Social security systems around the globe - PwC

IntroductionIt is my pleasure to bring you the firstedition of ‘Social security systems aroundthe globe’.This brochure will guide you through theessentials of the social security systemsof 41 countries, acquainting you withtheir social security rates and benefitsand helping you reduce your risks.Just the beginningIt’s designed as a first edition with informationof 41 countries worldwide. In further editionsof this brochure, we will continue to update thecontent and to extend our global coverage.In addition to this brochure, you’ll find highlevelprofiles and social security summariesfor some 100 countries on our website. You canvisit us there at www.pwc.com/socialsecurity.On the website, you’ll also find a full directoryof contacts in our global social securitynetwork. This connects you with experts inover 130 countries, all of whom meet ourglobal standards, sharing a common training,methodology and working culture, and withaccess to the latest technologies and tools.These experts work closely together with ourother networks, including tax, immigrationand employment, to bring you the mostcomplete service possible.All of the information in this document,unless otherwise stated, was last updatedon 1 November 2012. All new changesin legislation will be included in a new,updated version.Our people are always standing ready to bring you theanswers you need. Please don’t hesitate to contact us.Bart EliasSocial Security Leader –Europe, Middle East, Africa and IndiaSocial security systems around the globe 1

Table of contentAlbania..............3 China...............66 Hungary........128 Norway.......... 190 St-Lucia.......... 252Algeria...............9 Croatia.............71 India..............134 Poland........... 196 Switzerland...260Austria............. 16CzechRepublic...........77Ireland........... 140 Romania........205 Turkey...........268Belarus............24 Denmark..........84 Italy............... 147 Russia............ 213UnitedKingdom........ 276Belgium........... 31 Finland............ 91 Lithuania....... 155 Sierra Leone... 218 USA...............283Bosnia andHerzegovina ...38France..............99 Macedonia..... 163 Singapore......223Brazil...............44 Gabon............ 108 Malta............. 169 Slovakia.........230Bulgaria...........50 Germany........ 114 Mexico........... 175 Slovenia.........240Canada............ 57 Greece...........122 Netherlands... 181 South-Africa..248Social security systems around the globe 2

AlbaniaAlbaniaGeneral backgroundCovered personsThe Albanian social securitysystem consists of social securityinsurance and health insurance,which together form the SocialSecurity and Health Contributionscheme (SHC).The Social Security and HealthContribution scheme is non-profitmakingand intervenes in thefollowing cases:• employed persons – wage loss:––temporary inability towork due to illness;––maternity;––old age, disability and lossof the heads of the family;––accidents at work andoccupational diseases;––unemployment.• other economically active persons (employers and the self-employed)in relation to:––maternity;––old age, disability and loss of the heads of the family.The following categories are subject to compulsory social security andhealth contributions in Albania:• employees: employed persons who obtain regular income fromroyalties, immovable property or other, similar sources;• self-employed individuals: self-employed individuals, self-employedpartners of firms, self-employed persons who hire third parties.Foreign individuals who work in Albania under a local employmentcontract are required to pay SHC in the same manner as localemployees. However, foreign employees working under a foreignemployment contract in Albania (with some exceptions) have the rightto opt for the voluntary Social Security and Health Insurance scheme.Social security systems around the globe 3

AlbaniaContributions1. Employee contributionsAlbania applies a system of minimum andmaximum thresholds in calculating socialsecurity and health contributions.Employees in Albania are subject to a rate of11.2% charged to their monthly wage, betweenthe minimum and maximum thresholds. The11.2% rate consists of 9.5% for social securityand 1.7% for health insurance.The minimum and maximum monthly salarythresholds for the purposes of calculating SHCare ALL 18,295 and ALL 91,475, respectively.Although the lower limit for SHC purposes isALL 18,295, the minimum wage in Albania isALL 21,000. As a result, in practice, employersand employees cannot pay SHC on salarieslower than ALL 21,000 and so the minimumamount of SHC payable by an employee is11.2% of ALL 21,000 (i.e. ALL 2,325), andthe maximum is 11.2% of ALL 91,475 (i.e.ALL 10,245).2. Employer contributionsEmployers in Albania are subject to SHC atthe rate of 16.7%, applied to the employees’monthly salaries, 15% of which is for socialsecurity and 1.7% is health insurancecontributions. Considering the minimum andmaximum thresholds, the minimum amountof SHC that the employer pays for an employeeon the minimum wage (i.e. ALL 21,000) is16.7% of ALL 21,000 (i.e. ALL 3,507) and themaximum is 16.7% of ALL 91,475 (i.e. 15,276).3. Self-employed individualsSelf-employed individuals, self-employedpartners of firms and self-employed personswho hire third parties (excluding selfemployedpersons in agriculture) are liableto pay compulsory SHC at the rate of 30%(23% social security contribution, 7% healthcontribution) on the minimum monthly salaryof ALL 18,295.Social security systems around the globe 4

AlbaniaBenefits1. RetirementRetirement pension is a benefit to whichan individual is entitled based on hiscontributions and once he has reached a givenage. The normal retirement age in Albania is65 for men and 60 for women. Claimants haveto work and pay contributions for 35 years inorder to be entitled to a full pension.The full monthly retirement pension consistsof a basic pension and a supplement. Thebasic amount of the pension is paid to allclaimants. The supplement paid to employedpersons is 1% per annum multiplied by theaverage assessable insurance base the insurerhas achieved by means of his contributionsthroughout his entire contribution history.2. Survivor’s pensionFamily benefits are paid to claimants that havelost their partner or children who have lost oneor both of their parents.When an insured person dies, his dependantsare entitled to family benefit depending on thenumber of dependants.Widow(er)s are entitled to 50% of the fullpension that the deceased received or wasto receive, and children are entitled to 25%.A child who has lost both of his parents isentitled to pension from both parents.3. Sickness benefitEmployees absent from work due to illness areentitled to benefit covering the loss of income.Employers are under an obligation to continuepaying salary for the first 14 days of sickness.After that, the salary is paid by the socialsecurity system for up to six months in total.The payment is 70% of the average baseestimated during the last calendar year if theemployee has been insured up to 10 years and80% if insured for more than 10 years.4. DisabilityPersons who are incapacitated for workand suffer from severe physical impairment(including blindness) are entitled to adisability pension.The benefit for temporary disability as a resultof an accident at work or occupational diseaseis 100% of the average daily wage over the lastthree years, which is paid over a benefit periodnot exceeding 12 months.The benefit for permanent disability fromwork that has caused at least 67% incapacityfor work is equal to 80% of the average wageof the last three years of work, but no less thanthe minimum standard of living fixed by thegovernment.The benefit for permanent partial disability atwork of a person that has caused 33% or moreincapacity for work varies in the range of 50%to 80% of the average salary of the last threeyears, depending on the degree of loss.5. UnemploymentReplacement income is granted to an employeein the case of involuntary loss of employment.However, being subject to the socialsecurity scheme is not sufficient to claimunemployment benefit. The first conditionthe employee needs to meet is that he/she hascontributed to the social security system for noless than 12 months. In addition, he/she has tobe certified as unemployed by the labour officeand should not refuse to take qualificationsor re-qualifications. The employee shouldalso receive no other benefits from the socialsecurity scheme, with the exception of a partialinvalidity pension.Social security systems around the globe 5

AlbaniaUnemployment benefit is paid for up to 12months. Persons attending training coursesand retraining receive unemployment benefitduring those courses if they do not get paidduring that period, but not for more than sixmonths after the one-year break-off date forunemployment benefit.Unemployment benefit is a fundamentalbase providing a minimum subsistence level,indexed annually by the government inrelation to the prices index for selected items.7. Health benefitThe compulsory health insurance scheme aimsto provide health care services to the entirepopulation of Albania.Health insurance is compulsory for alleconomically active persons with a permanentresidence in Albania:• employed;• self-employed;• unpaid family workers;• other economically active persons.Compulsory health insurance also covers thefollowing categories of economically inactivepersons, payment of whose contributions isfinanced from the state budget.• persons who receive benefits from theSocial Security Institution;Individuals not included in the compulsoryhealth insurance scheme can join voluntarily.They have the same rights and obligations asindividuals subject to compulsory insurance,if they fulfil the condition of waiting sixmonths from the date of registration and paycontributions until the date they can claimbenefit.6. Maternity benefitPregnant women are entitled to 365 days ofmaternity leave including a minimum of 35days before and 42 days after childbirth.During her maternity leave, the insuredemployee is entitled to:• 80% of her daily average assessed salarybased on the last calendar year for theprenatal period and for 150 days after thebirth;• 50% of her daily average assessed salarybased on the last calendar year for theperiod thereafter.However this scheme is often subject torules laid down by the Labour Code or in thecompany’s terms of employment.• persons who receive social assistance ordisability benefit;• persons registered as unemployed, jobseekers in the National EmploymentService;• children under the age of 18;• students under the age of 25, provided theyhave no income from economic activities;• other categories defined by special laws.Social security systems around the globe 6

AlbaniaContactsLoreta PeciDirectorTel.: +355 4 2242 254loreta.peci@al.pwc.comSocial security systems around the globe 8

Algeria General background Covered personsAlgeria has an extensive statutorysocial security system based onsolidarity.It intervenes in three events:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social burdens (e.g.children, sickness): incomesupplements;• no earned income (outsidethe claimant’s control):subsistence allowances.The Algerian statutory social security system is divided into threeschemes:• scheme for salaried persons (individuals who are linked to theiremployer by an employment agreement);• scheme for self-employed persons (individuals who work outsidethe scope of an employment agreement/office);• scheme for civil servants (not further elaborated on in this profile).Social security systems around the globe 9

AlgeriaContributions1. Salaried personsSocial security contributions are due byboth employees and employers. Employeecontributions are deducted from gross pay,whilst employer contributions are paid on topof gross pay. Contributions are due on totalgross salary (in cash or kind), without anyceiling.Employee social security contributionsamount to 9% and employer social securitycontributions are 26%. Both are taxdeductible.Several abatement schemes are in place, oneof which is structural, with others applying tocertain target groups.2. Self-employed personsSocial security contributions for self-employedpersons are calculated on the basis ofearned income (i.e. as determined by the taxadministration) during the second calendaryear preceding that for which contributionsare due (i.e. called the ‘reference year’). Fora main self-employed activity, contributionsamount to 15% of the income, with a minimumcontribution of DZD 32,400 and a maximumcontribution of DZD 259,200.Social security systems around the globe 10

AlgeriaBenefitsfor salaried persons1. Health careHealth care covers both preventive andcurative care required for maintaining andrestoring a person’s health (e.g. ordinarymedical care, dental care, hospital care). Allthe medical dispensations that can be (partlyor completely) reimbursed are listed in a socallednomenclature of medical dispensations.A number of conditions/criteria have to bemet in order to access health care (e.g. registerwith a health insurance fund, pay a minimumamount of contributions and, in some cases, aqualifying period).Refunds by the health insurance fund of thecost of medical treatment vary with the natureof the treatment, the status of the insured andthe care provider’s capacity. In most cases, thefull amount is not refunded.2. Sickness benefitsSick pay offers benefits in kind and a daily cashbenefit for employees.Benefits in kind include coverage ofexpenses such as: medical expenses, surgery,pharmaceutical, hospital, etc. These expensesare covered if a registered doctor hasprescribed the treatment. The employee mustsend his/her medical file to the social securityadministration within three months of the firstmedical intervention.Reimbursement is normally limited to 80% ofthe regulatory tariffs. One hundred per cent ispaid in certain cases.Sick employees are entitled to a dailyindemnity when obliged to temporarilyinterrupt their employment.During the first six months, employees areentitled if they have worked at least:• 9 days or 60 hours during the threepreceding months; or• 36 days or 240 hours during the12 preceding months.After the first six months, employees areentitled if they have worked at least:• 36 days or 240 hours during the12 preceding months; or• 108 days or 720 hours during the threepreceding years.The compensation is equivalent to:• 50% of the daily salary for the employee’sposition, between the first and 15th dayfollowing the interruption;• 100% from the 16th day;• 100% from the first day for long illnesses orin cases of hospitalisation.The daily indemnity cannot be:• less than eight times the net amount ofthe hourly minimum guaranteed salary(18.000 DZD – amount for 2012);• greater than 1/30 of the monthly salary forthe employee’s position.The social security administration must beinformed of any illness that can give riseto a daily indemnity within two workingdays, not including the days determined forthe leave entitlement. The employee or hisrepresentative must send in the sick note.Social security systems around the globe 11

