceCentral Government Allocation 4,591,535 5,031,900 5,612,820 5,987,565 6,397,595

Expenditure, by Activity Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Programme Management and Administration 69,800 74,120 76,000 80,599 85,532Annual Transfer to the National Pension Fund 4,500,000 4,930,000 5,510,000 5,880,000 6,285,000Payment to Mauritius Post for Pension Disbursement - 4,600 4,600 4,600 4,600Provision for Medical Boards and Domiciliary Visits 4,550 6,000 6,000 6,000 6,000Provision for Travelling and Transport 8,542 8,800 8,800 8,900 8,950Other Provisions 8,643 8,380 7,420 7,466 7,513Total Expenditure, by Activity 4,591,535 5,031,900 5,612,820 5,987,565 6,397,595


Ministry of Social Security, National Solidarity and Senior Citizens Welfare & Reform InstitutionsProgramme 06-103: National Pensions




2003/4 2004/5 2005/6 2006/7 2007/8

Posts (Number)Managerial /Administrative /Technical staff 297 297 297 300 300Support staff 243 262 262 265 265Other staff 35 35 35 35 35

Posts, Total 575 594 594 600 600

Programme IndicatorsNumber of pensioners receiving pension payments 200,000 200,000 200,000 203,000 206,045Average pension paid annually (Rs) 22,500 24,650 27,550 28,965 30,503

Ministry of Social Security, National Solidarity and Senior Citizens Welfare & Reform InstitutionsProgramme 06-103: National Pensions



Actual Rev Est

2003/4 2004/5 2005/6 2006/7 2007/8

Expenditure Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Recurrent Items Staff Costs 7,343 8,630 9,135 9,585 10,059 Goods and Services 350 490 490 496 502 Transfer Payments 103,040 113,800 118,200 122,700 127,200Total Recurrent 110,733 122,920 127,825 132,781 137,761Capital Items Construction 0 0 0 0 0 Improvement/Extension 562 1,000 1,000 1,000 1,000 Vehicles, Equipment and Furniture 2,773 2,000 3,000 3,000 5,000 Other Capital 3,003 3,500 3,500 3,500 3,500Total Capital 6,338 6,500 7,500 7,500 9,500Total Expenditure, by Economic Classification 117,071 129,420 135,325 140,281 147,261

Revenue, by SourceCentral Government Allocation 117,071 129,420 135,325 140,281 147,261

Expenditure, by Activity Rs 000 Rs 000 Rs 000 Rs 000 Rs 000Programme Management and Administration 6,154 5,630 6,135 6,535 6,959Grant to SILWF 100,543 111,500 115,000 120,000 124,500Social Welfare Centres 8,273 9,300 9,200 9,700 9,700Other Provisions 2,101 2,990 4,990 4,046 6,102Total Expenditure, by Activity 117,071 129,420 135,325 140,281 147,261




Programme 06-104: Social Welfare



2003/4 2004/5 2005/6 2006/7 2007/8


Posts, Total 58 58 58 58 58

Programme IndicatorsNumber of social welfare centres receiving grants 52 52 52 52 52Average grant per social welfare centre 75 90 100 100 100Total overtime as a percentage of total personal emoluments 0.6% 1% 1% 1% 1%



Programme 06-104: Social Welfare

Social Security

Documents

Transcript of Social Security