Algeria3. Accidents at work4. Family benefits5. Maternity benefitsAll salaried persons are covered againstaccidents at work and accidents on the wayto and from work. An accident at work is anaccident occurring during and because ofperformance of the claimant’s labour contractand causing injury. Accidents on the way toand from work are accidents which occur onthe normal route the person has to use to movefrom the threshold of his/her residence to workand vice versa.A victim of an accident at work is entitled toreimbursement of the costs for hospital care,physiotherapy, medical, surgical, dental andpharmaceutical care as well as orthopaedicequipment. Care costs are reimbursedaccording to the applicable sickness insurancetariffs and the insurance institution has to paythe patient charge.During periods of incapacity for work causedby an accident at work, victims are entitled toindemnities for loss of income (depending ontheir sickness status).Family benefits comprise several allowances,of which ordinary family allowance is the mostimportant.Three persons are involved in the familybenefit system: the beneficiary, the qualifyingchild and the ‘allottee’. The beneficiary opensup entitlement to family benefits through his/her employment. A qualifying child has to meetparticular conditions (e.g. degree of kinshipwith the beneficiary, conditions with regard toeducation and age). The allottee is the personwho receives the benefit.The amount of the family benefits depends onthe family revenue.Pregnant women are entitled to maternityleave during the prenatal and postnatalperiods.Social security protection offers benefits inkind to mothers on maternity leave.Benefits in kind include reimbursement ofthe expenses linked to pregnancy and birth.Medical and pharmaceutical expenses arecovered on the basis of 100% of regulatorytariffs. Hospitalisation expenses for the motherand the child are reimbursed on the same basisfor a maximum period of eight days.In addition, mothers who must stop workingbecause of pregnancy are entitled to a dailyindemnity of 100% of the daily salary for theirposition (average of the actual salary), for amaximum of the subsequent 14 weeks. Themother must stop working at least one weekbefore confinement.To obtain these benefits and indemnities,a registered doctor or qualified medicalauxiliaries must have assisted at the birth.During the first six months, employees areentitled if they have worked at least:• 9 days or 60 hours during the threepreceding months; or• 36 days or 240 hours during the12 preceding months.Social security systems around the globe 12

Algeria6. UnemploymentReplacement income is granted in the case ofinvoluntary loss of salaried employment.However, it is not enough for claimants tojust be subject to the social security schemefor salaried persons. They must also provea sufficient number of worked days orassimilated working days (e.g. invalidity,holiday) during a particular reference periodpreceding the application. Both the requirednumber of working days and the duration ofthe reference period depend on the applicant’sage.In order to be entitled to unemploymentbenefits, granting number of special conditionsalso have to be met (e.g. not in receipt of salary,no carrying out work, unemployment outsidethe claimant’s control, available for the labourmarket, fit for work, resident in Algeria). Inaddition, claimants must comply with certainformalities (e.g. register as a ‘job seeker’).7. RetirementRetirement pension is a benefit to whichclaimants are entitled based on career andreaching a given age.The normal retirement age in Algeria is 60.Claimants have to work 15 years in order tobe entitled to a full pension. However, it ispossible to take early retirement from age 50if the claimant has worked for 20 years andwithout any age condition in case of activityduring 32 years.The pension is calculated on the basis of a real,fictitious (for assimilated periods) or lump-sumactive income (capped at a certain amount).The amount of the pension is fixed on the basisof the claimant’s family situation.Retirement pension can only be combined withwork under strict conditions.Social security systems around the globe 13

AlgeriaCompetent authorities1. Salaried personsContributions paid by employers andemployees are collected by the NationalOffice for Social Security for salaried persons(CNAS), which then distributes them amongthe different institutions responsible for payingallowances and benefits.2. Self-employed personsSelf-employed persons join and pay socialcontributions to a social insurance fund forself-employed people overseen by the NationalInstitute for Social Insurances of Self-employedPersons (CASNOS). Social insurance fundsare also in charge of paying benefits to selfemployedpersons.Under certain conditions, company directorscan be self-employed in Algeria.Social security systems around the globe 14

AlgeriaContactsAlain ChedalPartnerTel: +33 1 56 575 657alain.chedal@fr.landwellglobal.frKarine LasneDirectorTel: +21 321 484 183karine.lasne@fr.landwellglobal.frSocial security systems around the globe 15

Austria General background Covered personsThe Austrian social securitysystem is based on the principleof ‘statutory compulsory socialsecurity’. All employees employedin Austria are basically subjectto the Austrian compulsorysocial security system. It coverssickness, accidents, pension andunemployment.Employees of a foreign employer that has no permanent establishmentin Austria are subject to the Austrian social security system if they workfrom a domestic residence and are not subject to another social securitysystem abroad by dint of their work.Employees subject to Austrian social security have to be registered uponstarting work and deregistered upon termination. The deadlines forregistration are very short. Failure to comply results in severe penalties.The Austrian compulsory social security system is divided into sixsocial security schemes for:• dependent employees (blue and white-collar workers) AustrianGeneral Social Insurance Act (‘ASVG’);• the self-employed Austrian Commercial Social Insurance Act(‘GSVG’);• farmers Austrian Farmers Social Insurance Act (‘BSVG’);• civil servants Austrian Social Insurance Act (‘B-KUVG’);• notaries public Austrian Notaries Social Insurance Act (‘NVG’);• freelancers Austrian Freelancer Social Insurance Act (‘FSVG’).Only the first two groups of workers (dependent and self-employedemployees) are dealt with in detail below owing to the vast range ofcontributions for the other three groups, which must be checked ineach individual case.Social security systems around the globe 16

AustriaContributions1. Salaried employeesSocial security contributions are partly paidby the employee and partly by the employer.Employees’ portions are withheld monthlyfrom their salary. Both portions are paid bythe employer to the competent social securityinstitution.The contribution basis is the monthly grosssalary of the employee or special paymentspaid to the employee. For both kinds of salaryincome, the maximum contribution has to beconsidered. This is the applicable maximum upto which contributions are levied. In 2012 thecap for current salary is EUR 4,230 a monthand for non-current salary (special payments)it is EUR 8,460 per annum. For salaryincome exceeding this cap, no social securitycontribution is due.For a white-collar employee, the employee’sportion for current salary in 2012 is 18.07%and the employer’s portion is 21.83%. For noncurrentsalary (special payments), the rates are17.07% (employee) and 21.33% (employer).For a blue-collar employee, the employee’sportion for current salary in 2012 is 18.20%and the employer’s portion is 21.70%. For noncurrentsalary (special payments), the split is17.20% (employee) and 21.70% (employer).Important exceptions are: daily and overnightallowances, mileage allowances, severancepayments, contributions to an employee(pension) provision fund, company pensions,pension lump sums. For aged employees, aportion of their social security contributions isnot payable after reaching a certain age (e.g.accident insurance after age 60).In Austria, in addition to social securitycontributions, employers are obliged to payvarious other payroll-related costs to varioussocial security authorities. Please find below ashort summary of the current Austrian payrollrelatedcosts for salaried employees:Payroll-related taxes Taxpayer Taxable basis % RecipientSocial securityEmployee (pension)provision fund (‘MVK’)Employer contributionto family allowance fund(‘DB’)Surcharge to contributionto family allowance fund(‘DZ’)Employer/employeeMaximum contributionbasis21.83/18.07 Social security institutionEmployer Gross salary 1.53 Social security institution/pension provision fundEmployer Gross salary 4.5 Tax officeEmployer Gross salary approx. 0.4 Tax officeMunicipal tax Employer Gross salary 3 Municipal officeU-Bahn tax Employer Gross salary EUR 2 per week Municipal office ViennaSocial security systems around the globe 17

Austria2. Self-employed personsSelf-employed persons (two differentgroups: those with a trade licence and ‘newself-employed persons’, depending on theiroccupation) have to pay monthly socialsecurity contributions, which cover healthinsurance and pension insurance, as follows.The different groups of self-employed personsare stipulated by Austrian Law and meetdifferent requirements.In 2012, the maximum contribution basis forcurrent income for both groups is EUR 4,935a month and EUR 59,220 per annum.Furthermore, the respective rates for currentincome in 2012 are 17.5% (pension insurance)and 7.65% (health insurance).There are different values for the minimumsocial security contributions when beginningin self-employment and during the first threeyears, which are not gone into in detail inthis overview. Currently (2012), the accidentinsurance contribution is EUR 99.00 a year.Social security systems around the globe 18

AustriaBenefitsfor salaried employeesBoth white and blue-collar workers areentitled to pay sick leave in the event thatthe incapacity for work is not due to grossnegligence or a deliberate act on the part ofthe employee. The period during which theemployee is entitled to full pay depends on his/her seniority. For up to five years’ employment,the period is six weeks; up to 15 years, it iseight weeks; up to 25 years, it is ten weeks, andit increases thereafter to 12 weeks.1. SicknessAll employees in Austria are covered bycompulsory statutory sickness insurance as ageneral principle. This means that there is novoluntary opt-out. There are local insuranceauthorities depending on the location of theemployer’s registered office.Sickness insurance covers both preventive andcurative care required for maintaining andrestoring health (e.g. ordinary medical care,dental care, hospital care). Benefits take theform of cash benefits and benefits in kind in thecase of maternity, rehabilitation measures andpaid sick leave.In special cases, stays at health spas are alsocovered by statutory sickness insurance. Alltreatment that is dispensed and that is subjectto (part or complete) reimbursement mustbe medically necessary and whether it iscovered will depend on the relevant insuranceauthority.In addition to statutory sickness insurance,each employee may take out private sicknessinsurance.Up to the Austrian monthly marginalemployment limit (‘Geringfügigkeitsgrenze’– EUR 376.26 in 2012) the employee does nothave to pay any contributions to the statutorysickness insurance. Only the employer has topay 1.4% to the accident insurance.If the monthly income limit is exceeded(EUR 376.26 in 2012), the employer andthe employee must pay social insurancecontributions. The contribution basis isthe employee’s gross salary. Currently theemployee has to pay 3.87% and the employer3.87%.2. AccidentAustrian statutory accident insurance coverswork accidents and occupational diseases.Work accidents include accidents whichhappen during working time or on the wayto work. Occupational diseases are diseasescaused by negative impacts during workingtime (e.g. noise, allergies, working withpoisonous substances, etc.). The benefits maybe in cash or in kind (accident benefits).The employer pays 1.4% of the monthlycontribution basis for each employee. There isno employee contribution.Social security systems around the globe 19

Austria3. PensionStatutory pension insuranceAustrian statutory pension insurance basicallycovers cases of old age, death and disabilitydue to illness, and also surviving dependants.Rehabilitation measures can also be offered.Generally, the normal retirement age inAustria is 65 for men and 60 for women.Under the current law, the retirement age forwomen will increase starting in 2024 untilequal retirement ages are reached for men andwomen in 2034.There are many different kinds of pension inAustria depending on the age of the employeeand the number of insurance months. Theamount of pension also depends on thesefactors and must be calculated by the relevantpension insurance fund in each individualcase.The monthly employer contribution is 12.55%of the contribution basis and the employee’scontribution is 10.25%.Employee (pension) provision fund(‘MVK’)The occupational Employee (Pension)Provision Fund (called ‘MVK’) is a system ofseverance payments (i.e. an extraordinaryremuneration paid upon termination ofemployment) levied on the employer companyand applies to all employment commencingon or after 1 January 2003 and subject to theAustrian Labour Act. Both white-collar workersand blue-collar workers are eligible for aseverance payment.Contributions to MVK are an employer’s tax.Monthly contributions have to be paid foreach employee subject to the fund at a rate of1.53% of the monthly contribution basis. Thisis the uncapped employment income subjectto compulsory social security. The first monthof employment is exempt from contributions.Also exempt is employment which startedbefore 1 January 2003 and employment notsubject to Austrian labour law.MVK contributions are registered monthly andelectronically together with contributions tothe social security institution and paid togetherwith them to the social security institutionby the 15th of the subsequent month. Thesocial security institution forwards theMVK contributions to the relevant employee(pension) provision fund.In addition to these mandatory pensionschemes, employees can take out privatepension insurance.4. UnemploymentBasically, Austrian employees are coveredby unemployment insurance (exceptions arepossible). Contributions are shared betweenthe employer and the employee (each pays3% of the contribution basis – included in thegeneral social security contributions). Theemployer must withhold the employees’ sharesfrom their salaries and pay both contributionsto the relevant regional health insurance fund,which in turn forwards them to the local office.Accordingly, in order to qualify forunemployment benefit, the employee needs tomeet the following conditions:• available to go to the local employmentoffice;• unemployed and able and willing to work;and• fulfils the requirements for receivingbenefit.Social security systems around the globe 20

AustriaAfter paying contributions for a certain periodof time (52 weeks within the last two years),unemployed employees are entitled to cashbenefits. They are calculated on the basisof the pay the employee received in the lastsix months before becoming unemployed.Supplementary payments are granted tosupport children, grandchildren, parents andgrandparents. However, the benefits may notexceed 80% of the employee’s most recentsalary. Benefit is paid for several months and,under certain circumstances, is followed byemergency benefit (‘Notstandshilfe’) for aspecific period.Generally, if the employment relationship isterminated voluntarily by the employee, thereis a qualifying period of four weeks beforebeing eligible for benefit.5. Additional benefitsMaternity allowanceUnder the Maternity Protection Act (‘MSchG’),(expectant) mothers are not allowed to workfor a period of eight weeks either side of givingbirth. During these 16 consecutive weeks (thematernity protection period), they are entitledto maternity allowance (‘Wochengeld’) in anamount corresponding to their recent salary.It is paid by the health insurance fund. Wherespecial circumstances and medical indicationsapply, these periods may be extended.Other allowancesEmployees can also agree with their employeron unpaid leave for further training oreducation during their employment for aminimum of two months and a maximumof one year. During this time, the employerneed not pay wages and the employeecan receive further training allowances(‘Weiterbildungsgeld’).Family allowance and children’s nursingallowanceFollowing the protection period, both mothersand fathers are entitled to parental leave(‘Karenz’) until the child is two. Duringthis period, the mother or father is entitledto family allowance and children’s nursingallowance. They enjoy special protectionagainst termination of their employment bytheir employers.Furthermore, the employer is not obliged topay wages and the employee is not obliged towork during the protection term and maternityleave. Both allowances must be applied forfrom the appropriate Austrian social securityauthorities by the employee personally.Social security systems around the globe 21

AustriaContactsAngelika HambergerManagerTel: +43 1 501 88 3036angelika.hamberger@at.pwc.comHeidi-Maria DerlerSenior consultantTel: +43 1 501 88 3038heidi-maria.derler@at.pwc.comSocial security systems around the globe 23

Belarus General background Covered personsBelarus has an extensive statutorysocial security system based onsolidarity.The Belarusian social securityscheme intervenes upon threeevents:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social charges (e.g.children, sickness): incomesupplements;• no earned income (outsidethe claimant’s control):subsistence allowances.The Belarusian statutory social security system is divided into threeschemes:• scheme for salaried persons (individuals who are linked to theiremployer by an employment agreement or civil law contracts forthe supply of services, work or the creation of intellectual propertyrights);• scheme for self-employed persons (individuals who work outsidethe scope of an employment agreement/appointed office);• pension scheme for persons in certain occupations (individuals withjobs listed in the legislation, including those working in especiallyhard conditions, in the sphere of aviation, medical and pedagogicalworkers, artists, sportsmen, etc.) – not dealt with in this countryprofile.Certain civil law contracts for the supply of services and worksconcluded between individuals and legal entities may trigger anobligation of a legal entity to pay social security contributions for suchindividuals. In this respect work does have a material result whereasservices do not.Only individual entrepreneurs (individuals registered with stateauthorities as such and carrying out business activities), craftsmen,private notaries, sollicitors, individuals working for other individualsare regarded as self-employed.Social security systems around the globe 24

BelarusContributions1. Salaried personsSocial security contributions are paid by boththe employee and the employer. Employees’contributions are withheld by the employerfrom their gross pay, whilst employercontributions are paid on top of gross pay.Generally, social security contributions arechargeable at flat rates of 34% (including 28%for pension coverage and 6% for other socialsecurity benefits) to the employer and 1% forpension coverage to the employee.Social security contributions are charged onemployees’ gross pay not exceeding four timesthe average salary in Belarus calculated for themonth preceding that for which contributionsare made (the cap for September 2012 isapproximately EUR 1,490).Foreign nationals are not obliged toparticipate in the Belarusian social securityscheme. Therefore, neither foreign nationalsthemselves nor their local employers areobliged to pay social security contributionsunless the foreign nationals decide to becovered by one of the Belarusian social securityschemes, in which case they can be providedeither with complete coverage (pensioncoverage plus other social security benefits)or partial coverage (only social security, i.e.no pension coverage is included). They thenpay social security contributions at a rate of35%, 29% or 6% depending on the extent ofprotection they opt for.Additionally, employers are obliged to paycontributions for compulsory insurance againstaccidents at work and occupational diseases foreach employee (including foreign nationals) ata general rate of 0.6%. Correction coefficientsmay be applied depending on the level ofoccupational risk.2. Self-employed personsSelf-employed persons, including individualbusinesspeople, private notaries public,lawyers, etc., are liable for pension insuranceat the rate of 29% and social insurance at therate of 6%, payable on their computed income.Social security contributions are charged onthe amount of income determined by selfemployedpersons, which is not necessarilyequal to the income they actually receive.However, the basis for social securitycontributions determined by self-employedpersons cannot be less than the minimumsalary amount set down in Belarus (inSeptember 2012, the minimum monthly salarywas approximately EUR 100).Social security systems around the globe 25

BelarusBenefitsfor salaried persons1. Health careBelarusian nationals have a constitutionalright to receive medical care in public healthcare institutions free of charge according tominimum health care standards. The sameapplies to foreign nationals living temporarilyin Belarus.There is no compulsory health insurance foremployees in Belarus, though employers mayprovide their personnel with voluntary healthinsurance as part of an employment package.2. RetirementRetirement pension is a benefit to whichclaimants are entitled based on age andworking life.The normal retirement age in Belarus is 60 formen and 55 for women. In order to qualify for afull pension, men have to work at least 25 yearsand women at least 20 years. Moreover, somecategories of workers (e.g. those working inarduous or unhealthy conditions, miners,persons disabled from childhood, motherswith large numbers of children, etc.) can takeretirement earlier and/or having completedfewer years of work.The general retirement pension is 55% of theclaimant’s average salary. Each year at workover 25 for men and 20 for women adds 1% tothe amount of the retirement pension. It maythus be increased by up to 20%. Claimants arealso entitled to a 1% increase in the amountof their retirement pension for every twomonths of work in the period between reachingretirement age and applying for a pension.Average salary for retirement pension purposes(and for the purposes of other types ofpensions, e.g. disability pensions, survivor’spensions) is not equal to the claimant’s actualaverage salary. Instead, it is calculated onthe basis of the average salary of employeesin Belarus. Hence, increases in the incomeforming the basis for calculating pensioncontributions are not directly proportional toincreases in the amount of the future pension.3. Sickness benefitsThose who fall ill qualify for health care plusbenefits covering the loss of income.Generally, sickness benefit is paid for thewhole period of sickness but is capped at120 consecutive calendar days, or 150 calendardays within the last 12 months in the caseof repeated sickness with the same or alliedillness. The employer pays the employee 80%of his/her average salary for the first six daysof sickness and 100% of the average salarysubsequently.4. DisabilityEmployees recognised as disabled by a specialmedical commission are entitled to a disabilitypension regardless of the reason for thedisability.Depending on the degree of disability, disabledpersons fall into one of three groups. Theamount of disability pension is 75% of theaverage salary for Disability Group I, 65%for Disability Group II and 40% for DisabilityGroup III. Disability pension is paid for thewhole period during which the claimant isdisabled, whether they work or not.Claimants must have the required length oflabour experience, which can be from one to15 years depending on age. Claimants wholack the required labour experience can applyfor a social disability pension. This is 110% ofthe living-wage for Disability Group I, 95-85%for Disability Group II and 75% for DisabilityGroup III (the living-wage in Belarus isapproximately EUR 77 as of September 2012).Social security systems around the globe 26

Belarus9. Accidents at work and occupationaldiseasesAll salaried persons are covered againstaccidents at work and occupational diseases bycompulsory insurance that must be contractedand paid for by employers.An accident at work is an accident causinginjury or death to the employee and occurringduring and due to performance of his/herlabour agreement or on the way to or fromwork in a vehicle provided by the employer.There is a list with acknowledged occupationaldiseases. Claimants suffering from a disease onthe list and working in a sector in which theyare exposed to a recognised risk are deemedto be suffering from an occupational disease.Claimants are under no burden of proof asthere is an irrefutable assumption in theirfavour. For non-listed occupational diseases,the victim has to prove exposure to risk andthe causal link between the exposure and thedisease.A victim of an accident at work or anoccupational disease is entitled toreimbursement of the costs of hospitalcare, physiotherapy and medical, surgical,dental and pharmaceutical care as well asorthopaedic equipment and occupationaltraining (retraining).During the period of incapacity for workcaused by an accident at work or anoccupational disease, the victim is entitled toindemnities for the attendant loss of income:• disability pension;• sickness allowance;• compensation of the difference between theclaimant’s previous average salary and thenew salary paid for easier, lower-paid work.If the victim dies, a disability pension andfuneral allowance may be paid to the survivorsas described above.Social security systems around the globe 28

BelarusCompetent authoritiesVoluntary socialsecurity schemeWith regard to both salaried and self-employed persons, social securitycontributions are paid to the Social Security Fund of the Ministry ofLabour and Social Security of the Republic of Belarus.Payments into the compulsory scheme against accidents at work andoccupational diseases are made to the Belarusian Republic’s UnitaryInsurance Company ‘Belgosstrakh’.Belarusian nationals working outside Belarus are entitled to voluntarypension coverage, for which they have to register with a local socialsecurity authority in Belarus according to their place of residence inBelarus.Generally, two situations are possible:1. Belarusian national does not move from Belarus for permanentresidence in another country. In such case he/she shall stayregistered at the place of residence in Belarus and can pay socialsecurity contributions.2. Belarusian national moves to another country for a permanentresidence and shall be deregistered at the place of residence inBelarus. There is no direct regulation of such cases in Belarusianlegislation. Social Security Fund comments that Belarusiannationals permanently residing in another state are not able to paysocial security contributions in Belarus unless otherwise set outin Social Security Agreements entered into by Belarus (e.g. SocialSecurity Agreements between Belarus and Russia).Social security contributions payable by individuals on their own arechargeable at 29% on the amount of income as determined by theindividuals themselves. In other words, a Belarusian national is notobliged to make social security contributions on the basis of the wholeamount of salary received outside Belarus.However, the minimum basis for paying social security contributionsis equal to the minimum salary set down in Belarus (approximatelyEUR 100 as of August 2012).Social security systems around the globe 29

BelarusContactsOleg GvozdDirectorTel: +375 17 3354000oleg.gvozd@by.pwc.comAlexey KaluginConsultantTel: +375 17 3354000alexey.kalugin@by.pwc.comSocial security systems around the globe 30

Belgium General background Covered personsBelgium has an extensivestatutory social security systembased on solidarity.It intervenes in three events:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social burdens (e.g.children, sickness): incomesupplements;• no earned income (outsidethe claimant’s control):subsistence allowances.The Belgian statutory social security system is divided into threeschemes:• scheme for salaried persons (individuals who are linked to theiremployer by an employment agreement);• scheme for self-employed persons (individuals who work outsidethe scope of an employment agreement/office);• scheme for civil servants (individuals who are subject to the statusof public servants) – not gone into in this country profile.Social security systems around the globe 31

BelgiumContributions1. Salaried personsSocial security contributions are due byboth employees and employers. Employeecontributions are deducted from gross pay,whilst employer contributions are paid on topof gross pay. Contributions are due on totalgross salary (in cash or kind), without anyceiling.Employee social security contributions amountto 13.07% and employer social securitycontributions are approximately 35%. Bothare tax-deductible. For blue-collar workers, anadditional 10.27% is due on an annual basisand contributions are calculated on 108% ofsalary.Insurance against industrial accidents is notincluded in the above. Employers mandatorilyneed to take out a separate insurance and pay aseparate fee to the insurance company of theirchoice in this respect.Several reduction schemes are in place, oneof which is structural; others apply to certaintarget groups.2. Self-employed personsSocial security contributions for selfemployedpersons are calculated on the basisof earned income (as determined by the taxadministration) during the third calendaryear preceding that for which contributionsare due (i.e. called the ‘reference year’).The earned income taken into account fordetermining contributions is capped (for 2012,at EUR 80,165.52). Therefore, the maximumcontribution for self-employed workers isEUR 15,616.24 a year.Social security contributions for a main selfemployedactivity are the following (amountsfor 2012 – administrative charges notincluded):• 22% of the portion of income up toEUR 54,389.06;• the contribution due on the portion ofincome between EUR 54,389.06 andEUR 80,165.52 amounts to 14.16%.Social security systems around the globe 32

BelgiumBenefitsfor salaried persons1. Health careHealth care covers both preventive andcurative care required for maintaining andrestoring a person’s health (e.g. ordinarymedical care, dental care, hospital care). Allmedical care dispensed that can be (partly orcompletely) reimbursed is listed in a so-callednomenclature of medical care.A number of conditions/criteria have to be metin order to access health care (e.g. registrationwith a health insurance fund, payment of aminimum amount of contributions and, insome cases, a six-month qualifying period).Refunds by health insurance funds of thecosts of medical treatment vary according tothe nature of the treatment, the status of theinsured and the care provider’s capacity. Inmost cases, they are not refunded entirely.2. Sickness benefitsIn addition to health care, claimants are alsoentitled to benefits covering loss of incomeupon falling ill.Salaried persons entitled to sickness benefitsmust satisfy certain conditions (e.g. minimumcoverage period over a period of six monthsand payment of sufficient social securitycontributions).Incapacity consists of two periods:• Primary incapacity for work (maximumone year): during the first period of up to 30days of primary incapacity, salaried personsreceive guaranteed salary paid by theiremployer but, as from the 31st day, theyreceive an indemnity based on a percentageof their salary, up to a maximum of EUR75.89 a day (as at 1 September 2012, forincapacity for work as of 1 January 2011).The percentage varies according to theclaimant’s family situation.• Invalidity period (after one year ofprimary incapacity): benefits are grantedaccording to the claimant’s family situationand any loss of sole income; they arebased on a percentage of salary, with amaximum of EUR 82.88 a day (amount on1 September 2012 for incapacity for workas of 1 January 2011). The percentage ofsalary varies according to the claimant’sfamily situation.3. Accidents at workAll salaried persons are covered againstaccidents at work and accidents on the wayto and from work. An accident at work is anaccident occurring during and because ofperformance of the claimant’s labour contractand causing injury. Accidents on the way toand from work are those occurring on thenormal route the claimant has to use to travelfrom the threshold of his/her residence to workand vice versa.Every employer should contract an insuranceagainst accidents at work with a competentinsurance institution. The Fund for Accidentsat Work (FAO - FAT) supervises the insuranceinstitutions technically as well as medically. Insome cases (ship-owners, seamen, employeesfor whom no insurance for accidents at workhas been contracted), the FAO - FAT itself actsas an insurance company. The FAO - FAT alsopays the supplementary allowances.Victims of accidents at work are entitled toreimbursement of the costs of hospital care,physiotherapy, medical, surgical, dentaland pharmaceutical care and orthopaedicequipment. Care costs are reimbursedaccording to the applicable sickness insurancetariffs and the insurance institution has to paythe patient fee.Social security systems around the globe 33

BelgiumDuring periods of incapacity for work causedby accidents at work, victims are entitled toindemnities for loss of income:• period of temporary incapacity for work:percentage of the claimant’s average dailysalary, which corresponds to 1/365 of thebasic salary, capped EUR 38,564.91 (2012amount);• period of permanent incapacity for work(starts at the time of consolidation): anannual allowance, depending on salary anddegree of incapacity for work.4. Occupational diseasesThere is a list with diseases acknowledged asoccupational diseases.Claimants who have a disease on the list andwork in a sector in which they are exposed toa risk likely to cause the disease, it is deemedan occupational disease. The burden of proofdoes not lie with the victim, there being anirrefutable assumption in his favour.For non-listed occupational diseases, thevictim has to prove exposure to a risk and thecausal link between exposure and the disease.Victims are entitled to a disability allowancefrom the Fund for Occupational Diseasesamounting to a percentage of a capped salaryof EUR 38,564.91 (2012 amount), and to otherallowances (e.g. reimbursement of medicalexpenses, survivor’s allowance).5. Family benefitsFamily benefits comprise a number ofallowances, of which ordinary familyallowance is the most important.Three persons are involved in the familybenefits system: the beneficiary, the qualifyingchild and the ‘allottee’. The beneficiary opensup entitlement to family benefits throughhis employment. A qualifying child has tomeet particular conditions (e.g. degree ofkinship between him/her and the beneficiary,conditions with regard to education and age).The allottee is the person who receives thefamily benefits.Ordinary family benefit is determined by therank of the child compared to other qualifyingchildren educated within the same family.The monthly amounts are the following (per1 February 2012):First child: EUR 88.51Second child: EUR 163.77Third and successive children: EUR 244.526. Maternity benefitsExpectant mothers are entitled to maternityleave of 15 weeks and an allowance duringthat leave.Two periods can be distinguished:• the prenatal rest period: six weeks beforethe presumed date of confinement (five areoptional and may be transferred until afterthe birth);• the postnatal rest period: nine weeks aftergiving birth (to which can be added the fiveremaining weeks of prenatal rest).During maternity leave, salaried women areentitled to 82% of their normal gross salary forthe first 30 days and 75%, capped at EUR 94.87(as of 1 January 2011) a day for the remainder.Payment is made by the claimant’s healthinsurance fund.Fathers are also entitled to ten days paternityleave, to be taken during the four monthsfollowing the birth.Social security systems around the globe 34

Belgium7. UnemploymentReplacement income is paid to those thatare dismissed from salaried employmentinvoluntarily.However, it is not enough just to be subject tothe social security scheme for salaried personsto claim unemployment benefit. Claimantsmust also prove a sufficient number of workeddays or equivalent (e.g. invalidity, holiday)during the ‘reference period’ prior to applying.Both the required number of working days andthe length of the reference period depend onthe claimant’s age when applying.Entitlement is also subject to certain specificconditions (e.g. not in receipt of salary, notperforming work, unemployment outside theclaimant’s control, available for the labourmarket, fit for work, resident in Belgium).There are nonetheless exceptions to theseconditions.In addition, claimants must comply withcertain formalities (e.g. register with a pay-outinstitution, register as a ‘job seeker’).Basic unemployment benefit is 40% of theaverage daily salary, limited to a maximumof EUR 54.71 (since 1 February 2012). Thisbasic benefit may be supplemented by extraallowances depending on the claimant’scategory and the length of time he/she is out ofwork.8. RetirementRetirement pension is a benefit to whichclaimants are entitled based on career andreaching a given age.The normal retirement age in Belgium is 65.Claimants must work 45 years to be entitledto a full pension. It is nevertheless possibleto take early retirement as from age 60 if theclaimant has worked for 35 years. Note that thelimits for early retirement will be increased inphases to age 62 and a working life of 40 yearsin 2016.Pensions are calculated on the basis of a real,fictitious (for assimilated periods) or lump-sumearned income (capped at a certain amount).The amount of pension is fixed on the basis ofthe claimant’s family situation.Pensions may only engage in gainfulemployment under strict conditions.Social security systems around the globe 35

BelgiumCompetent authoritiesVoluntary socialsecurity scheme1. Salaried personsContributions paid by employers and employees are collected bythe National Office for Social Security (RSZ/ONSS) for salariedpersons, which then distributes them among the different institutionsresponsible for paying allowances and benefits.2. Self-employed personsSelf-employed persons join and pay social contributions to a socialinsurance fund for the self-employed under the oversight of theNational Institute for the Social Insurances of Self-employed Persons(RSVZ/INASTI). Social insurance funds also have the task of payingbenefits to self-employed persons.Under certain conditions, company directors are deemed to be selfemployedin Belgium.It is not possible to remain subject to the Belgian statutory socialsecurity scheme on a voluntary basis.Citizens of Member States of the EEA or Switzerland who work outsidethose countries may nevertheless join the Overseas Social SecurityOffice (OSSO), which is a public social security institution guaranteedby the Belgian State. Citizens of other countries can also join up to theOSSO if they are employed by a company whose registered office is inBelgium or by the Belgian State, Regions or Communities.The Belgian OSSO scheme is contribution-based and consists of ageneral scheme (pension, allowance in case of illness, maternity ordisability and deferred health care insurance) and supplementaryinsurance contracts (health care, occupational accidents and accidentsin private life). Participation in the general scheme is a precondition fortaking out supplementary insurance.The OSSO scheme can be joined on an individual basis or via theworker’s employer. There is a monthly contribution, fixed betweenstatutory minimum and maximum amounts (as desired).Social security systems around the globe 36

BelgiumContactsBart EliasPartnerTel: +32 3 259 3156bart.elias@pwc.beNadja De BieSenior legal counselTel: +32 3 259 3137nadja.de.bie@pwc.beSocial security systems around the globe 37

Bosnia andHerzegovinaGeneral backgroundCovered personsBosnia and Herzegovina consistsof two entities: the Federationof Bosnia and Herzegovina; andRepublika Srpska and BrčkoDistrict, which constitute aseparate administrative unit.Each entity has a separate socialsecurity contribution system anddifferent regulations on socialsecurity contributions. Theinformation below mainly relatesto the social security system ofthe Federation of Bosnia andHerzegovina (FBiH).FBiH has an extensive statutory social security system based onsolidarity.The social security scheme in FBiH intervenes upon three events:• wage loss (e.g. unemployment, retirement, incapacity for work):substitute income;• dependent burdens (e.g. children, sickness): income supplements;• limited allowance necessary for fulfilment of minimal existentialneeds.The following persons are subject to FBiH’s statutory social securitycontributions:• salaried persons (individuals linked to an employer by anemployment agreement);• self-employed persons;• persons engaged under a project agreement.Social security systems around the globe 38

Bosnia andHerzegovinaContributionsCompulsory social security contributions are:• contributions for retirement and disabilityinsurance:––regular contributions;––additional contributions, for extendedinsurance periods;• contributions for health insurance;• contributions for unemployment insurance.1. Salaried personsSocial security contributions are due byboth employees and employers. Employeecontributions are deducted from gross pay,whilst employer contributions are paid on topof gross pay. Contributions are due on the totalgross salary (in cash or in kind), without anyceiling.The rates are 31% for employees andapproximately 10.5% for employers. Both aretax-deductible.2. Self-employed personsSocial security contributions for self-employedpersons are calculated on the basis of theaverage monthly salary in FBiH multiplied by acoefficient fixed separately for different typesof self-employed activity.They are calculated at the following rates:• 23% for retirement and disabilityinsurance;• 16.5% for health insurance; and• 2% for unemployment insurance.Self-employed persons are obliged tocalculate and pay SSC on generated income bythemselves and they are gaining benefits fromthe paid contributions (pension and healthinsurance).3. Persons engaged under a projectagreementThe social security contributions for personsengaged under a project agreement arecalculated at the following rates:• 4% on income for basic health insurance;• 6% on income for retirement and disabilityinsurance.Persons engaged under a project agreementare engaged by a legal entity which is obligedto withhold and pay due SSC from the totalincome paid. Person engaged is also notgaining any benefit from SSC paid.Additional contributions for extendedinsurance period• additional contributions for retirement anddisability insurance are calculated at thefollowing rates: 2% for employees who areassigned to the working position where12 months of effective work counts as14 months;• 3% for employees who are assigned tothe working position where 12 months ofeffective work counts as 15 months;• 6% for employees who are assigned tothe working position where 12 monthsof effective work counts as more than15 months.Social security systems around the globe 39

Bosnia andHerzegovinaBenefitsfor salaried persons1. Health careHealth care covers both preventive andcurative care required for maintaining andrestoring health (e.g. general medical care,dental care, hospital care, medicines from apre-set list of essentials).Supplementary charges are made for someadditional care costs.To access health care, patients have to beregistered with the FBiH tax authorities andpay a minimum amount of contributions.2. Sickness benefitUpon falling ill, in addition to health care,claimants are entitled to benefits covering lossof income. Salary continues to be paid for first42 days of sickness. After that, it is paid by theHealth Insurance Fund.While on sick leave, employees are entitledto a minimum of 80% of their salary. In somesituations (pregnancy, occupational illness andtransplants), sick pay cannot be less than fullpay.3. Accidents at workAll salaried persons are covered againstaccidents at work and accidents on the wayto and from work. An accident at work is anaccident causing injury and occurring duringand due to performance of the employee’slabour contract. Accidents on the way to andfrom work are those occurring on the normalroute the claimant has to use to travel from thethreshold of his residence to his work and viceversa.Victims of accidents at work are entitled toreplacement income and a refund of the costsof hospital care, physiotherapy, medical,surgical, dental and pharmaceutical care, andorthopaedic equipment.Social security systems around the globe 40

Bosnia andHerzegovina4. Maternity benefitsExpectant and new mothers are entitled to oneyear’s maternity leave and an allowance duringthat period.Two periods can be distinguished:• the prenatal rest period – during pregnancyif prescribed by a doctor or for four weeksbefore the estimated date of birth. Thesefour weeks are optional and may be keptover till after the birth;• the postnatal rest period: a maximum ofone year after giving birth.During maternity leave, salaried femaleworkers may be entitled to benefit instead oftheir income. The amount of benefit variesfrom canton to canton within FBiH.5. Unemployment benefitReplacement income is paid to those whoinvoluntarily lose their salaried employment.However, it is not enough just to be subjectto the social security scheme for salariedpersons to claim unemployment benefit. Atthe time employment is terminated, claimantsmust have been employed for at least eightcontinuous months or for eight months withinterruptions within the last 18 months.Unemployment benefit is 40% of the averagenet salary paid in FBiH in the last three monthspreceding termination of the claimant’semployment.Claimants are entitled to unemploymentbenefit for:• three months if they were employed formore than eight months and less than fiveyears;6. RetirementRetirement pension is a benefit entitlementwhich is based on working life andachievement of a given age.The normal retirement age in FBiH is 65.Claimants must work at least 20 years in orderto be entitled to a full pension. Regardless ofage, a full pension may be claimed by thosewho have worked for 40 years, regardless oftheir age.However, it is possible to take early retirementfrom age 60 if the claimant has worked for35 years.The pension is calculated on the basis of a realincome for assimilated periods. Retirementpension can only be combined with work understrict conditions.• six months if employed for more than fiveand less than ten years;• nine months if employed for more than tenand less than 15 years;• 12 months if employed for more than 15and less than 30 years;• 18 months if employed for more than 30and less than 35 years; and• 24 months if employed for more than35 years.Social security systems around the globe 41

Bosnia andHerzegovinaCompetent authoritiesVoluntary socialsecurity schemeContributions paid by employers and employees, and by self-employedpersons, are collected by three separate funds: the Retirement andDisability Fund, the Health Insurance Fund and the Employment Fund.Social security contributions paid for persons engaged under a projectagreement are paid to a special solidarity fund and persons engaged donot obtain any benefit from contributions paid.It is possible to obtain voluntary social security coverage in FBiH. Firstof all, the individual should not be subject to compulsory coverage inFBiH.In order to get voluntary social security coverage in FBiH, individualsmust report and pay compulsory social security contributions. Theminimum basis is the minimum gross salary in FBiH.Social security systems around the globe 42

Bosnia andHerzegovinaContactsMubera BrkovićManagerTel: +387 33 295 234mubera.brkovic@ba.pwc.comNermina HadžiosmanovićSenior consultantTel: +387 33 295 245nermina.hadziosmanovic@ba.pwc.comSocial security systems around the globe 43

BrazilBrazilGeneral backgroundCovered personsThe general Brazilian socialsecurity system (‘RGPS – RegimeGeral de Previdência Social’)managed by the National SocialSecurity Institute (INSS) isessentially regulated by theFederal Constitution (1988) andspecific laws.The social security system isfinanced by Brazilian society,directly and indirectly, byresources originating from theFederal Government, States, theFederal District and Cities.Thus, all companies and employees must pay a monthly contributionto the INSS, whose system provides retirement annuities, sickness,accident and disability compensation, maternity leave allowances,funeral assistance, medical care, dental care and hospital services.Employee and employer contributions are deductible for income taxpurposes.The individuals covered by the Brazilian social security system are:• employees – regular employees under an employment contract;domestic employees;• individual contributors – self-employed individuals who renderservices to other individuals or to companies; statutory directors;• voluntary contributors – individuals who are not workers and wantto be affiliated to the Brazilian social security system;• rural workers.Social security systems around the globe 44

BrazilContributionsCompanies that hire employees, includingforeign individuals, will be subject to thefollowing social security charges:• payment of contributions to the socialsecurity system (INSS) on the totalcompensation paid, due or credited toemployees, at a flat rate equivalent to 20%;• payment of the following corporatecharges, calculated according to thepayroll:The RAT (percentage ranging from 1% to 3%)corresponds to a percentage that measures therisk related to the company’s economic activity,based on which it is charged a contribution tofinance social security benefits related to thedegree of incapacity for work. As of January2010, besides the RAT, companies have alsostarted being classified by the FAP (AccidentPrevention Factor), which measures thecompany’s performance within its economicactivity in relation to work accidents occurringSESI (‘Serviço Social da Indústria’ – Industry Social Service), SESC (‘Serviço Social do Comércio’ –Commerce Social Service), SEST (‘Serviço Social do Transporte’ – Transportation Social Service)SENAI (‘Serviço Nacional de Aprendizagem Industrial’ – National Service of Industrial Learning),SENAC (‘Serviço Nacional de Aprendizagem no Comércio’ – National Service of Commerce Learning),SENAT (‘Serviço Nacional de Aprendizagem no Transporte’ – National Service of Transport Learning)INCRA (‘Instituto Nacional de Colonização e Reforma Agrária’ - National Institute of Colonization andLand Reform)SEBRAE (‘Serviço Brasileiro de Apoio às Micro e Pequenas Empresas’ - Brazilian Service of Support forMicro and Small Companies)1.5%1.0%0.2%0.6%over a certain period. The FAP is a multipliervarying from 0.5 to 2 and is applied to the RAT.Accordingly, the RAT may vary from 0.5% to 6%.Employees are also required to pay monthlycontributions to the INSS ranging from 8 to11% of their salaries – with a set ceiling ofR$ 457,28 per month (applicable to FY 2013).The contributions to the social security system(INSS) on total compensation paid, due orcredited to employees at a flat rate equivalentto 20%, as described above under item (a),do not apply for IT and communicationcompanies.As a general rule, for IT and communicationcompanies and other specific industries, areduced social security contribution has recentlybeen introduced on gross revenue, excludingcancelled sales, unconditional discounts andrevenue from exports. Please be aware that item(b) above is still due by those companies.Education Salary 2.5%Work accident insurance – RAT (from 1% to 3% multiplied by a factor ranging from 0.5 to 2) 6.0%Total (maximum rate) 11.8%Social security systems around the globe 45

BrazilBenefits eligibility1. Old-age pension (retirement)Available to insured individuals who havereached age 65 (60 for women). In order toclaim, the individual must have made at least180 monthly contributions to the Braziliansocial security scheme.2. Invalidity pension (retirement)Insured individuals considered permanentlyand fully incapacitated for work by a socialsecurity expert due to sickness or accidentwill be entitled to benefit. The individualmust have made contributions to the Braziliansocial security scheme for at least 12 monthsin the case of sickness. For an accidentrelated situation, there is no grace period. Ifthe individual returns to work, retirementpayments cease.3. Retirement due to period ofcontributionThis is available after 35 years of contributions(30 for women). The individual may claim fullor proportional benefit. Proportional benefitmay be claimed by men aged 53 who havecontributed to the social security scheme for atleast 30 years, and by women aged 48 years oldwho have contributed for at least 25 years.The benefit is not available to voluntarycontributors who have contributed to thesocial security scheme with minimum monthlycontributions equivalent to 11% of theminimum wage.4. Special retirementThis is available to insured individuals whohave worked under certain dangerous orunhealthy working conditions. It may beclaimed after 15, 20 or 25 years, depending onthe work conditions. The individual must havemade at least 180 contributions to the socialsecurity scheme.5. Sickness insurance benefitThis is granted when the individual becomesincapacitated for work by an accident orsickness for more than 15 days (consecutive).The first 15 days must be paid by the employer.The social security authorities will only paybenefits as from the 16th day. The individualmust have contributed to the social securityscheme for at least 12 months to be entitled; anexception is made in the case of accidents andcertain specific diseases.6. Accident insurance benefitThis is granted to employees who, due to anaccident, have reduced working capacity andcannot perform the same activity. It is alsogranted to employees who used to receivesickness insurance benefits. There is no graceperiod.The benefit is not available to individual andvoluntary contributors.Social security systems around the globe 46

Brazil7. Maternity allowance8. Family allowance9. Prison insurance benefitThis relates to assistance given to dependentsof insured prisoners during the cloister period.There is no grace period. Certain specificconditions must be met.This is due to insured individuals (women) atthe time of childbirth or adoption. The benefitfor childbirth lasts 120 days and may start upto 28 days before the delivery date. The benefitfor adoption may be from 30 to 120 days,according to the child’s age.As a general rule, there is no grace period.Sole contributors, voluntary contributors anddomestic servants must prove at least tenmonths of contributions.This is available to insured employees whoreceive monthly earnings of up to R$ 915.05to assist in upkeep of the family. The benefitis granted according to the children’s ages(under 14, or invalids of any age).There is no grace period.10. Death pensionThis benefit is granted to the worker’s familyupon death. There is no grace period. Certainspecific conditions may extinguish this benefit.Social security systems around the globe 47

BrazilVoluntary social security schemeAny individual over sixteen years of age who is not engaged in gainfulactivity and as such not mandatorily covered can join the BrazilianSocial Security system as voluntary contributor.Social security systems around the globe 48

BrazilContactsEdmar PerfettoPartnerTel: + 55 11 3674 3912edmar.perfetto@br.pwc.comVanessa MoretiTax directorTel: + 55 21 3232 6205vanessa.moreti@br.pwc.comFlavia FernandesTax directorTel: + 55 19 3794 5443flavia.fernandes@br.pwc.comSocial security systems around the globe 49

Bulgaria General background Covered personsBulgaria has an extensivesocial security system based onsolidarity.Two events can trigger a claim tosocial security in Bulgaria:• wage loss (e.g. unemployment,incapacity for work,retirement) – substituteincome;• social burdens (e.g. children) –income supplements.The Bulgarian statutory social security system is divided into threeschemes:• scheme for salaried persons (individuals who are linked to theiremployer by an employment agreement);• scheme for self-employed persons (individuals who work outsidethe scope of an employment agreement);• scheme for civil servants (individuals who work in a public office) –not covered in this profile.Social security systems around the globe 50

BulgariaContributions1. Salaried personsSocial security contributions are due by theemployee, the employer and the State. TheState contributes at the rate of 12%.Employee contributions are deducted fromgross pay, whilst employer contributions arepaid on top of gross pay.Generally, employers pay 17.9% and 12.9%is withheld from employees’ pay. Someminor variations may apply. Both types ofcontribution are tax-deductible. Part is paidto the State insurance fund, part to privatepension funds.Compulsory social security contributions aredue on gross pay (within certain minimumand maximum thresholds) less any allowedstatutory deductions.The minimum base per month varies anddepends on the employer’s business andthe employee’s occupation and grade. Thecompulsory social security base is capped; for2012, the maximum is BGN 2,000 (approx.EUR 1,000) a month.2. Self-employed personsSelf-employed persons pay social securitycontributions at a standard rate of 25.8%(or 29.3% if they opt for making contributionsto the General Illness and Maternity fund). TheState also makes a 12% contribution for them.The social security basis for self-employedpersons ranges from BGN 420 (approx.EUR 210) to BGN 2,000 (approx. EUR 1,000)for 2012.Social security systems around the globe 51

BulgariaBenefitsFor salaried persons1. Health care benefitsHealth care covers both preventative andcurative care required for maintaining andrestoring patients’ health (e.g. general medicalcare, dental care and hospital care). Onlypart of the service is paid for by health carecontributions. Patients pay the balance in cashor through voluntary health insurance.A number of conditions and criteria haveto be met in order to access health care(e.g. registration with a health insurancefund, payment of a minimum amount ofcontributions).Doctor’s visits are subject to a fixed chargeof BGN 2.90 (approx. EUR 1.45) (there areexceptions for children and pregnant women).2. Sickness benefitsThe ill can claim health care plus benefitscovering loss of income.Salaried persons must satisfy certainconditions to claim sickness benefit (e.g.minimum coverage period of at leastsix months and payment of sufficientcontributions). There is no qualifying periodfor under 18s. Their contributions are paid bythe State.Sickness benefit is based on ‘insuranceincome’, which is calculated on the basis of theindividual’s daily gross wage or average dailyinsurance income in the 18 calendar monthsbefore incapacity began. Benefit is 80% ofthe insurance income, which is paid fromthe fourth day of sickness until the claimantis able to return to work or is assessed aspermanently disabled. During the first threedays of sickness, the employer pays 70% ofthe insurance income. Benefit is also paid toquarantined patients for the entire period oftemporary incapacity.Depending on the specific case, sanatorium(health resort) treatment may be provided aswell.Benefit is also paid to carers looking afterfamily members. The period for which benefitis paid depends on certain criteria, such as theage of the family member and the period ofrecovery or confinement.Invalidity (long-term incapacity for work (oversix months) or invalidity above 50%) triggersvarious benefits or pensions according tospecial rules and criteria.3. Accidents at workand occupational diseasesAll salaried persons are covered againstaccidents at work and occupational diseases.An accident at work is any sudden impairmentto health occurring during or in relationto work performed in the interests of theemployer and resulting in temporary orpermanent reduced capacity for work or death.An occupational disease is defined as anyillness occurring exclusively or primarilyas a result of harmful factors in a workingenvironment or working process and which isincluded on a special list.Social security systems around the globe 52

BulgariaEmployees who suffer accidents at work areentitled to monetary compensation for thetemporary reduction in their capacity towork, sanatorium treatment and medicalcare, examinations and treatment. Theyare also entitled to monetary compensationfor prophylactics (regular health checks),rehabilitation and support devices (e.g.wheelchairs) needed as a result of the harmcaused to them, and a pension for any resultingdisability.In the event of death as a result of a workaccident or occupational disease, thedeceased’s spouse, dependent children andparents are entitled to a one-off allowance andsurvivor’s pension.The daily monetary benefit for temporaryreduced capacity for work as a result of a workaccident or occupational disease is 90% of therelevant insurance income.4. Family benefitsFamilies and pregnant women with an averagemonthly income per family member for thelast 12 months that does not exceed BGN 350(approx. EUR 175) for 2012 are entitled to anumber of family benefits. The family benefitsfor this group in 2012 are as follows:• for pregnant women, a one-off allowance ofBGN 150 (approx. EUR 75);• monthly family allowance for raisingchildren until they leave school, but no laterthan age 20 – BGN 35 (approx. EUR 17) perchild;• a monthly family allowance for raisingchildren to age one – BGN 100 (approx.EUR 50) if the mother is not insuredand does not receive other monetarycompensation during her maternity leave;• a lump-sum allowance for students(primary and secondary school) to coverpart of the expenses for the start of theschool year – BGN 150 (approx. EUR 75).There are also family benefits which are notmeans tested, such as:• for giving birth to a child – a lump sum ofBGN 250 (approx. EUR 125) for the firstchild, BGN 600 (approx. EUR 300) for thesecond and BGN 200 (approx. EUR 100) forthe third and subsequent children;• BGN 1,200 (approx. EUR 600) for givingbirth to twins, if there is already an oldersibling in the family, otherwise the regularallowances for the first and second childrenapply;• for raising a child to age one if the mother isa university student (on a regular course ofstudy) – a lump sum of BGN 2,880 (approx.EUR 1,440);• there is an additional one-off allowancefor children assessed as having longtermdisability of 50% or over 50% (ifestablished by age two) – BGN 100 (approx.EUR 50).Social security systems around the globe 53

Bulgaria5. Maternity benefits6. Unemployment benefit7. Retirement pensionPregnancy and childbirth benefitsEmployed insured women are entitled to anallowance instead of salary during pregnancyand childbirth if they have been insured for18 months (24 months for self-employedwomen).The daily allowance for pregnancy andchildbirth is 90% of the relevant insuranceincome.Employees are entitled to a prenatal andpostnatal leave of 410 days for each child,45 days of which must be taken beforechildbirth.Child-care benefitOnce prenatal and postnatal leave have beenused up, if the child does not attend childcare,the employee is entitled to additionalchild-care leave until the child reaches the ageof two (this applies for the first, second andthird child), and six months for any fourth andsubsequent child.Claimants are entitled to child-care benefit ifthey have contributed for this kind of benefitfor 18 months.During the additional child-care leave, theemployee is entitled to a monthly allowance,which is BGN 240 (approx. EUR 120) in 2012.Employees contributing to the ‘UnemploymentFund’ for at least nine of the last 15 monthsbefore termination of their employment areentitled to unemployment benefit.Further qualifying requirements include:• employees must register as unemployedwith the National Employment Agency;• they cannot be in receipt of a pension;• they may not perform work for which theyare subject to compulsory social securitycontributions.Daily unemployment benefit is 60% of therelevant insurance base for the last 24 monthspreceding the month in which employmentterminated. The minimum daily benefit for2012 is BGN 7.20 (approx. EUR 3.60).Entitlement to retirement pension is based onthe claimant’s length of service and age.Pensions are currently paid to women aged60 years and four months with a minimumof 34 years and four months of service and tomen aged 63 and four months with a minimumof 37 years and four months of service. As of31 December 2011, the retirement age is beingraised by four months each calendar year untilit reaches 63 for women and 65 for men.In addition, as of 31 December 2011, theservice threshold is also increasing by fourmonths each calendar year until it reaches37 years for women and 40 for men.Social security systems around the globe 54

BulgariaCompetentauthoritiesAdditional voluntary insuranceAll contributions are paid to the NationalRevenue Agency.1. PensionAdditional voluntary pension insurance isthrough private voluntary insurance funds.Anyone aged 16 or over can take out avoluntary pension scheme through a pensionfund. The contributions confer entitlement tothe following pensions:• personal old-age pension, which may bepaid as a lump sum or annuities basedon the funds accumulated in the retiree’sindividual account;• survivor’s pension – paid to the insured’sheirs in the case of death, which also maybe paid as a lump sum or annuities.Policyholders can make withdrawals from thefunds accumulated in their accounts prior toretirement.2. For unemployment and/orvocational qualificationsIt is possible to pay contributions into a privatevoluntary insurance fund for unemploymentand/or vocational qualifications, conferringthe following rights:• a monetary allowance in the event ofunemployment;• an allowance for additional education/qualifications.Policyholders can make advance withdrawalsof funds accumulated in their accounts.Social security systems around the globe 55

BulgariaContactsIrina TsvetkovaPartnerTel: +359 9355 126irina.tsvetkova@bg.pwc.comMina KapsazovaManagerTel: +359 9355 163mina.kapsazova@bg.pwc.comRossitsa ValevaAssistantTel: +359 9355 145rossitsa.valeva@bg.pwc.comBoryana GeorgievaAssistantTel: +359 9355 115boryana.georgieva@bg.pwc.comSocial security systems around the globe 56

CanadaGeneral backgroundCanadian social plans are comprised of threemain elements:1. The Canada Pension Plan (CPP), orthe Quebec Pension Plan (QPP)The Canada Pension Plan (CPP) is acontributory, earnings-related social insuranceprogramme. It ensures a measure of protectionto a contributor and his or her family againstthe loss of income due to retirement, disabilityand death. Every person in Canada overthe age of 18 who earns a salary must payinto this programme. The contributions aresplit between employer and employee. Selfemployedindividuals must pay both portions.For individuals working in the province ofQuebec, the Quebec Pension Plan (QPP) isthe programme that the contributions aremade to. It covers the same benefits as the CPPprogramme and had the same contributionlimits historically.2. Old Age Security (OAS)Another programme and benefit availableto Canadians is the Old Age Security (OAS)pension.3. Employment Insurance (EI)Finally, the Employment Insurance (EI)program offers temporary financial assistanceto Canadians. One of the most commontypes of benefits that the EI program offers isregular benefits. EI regular benefits are offeredto people who have lost their employmentthrough no fault of their own (for example,because of a shortage of work or because theywere employed in seasonal work) and who areready, willing, and capable of working eachday but unable to find work.Social security systems around the globe 57

CanadaCovered personsWith very few exceptions (e.g., due to atotalization agreement), every individualin Canada over the age of 18 who earnscompensation as an employee or self-employedindividual must pay into the CPP/QPP, OAS,and EI systems.With respect to who can apply for CPP/QPPbenefits, the following conditions must be met:you must have worked in Canada, made at leastone valid contribution to the plan and you mustbe at least 60 years old.The eligibility criteria with respect to OASand EI will be elaborated on later on in thisdocument.Social security systems around the globe 58

CanadaContributions1. CPP/QPPGenerally, CPP/QPP contributions aredetermined based on remuneration andtaxable benefits paid or provided to employees(pensionable earnings).There is an annual exemption of $ 3,500.Individuals who earn less than this do not needto contribute to CPP/QPP.The rates indicated below apply to all ofCanada, with the exception of Quebec. As of2012, the QPP participation rate has increasedby 0.075% for both employees and employers.Employee: 4.95% (5.025% for QPP) ofpensionable earnings. The maximum annualcontribution for 2012 is $ 2,306.70($ 2,341.65 for QPP) and maximumpensionable earnings are $ 50,100.Employer: 4.95% (5.025% for QPP) ofpensionable earnings. The maximum annualcontribution amount for 2012 is $ 2,306.70($ 2,341.65 for QPP) and maximumpensionable earnings are $ 50,100.Self-employed person: 9.90% of pensionableearnings. The maximum contribution for 2012is $ 4,613.40 ($ 4,683.30 for QPP).CPP/QPP contributions are not deductible forfederal or provincial income tax purposes,but they are creditable against taxes payable.The employer’s matching contribution is nottaxable to the individual.Voluntary CPP/QPP ContributionsIndividuals who are not otherwise required tocontribute can make voluntary contributionsto the CPP/QPP programme in certaincircumstances.2. OASThe Old Age Security (OAS) pension isa monthly payment available to mostCanadians aged 65 or older. You must applyto receive benefits. If you meet the eligibilityrequirements explained below, you maybe entitled to receive the Old Age Securitypension even if you are still working or havenever worked. This is not a contribution-basedprogram. The Old Age Security program isfinanced from Government of Canada generaltax revenues.3. EIEmployee: 1.83% of insurable earnings. Themaximum annual contribution is $ 839.97 andthe maximum insurable earnings are $ 45,900.Employer: 2.562% of insurable earnings. Themaximum annual contribution is $ 1,175.96and the maximum insurable earnings are$ 45,900.Social security systems around the globe 59

CanadaEI (Quebec only)Employee: 1.47% of insurable earnings. Themaximum annual contribution is $ 674.73 andthe maximum insurable earnings are $ 45,900.Employer: 2.058% of insurable earnings. Themaximum annual contribution is $ 944.62 andthe maximum insurable earnings are $ 45,900.Quebec Parental Insurance Plan (QPIP)In Quebec, the federal EI programme issupplemented with the QPIP. It provides for thepayment of additional benefits to an employeewho takes maternity, paternity, adoption orparental leave. For Quebec employees, the EIparticipation rate is reduced due to the QPIPprogramme.There is an annual exemption of $ 2,000.Individuals who earn less than this do not needto contribute to the QPIP.Employee: 0.559% of insurable earnings. Themaximum annual contribution is $ 368.94 andthe maximum insurable earnings are $ 66,000.Employer: 0.782% of insurable earnings. Themaximum annual contribution is $ 516.12 andthe maximum insurable earnings are $ 66,000.Contributions to EI and QPIP are generallybased on most elements of an individual’scompensation package, including non-cashamounts (insurable earnings).EI contributions are not deductible for federalor provincial income tax purposes, but theyare creditable against taxes payable. Theemployer’s matching contribution is nottaxable to the individual.Social security systems around the globe 60

CanadaBenefits1. CPP/QPPThe following benefits are provided for via theCPP/QPP programmes:• retirement pension;• disability benefits (including benefits fordisabled contributors and benefits for theirdependent children);• survivors’ benefits (including death benefit,survivors’ pensions and children’s benefit).The primary purpose of disability benefits is toreplace a portion of employment earnings forpeople who recently paid into the programme.Benefits eligibilityAn individual will qualify for a CPP/QPPretirement pension if he/she has made at leastone valid contribution to the CPP/QPP, and isat least 60 years old.Disability benefit is available to individuals whocontributed recently to CPP while they worked,and then became unable to work at any job ona regular basis because of a disability. Thereare also benefits for children if at least oneparent qualifies for the CPP/QPP disabilitybenefit.There are three types of survivor benefits,payable in respect of contributors.Contributions need to have been made into thesystem for a minimum of 3 years in order forsurvivors to be able to receive benefits.• Death benefit is a one-time, lumpsumpayment made to the deceasedcontributor’s estate.• The survivor’s pension is paid to the personwho, at the time of the death, is the legalspouse or common-law partner of thedeceased contributor.• The children’s benefit is paid to a dependentnatural or adopted child of the deceasedcontributor. The child must be either underthe age of 18, or between the ages of 18 and25 and in full-time attendance at a schoolor university.2. OASThe following benefits are provided for via theOAS program:• Old Age Security pension;• Guaranteed Income Supplement (monthlybenefit paid to eligible residents of Canadawho receive a basic, full or partial Old AgeSecurity pension and who have little or noother income);• Allowance for the Survivor (designed torecognize the difficult circumstances facedby many survivors and by couples living onthe pension of only one person).Benefits eligibilityOld Age Security (OAS) pension eligibility isdetermined based on age, legal status andnumber of years an individual has lived inCanada. It is not a contribution based program.For individuals living in Canada:• must be age 65 or older;• must live in Canada and be a Canadiancitizen or legal resident of Canada at thetime the pension application is approved;• must have lived in Canada for at least tenyears after turning 18.Social security systems around the globe 61

CanadaFor individuals living outside Canada:• must be age 65 or older;• must have been a Canadian citizen or legalresident of Canada the day before they leftCanada;3. EIBenefits eligibility• must have lived in Canada for at least 20years after turning 18.If the conditions outlined in these scenariosare not met, an individual may still be eligiblefor an OAS pension based on the totalisationagreements that Canada has entered into withvarious countries.There are several types of EmploymentInsurance (EI) benefits available to Canadians,depending on their situation.• Employment Insurance Regular Benefitsare available to individuals who lose theirjobs through no fault of their own (forexample, due to shortage of work, seasonallayoffs, or mass layoffs) and who areavailable for and able to work, but cannotfind a job.• Employment Insurance Maternity andParental Benefits provide support toindividuals who are pregnant, have recentlygiven birth, are adopting a child, or arecaring for a newborn.• Employment Insurance Sickness Benefitsare for individuals who are unable to workbecause of sickness, injury, or quarantine.• Employment Insurance CompassionateCare Benefits are available to people whohave to be away from work temporarily toprovide care or support to a family memberwho is gravely ill with a significant risk ofdeath.• Employment Insurance Fishing Benefitsprovide support to qualifying, selfemployedfishers who are actively seekingwork.Individuals may be entitled to receive EIregular benefits if:• premiums have been paid into the EIAccount;• loss of employment through no fault of theirown;• they have been without work and withoutpay for at least seven consecutive days inthe last 52 weeks;• they have worked for the required numberof insurable hours in the last 52 weeksor since the start of their last EI claim,whichever is shorter;• they are ready, willing, and capable ofworking each day; and• they are actively looking for work (mustkeep a written record of employerscontacted, including when they werecontacted).Individuals may not be entitled to receive EIregular benefits if:• they voluntarily left their employmentwithout just cause;• they were dismissed for misconduct; or• they are unemployed because of directparticipation in a labour dispute (strike,lockout, or other type of dispute).Social security systems around the globe 62

CanadaMaternity, paternity, adoption or parentalleave are also available in Quebec based on theQPIP program that is administered separatelyby the province of Quebec. The table enclosedindicates the maximum number of benefitweeks and percentage of average weeklyearnings for each type of benefit, depending onthe plan chosen.When an application is filed for benefitsunder the Québec Parental Insurance Plan,a choice must be made between two options,the basic plan or the special plan. This choicewill determine the length of leave and thepercentage replacement of income.Type of benefitsMaternity(exclusively for the mother)Paternity(exclusively for the father)Parental(may be shared between the parents)Adoption(may be shared between the adoptiveparents)Maximumnumber ofbenefit weeksBasic planPercentageof averageweekly incomeMaximumnumber ofbenefit weeksSpecial planPercentageof averageweekly income18 70% 15 75%5 70% 3 75%7 70%25(7+25=32)55%12 70%25(12+25=37)55%25 75%28 75%Social security systems around the globe 63

CanadaCompetent authoritiesWith respect to the administration of the various Canadian socialprograms, the appropriate Canadian authorities depend on whichsystem is concerned (e.g., OAS, CPP, QPP, QPIP, or EI). Service Canadahandles CPP, OAS and EI issues, the Quebec Social Security Bureau(Régie des rentes du Québec) handles QPP issues and Emploi etSolidarité Québec is the resource with respect to QPIP. These agenciesadminister these programs and the federal and Quebec income taxauthorities collect the contributions from the employees and employersvia payroll remittances to fund the programs.Social security systems around the globe 64

CanadaContactsChantal Farrell-CarterPartnerTel: +1 514 205 5370chantal.farrell-carter@ca.pwc.comTeresa MalowanySenior managerTel: +1 514 205 5283teresa.malowany@ca.pwc.comSocial security systems around the globe 65

China General background Covered personsChina’s social security law waspromulgated by the centralgovernment. However, itsadministration and specificdetails are governed by localauthorities. For example,employer and employeecontribution rates and capsfor each benefit generally varyamong local jurisdictions.Moreover, administration of thesocial security system also fallswithin the remit of local socialsecurity bureaux.Chinese social security contribution is mandatory for local Chineseemployees and their employers.Under the new social security law effective from 1 July 2011, foreignersemployed in China are required to make Chinese social securitycontributions as well. In practice, this requirement is applicable toforeigners holding a Chinese employment permit.Foreigners from countries which have entered into totalisationagreements with China may be exempted from certain Chinese socialsecurity contributions in accordance with the specific coverage of thoseagreements.Currently, China has only entered into totalisation agreements withGermany (covering both pensions and unemployment) and theRepublic of Korea (pensions only).Social security systems around the globe 66

ChinaContributionsGenerally, social security contributions areassessed on employment income, and themaximum employment income assessed iscapped at three times the average city salary ofthe prior year.Social security contribution rates and caps varyaccording to local jurisdiction and are subjectto change annually.In Beijing, for instance, the current employeesocial security contribution amounts toapproximately 10.2% and that due byemployers is approximately 32.8% of thecapped employment income amounting toRMB 14,016 (amount for 2012).Employers are required to manage the monthlyemployee contribution payroll withholdingand have the funds covering both the monthlyemployer and employee contributions availablefor settlement to the local social securitybureau. Monthly contribution methods dependon the local jurisdiction. For example, theymay be paid by direct debit from the employer’sdesignated bank account or together with themonthly individual income tax settlement.Contribution rates and bases in Shanghai, Beijing and GuangzhouCity Shanghai Beijing GuangzhouEmployee Employer Employee Employer Employee EmployerPension 8% 22% 8% 20% 8% 12%Medical 2% 12% 2% + RMB 3 10% 2% 8%Unemployment 1% 1.7% 0.2% 1% 1% 2%Maternity 0% 0.8% 0% 0.8% 0% 0.85%Work-related injury 0% 0.5% 0% 0.3% - 1% 0% 0.5% - 1.5%2012 monthlysalary base cap forcontributions12,993 14,016 14,367Note: the monthly salary base cap for contributions is subject to change annually.Social security systems around the globe 67

ChinaBenefits1. PensionEmployee contributions accrue to theindividual, whereas employer contributions areaccumulated in a social pool.Generally speaking, individuals who havecontributed to the pension fund for anaggregate of 15 years are entitled to receiveretirement benefit upon reaching the normalretirement age of 60 for men and 55 for women(these may differ for certain categories such asthose in high-risk industries). The amount ofretirement benefit also depends on local rules.2. Medical insuranceBoth employers and employees are requiredto make monthly medical insurancecontributions. Individual participants canclaim reimbursement of expenses incurredfor medical treatment at designated hospitals.However, the reimbursable amount issubject to a floor and a ceiling. In somelocal jurisdictions, individuals can makewithdrawals from the funds accrued in theirown accounts.3. Unemployment insuranceEmployers are required to contribute to theunemployment insurance fund. However, onlyemployees in certain local jurisdictions are alsorequired to make monthly contributions.In general, unemployed individuals areentitled to receive unemployment benefit fora maximum of 12 to 24 months (dependingon the actual case) if contributions have beenmade for them for a period of no less than12 months. Additional conditions includethat the individual did not terminate his/her employment voluntarily, and has alreadycompleted unemployment registration and is insearch of new employment.4. Maternity insuranceOnly employers are required to make monthlymaternity insurance contributions. Femaleemployees are entitled to receive maternitybenefit equal to the previous year’s averageemployee salary from their employer plusa reimbursement of maternity expenses.To qualify for these benefits, the femaleemployee’s employer must already have mademonthly fund contributions for her for threemonths and the relevant medical treatmentmust be in compliance with China’s birthcontrol policy. Additionally, male employeesmay also be entitled to reimbursement ofexpenses incurred for maternity medicaltreatment under certain circumstances.5. Work-related injury insuranceSimilar to maternity insurance, only employersare required to make monthly work-relatedinjury insurance contributions. The requiredmonthly amount may vary according toindustry in some local jurisdictions. Coveragegenerally includes work-related injury andoccupational illness compensation.Social security systems around the globe 68

ChinaCompetent authoritiesVoluntary socialsecurity schemeThe competent authorities are the local social security bureaux.Self-employed individuals, part-time employees who do notparticipate in the social security schemes through their employers, andunemployed individuals can participate in the pension and medicalinsurance schemes on a voluntary basis.Social security systems around the globe 69

ChinaContactsEdmund YangPartnerTel: +86 10 6533 2812edmund.yang@cn.pwc.comDiana DuanSenior managerTel: +86 10 6533 3586diana.duan@cn.pwc.comSocial security systems around the globe 70

Croatia General background Covered personsCroatia has an extensive statutorysocial security system based onsolidarity.Social security entitlements aretriggered by three events:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social burdens (e.g.children, sickness): incomesupplements;• no earned income (outsidethe claimant’s control e.g.disability): subsistenceallowances.The Croatian statutory social system is divided into three majorinsurance schemes under which individuals can be insured:• work and/or social status (e.g. employment, assignment,unemployment, etc.);• special conditions (e.g. school pupils, students, etc.);• statutory health insurance coverage of foreigners in Croatia(e.g. foreigners, their family members, etc.).Social security systems around the globe 71

CroatiaContributionsCompulsory social security contributions arepaid for:1. compulsory pension insurance. These arecategorised in pillar I contributions (15% -based on generation solidarity) and pillarII contributions (5% - based on individualcapitalised savings);2. compulsory health insurance, which coversthe risk of temporary incapacity for workdue to sickness or maternity and healthcare (13,2%);3. unemployment insurance. The generalintention of unemployment insurance isto cover the risk of unemployment. It alsopromotes employment and the process ofrehabilitating unemployed persons disabledat work (general contribution rate of 1,7%).Contribution base: there are various insurancebases and only the most general are indicatedin this summary.1. Employed individualsContributions are due on total gross salary(in cash and in kind), by employers andemployees.Employee contributions are deducted fromgross pay.The employee rate is 20% and is aimed atfinancing the pension insurance (15% forpillar I and 5% for pillar II). Both first andsecond pillar pension contributions are cappedat a monthly level. A 2012 monthly cap ofHRK 46,536 can be used, but only for regularmonthly payments, e.g. salary.A 2012 annual cap of HRK 558,432 is alsoapplicable, to first pillar contributions only.Once the annual cap is reached, first pillarcontributions are no longer paid.Employer contributions are paid on top ofgross pay and the rate is 15.2% (13% forhealth insurance contributions, 0,5% forcontributions for health protection while atwork and 1,7% for unemployment insurance).There is no monthly or annual cap on employercontributions.2. Self-employed individualsSelf-employed individuals in the independenthandcraft, agriculture and forestry sectors,liberal professions, sports and other forms ofself-employment from which self-employmentincome is obtained are liable for payingcontributions themselves.Insured individuals on a self-employment basismust pay:1. pension insurance contributions (pillars Iand II);2. health insurance contributions (13%); and3. contributions for health protection while atwork (0.5%).The monthly basis for calculating compulsoryinsurance contributions is the average Croatiansalary for the relevant year (laid down bythe Croatian Bureau of Statistics) multipliedby the appropriate coefficient (fixed by theContributions Act).Social security systems around the globe 72

CroatiaBenefits1. RetirementRetirement pension is a benefit to whichentitlement is based on the individual’s totalworking period and reaching a given age or theoccurrence of special life circumstances.Individuals insured by the compulsorypension insurance fund, which is based onsolidarity and reciprocity, have rights thatinclude: retirement pension, early retirementpension, disability pension, family pension,minimum pension, basic pension, vocationalrehabilitation and refunds of travel expensesincurred by claiming retirement benefits.Generally, individuals are entitled to aretirement pension when they reach 65,provided they have contributed to the pensioninsurance fund for 15 years.Retirement pension is calculated on theclaimant’s earnings and the length of thecoverage period.2. Health careA number of conditions/criteria need to be metin order to access health care (e.g. registeringwith a health insurance fund).Under Croatian law, every individual who isresident in Croatia and every foreign citizenwhose permanent residence is in Croatia (ifnot otherwise provided in the applicable socialsecurity convention) needs to be insured withthe Croatian Health Insurance Institute.Medical insurance rights cover the rightto medical care and the right to financialcompensation. Medical care includes primaryand hospital medical care, the right to drugsas laid down in the health insurance fund’spharmaceuticals list, the right to dentalprostheticcare and implants, the right toorthopaedic and other aids and the right tomedical care abroad. Medical care costs can becovered fully or partially.The right to financial compensation coversremuneration for temporary incapability forwork or being prevented from working due tomedical care (e.g. sick leave), plus financialcompensation due to inability to perform workgenerating other income and refunds of travelcosts in relation to claiming medical careunder compulsory medical insurance.3. Sickness benefitsEmployees absent from work due to illnessor injury or other circumstances renderingthem unable to perform their employmentcontract obligations (or obligations under anyother contract or deed) are entitled to receivecompensation (of salary) from:a) the employer (for the first 42 days of sickleave); orb) the Health Insurance Institute (after the42nd day of sick leave).The compensation is fixed on the basis of theaverage salary (regular monthly paymentsexcluding occasional payments like bonuses)the employee received in the six monthspreceding that in which the accident or otherevent occurred (on the basis of which the rightinures to the individual). The compensationcannot be lower than 70% of the averagesalary the employee received in that six-monthperiod.When the Health Institute pays, the monthlycompensation cannot be lower than 25% ofthe state budget basis (i.e. HRK 831.50 (aboutUSD 139)) or higher than 128% of the statebudget basis (HRK 4,257.28 (USD 710)).Compensation claimants need to havecontributed to the Health Institute for at least12 consecutive months or 18 non-consecutivemonths in the two years prior to the date thesick leave commences.Social security systems around the globe 73

Croatia4. Maternity benefits5. Child allowance6. UnemploymentThe Law on Maternity and Parental Benefitslays down what time off and what financialsupport parents and other child-carers in locoparentis can claim where they are insured(on one of the prescribed bases) under thecompulsory pension and health insurancefunds.Time off includes leave, exemption from workand prescribed time for child care (maternityleave, parental leave, part-time work due toenhanced child care, etc.).Financial support includes compensationfor salary, financial compensation, financialassistance and lump-sum financial assistancefor a newborn baby.For each of these forms of support, variousrequirements need to be fulfilled.Parental leave can be taken by the father orthe mother, for consecutive or non-consecutiveperiods.Child allowance is available to parents or childcarersin loco parentis. In general, it is paiduntil the child finishes secondary school (i.e.until he/she is a maximum of 19 years old).Various conditions need to be fulfilled toclaim child allowance (e.g. applicants musthave Croatian citizenship or, in the case offoreigners, must have resided permanently inCroatia for at least three years).One of the criteria that need to be fulfilled is anincome ceiling that must not be exceeded.Child allowance varies depending on thefamily’s social status and other circumstances.Unemployment benefit claimants must haveworked for at least nine months in a two-yearperiod. Working time is deemed to be the timethe claimant has contributed to the compulsorypension insurance system on the basis ofemployment, self-employment, etc.Benefit is calculated as the average salary lesscompulsory social security contributions paidin the three months before the terminationof employment. For the first 90 days ofunemployment, benefit is 70%, and, forthe remaining period (up to a maximum of450 days in total), it is 35% of the base figure.Social security systems around the globe 74

CroatiaCompetent authoritiesVoluntary socialsecurity scheme• National Pension Insurance Institute (HZMO)• National Health Insurance Institute (HZZO)Voluntary Pension and Medical InsuranceAll individuals, regardless of age, can be included in the voluntarypension insurance system based on individual savings (pillar III) paidinto the private pension fund of their choice. Individuals can contributeto voluntary pension funds whether or not they pay into the compulsorypension insurance scheme.Voluntary medical insurance in Croatia is divided into threesubcategories:• supplementary;• additional;• private.Supplementary medical insurance covers (part of the) the full cost ofmedical care under compulsory medical insurance.Additional medical insurance affords a higher standard of medicalcare and a wider range of cover than are provided under compulsorymedical insurance.Supplementary and additional voluntary medical insurances are paidon top of compulsory health insurance contributions.The aim of private medical insurance is to cover medical care forindividuals who reside in Croatia and are not liable to contribute underCroatia’s Compulsory Health Insurance Act and Health Insurance Lawfor Foreigners.Social security systems around the globe 75

CroatiaContactsCherie FordPartnerTel: + 385 1 6328 807cherie.ford@hr.pwc.comSanja JurkovicTax managerTel: +385 1 6328 884sanja.jurkovic@hr.pwc.comSocial security systems around the globe 76

Czech RepublicGeneral backgroundThe Czech Republic has anextensive statutory socialsecurity system. There are twocompulsory state schemes withseparate legislation and separateconditions: the State healthinsurance scheme and the Statesocial security scheme.Social security systems around the globe 77

Czech RepublicCovered persons1. Covered persons by the HealthInsurance SchemeThe health insurance scheme provides medicalcoverage.• It covers all holders of Czech ID cards/permanent residence permits, regardless ofwhether they perform any working activity.• It also covers employees employed by Czechcompanies.That means that all employees employed byCzech companies and all holders of CzechID cards/permanent residence permits haveto pay health insurance contributions. Selfemployedpersons are subject to the healthinsurance scheme if they hold a Czech ID card/permanent residence permit.Most secondees working for Czech companies(inbound/outbound) must pay Czech healthinsurance contributions unless otherwiseprovided by EU Regulation or under abilateral social security treaty. The rules onparticipation in the Czech health insurancescheme are complex and each secondee’ssituation should be reviewed individually.2. Covered persons by the SocialSecurity SchemeThe social security scheme provides coveragefor pension, unemployment and sickness.EmployeesSocial security (all three parts) is obligatory foremployees employed by Czech companies.Self-employed personsTwo parts of the social security scheme –pension and unemployment – are obligatoryfor self-employed persons doing business basedon a licence granted under Czech law (mainlyself-employed persons operating in the CzechRepublic).Special coverage rules apply to self-employedpersons with other income in addition to thatfrom the self-employment (e.g. employmentincome, retirement pension, etc.). Such casesneed to be reviewed individually.The sickness scheme is voluntary for the selfemployed.Most secondees working for Czech companies(inbound/outbound) must pay Czech socialsecurity unless otherwise provided by EUregulation or under a social security treaty.The rules on participation in the Czechsocial security scheme are complex and eachsecondee’s situation should be reviewedindividually.Social security systems around the globe 78

Czech RepublicContributionsThere is a maximum annual cap to theassessment base for calculating contributionsto the social security scheme (CZK 1,206,576in 2012) and the health insurance scheme(CZK 1,809,864 in 2012).The cap applies to both employees and the selfemployed.EmployeesCompulsory contributions are calculatedon gross pay, including most benefits andallowances.Income that is subject to income tax isgenerally subject to contributions to the socialsecurity and health insurance schemes.The rates (in 2012) are:• Employer social security 25%• Employee social security 6.5%• Employer health insurance 9%• Employee health insurance 4.5%Self-employed personsThe self-employed themselves determine theamount of the annual assessment base forpremium payments, but it may not be less than50% of taxable profit. This applies to bothhealth insurance and social security.Contributions are paid in the form of monthlyadvances/pre-payments, followed by anannual reconciliation, where the result canbe underpayment or overpayment on thecontributor’s annual health insurance/socialsecurity liability.In 2012, social security contributions were29.2% of the assessment base for pension andunemployment coverage. Health insurancecontributions amount to 13.5% of theassessment base.Sickness contributions by voluntaryparticipating self-employed persons amount to2.3% of the assessment base.Social security systems around the globe 79

Czech RepublicBenefits1. Benefits provided under SicknessInsuranceSickness benefit – this benefit is provided foreach day of the week from the 22nd calendarday of the claimant’s temporary incapacity forwork.During the first three weeks (21 days) oftemporary incapacity for work, an employerpays a compensation wage for working daysexcept for the first three days. Employeesare only entitled to compensation wages forthe period of the employment relationshipestablishing the employee’s participation in thesickness insurance scheme.These rules apply for the period from1 January 2012 to 31 December 2013.The support period (i.e. period of payment ofsickness benefit, plus the initial three-weekperiod (three-day grace period and 18 daysof compensation wages), lasts no longer than380 calendar days from the date of temporaryincapacity for work or quarantine order, unlessstated otherwise.The amount of sickness benefit per calendarday is 60% of the reduced daily basis ofassessment.Maternity benefit (MB) – Claimants musthave participated in the sickness insurancescheme for at least 270 calendar days over theprevious two years before going on maternityleave to be entitled.From the first calendar day, MB is 70% of thereduced daily assessment basis per calendarday.The support period for MB begins withthe start of maternity leave (no later thanthe beginning of the sixth week before theanticipated date of childbirth), and is 28 weeksfor women who bear one child. For twins ortriplets, the support period is 37 weeks but,after 28 weeks, MB is only granted if themother continues to take care of at least twoof the children. Claimants assuming care of achild (on the basis of a decision of the relevantauthority, due to the mother’s death or longtermserious disease, or on the basis of anagreement under the legislation), the supportperiod is 22 weeks. If the claimant takes careof two or more children at the same time, thesupport period is 31 weeks but, after 22 weeksof the support period, MB is only granted if theclaimant continues to take care of at least twoof the children.Attendance allowance – Attendanceallowance is granted to employees who cannotwork because they have to take care of an illchild below the age of 10, attend an ill memberof their household, take care of a healthy childbelow the age of 10 because the school orother child facility is closed (due to a technicaldefect, epidemic or other unforeseen event), orif their child has been ordered into quarantineor if the person who otherwise takes care ofthe child is ill.The support period for attendance allowance isno longer than 9 calendar days (or 16 calendardays in special cases).The amount of attendance allowance from thefirst calendar day is 60% of the reduced dailyassessment basis per calendar day.Compensatory pregnancy and maternitybenefit – this benefit is provided to femaleemployees transferred to a different job dueto pregnancy or maternity and, as a result,receiving a lower wage through no faultof their own. This also applies to femaleemployees who cannot carry on their currentwork because, according to medical opinion,to do so would pose a risk to their pregnancy,motherhood or breastfeeding. The benefit isprovided for the number of calendar days thatthe transfer to a different position lasts.Social security systems around the globe 80

Czech Republic2. Benefits provided under PensionInsuranceOld-age pension – Two conditions need to bemet to claim a Czech pension:a) minimum contribution period into the Statepension system; andb) achievement of ‘pensionable age’.There is no link to the amount of contributionspaid to the system to be entitled to a pension.‘Pensionable age’ has been extended underseveral pension reforms in the last few yearsand depends on the individual’s date of birth.Consequently, the necessary contributionperiod has been extended as well. Given thesechanges and the very turbulent development ofthe Czech State pension scheme, each person’ssituation needs to be reviewed separately.• invalidity pension;• widow’s and widower’s pension;• orphan’s pension;• health insurance – covers medical care.Social security systems around the globe 81

Czech RepublicCompetent authoritiesVoluntary socialsecurity schemeContributions are paid as appropriate to the Czech Social SecurityAdministration (http://www.cssz.cz/cz) and the relevant healthinsurance office. As a public agency, the CSSA falls under the CzechMinistry of Labour and Social Affairs and health insurance officesunder the CMU (Centrum mezistátních úhrad: http://www.cmu.cz/)and Ministry of Health.Voluntary participation in pension insurance coverage is possible undercertain conditions during periods when an individual is not covered bycompulsory insurance; it confers entitlement to a future Czech pension.As of 1 January 2012, the minimum insurance premium for voluntaryinsurance is CZK 1,760.Social security systems around the globe 82

Czech RepublicContactsTomas HunalSenior managerTel: +420 2 5115 2516tomas.hunal@cz.pwc.comPetra BobkovaManagerTel: +420 2 5115 2515petra.bobkova@cz.pwc.comJaroslava SpinarovaSenior consultantTel: +420 2 5115 2608jaroslava.spinarova@cz.pwc.comSocial security systems around the globe 83

Denmark General background Covered personsDanish social security is mainlybased on residence and financedthrough taxes. Social securitycontributions are therefore low.The Danish social security systemcovers all branches of traditionalsocial risks. The general schemeis compulsory for residentsand covers all benefits with theexception of unemployment andpre-retirement.Danish social security covers everyone whose residence is in Denmark.This includes:• employees;• self-employed persons;• civil servants;• non-active persons;• pensioners;• students;• refugees.As the system is based on residence, there are no special schemes forthe different types of contributors. Coverage is compulsory.Social security systems around the globe 84

DenmarkContributions1. EmployeesEmployees pay a DKK 90 monthly contributionbefore taxes. This contributes to a statutorysupplementary pension scheme.Non-statutory contributions to occupationalpension schemes and to voluntaryunemployment funds must also be taken intoconsideration.Many collective labour agreements governpensions and pension contributions. A largepart of the Danish labour market is governedby collective agreements.2. EmployersEmployers pay a DKK 180 monthlycontribution per employee. This contributes toa statutory labour market pension.Contributions have to be made to differentlabour market funds, and compulsory privateinsurance has to be taken out for accidents atwork and occupational diseases.The total contribution is approximatelyDKK 10,000 annually per employee.If an employee is entitled to paid absence dueto illness, this is to be covered by the Danishemployer for the first four weeks.It is common for employers and employees tocontribute to an occupational pension scheme.3. Self-employed personsSelf-employed persons can participate in thestatutory supplementary pension scheme on avoluntary basis. The contribution is DKK 270annually.Non-statutory contributions to occupationalpension schemes and to voluntaryunemployment funds must also be taken intoconsideration. Please see next pages for moredetails.Social security systems around the globe 85

DenmarkBenefits1. Health careThe mainstay of the health care system inDenmark is formed by a body of generalpractitioners. Individuals commonly have ageneral practitioner appointed. This is donewhen they register in Denmark. The appointedpractitioner is the first point of consultation.Doctors may refer patients for specialist orhospital treatment. This is altogether coveredby the national insurance scheme and istherefore free of charge.It is possible not to be appointed to a generalpractitioner. In that case, the individual canopt for any general practitioner and receivea standardised benefit to cover the fee. Thebenefit may not cover the entire fee, which thedoctor can set at his/her own free discretion.Dental care is also included in the scheme, butthe coverage is partial and involves patientcharges for visiting the dentist.2. Sickness benefitsWhen an employee or a self-employed personfalls ill, the Danish social security systemprovides for sickness cash benefit.The sickness benefit compensates the loss inearnings resulting from absence due to illness.It is paid to persons unable to work due toillness, on a weekly basis.During the first four weeks of an employee’sillness, the employer covers the expenses.Thereafter, the employee is entitled to a grantfrom the local municipality.Many Danish job positions covered by Danishemployment law include a right to paid sickleave. This right extends for more than fourweeks. After four weeks of sickness, theemployer is entitled to a reimbursement ofthe employee’s sick benefit from the localmunicipality.The level of benefit is calculated on the basis ofthe employee’s hourly salary had he not fallenill. However, it is capped. It is also limited to52 weeks within any 18-month period.Should an employee fall ill on a long-termbasis, the municipality will take action to helphim/her recuperate and will also monitor therehabilitation process.3. Accidents at work and occupationaldiseasesAccidents at work and occupational diseasecoverage are managed through compulsoryprivate insurance. Employers are obliged totake out insurance with an approved insuranceprovider covering their employees. Selfemployedpersons are covered if they take outinsurance themselves.The insurance covers physical injury dueto accidents or exposure sustained at work.It does not cover accidents sustained whiletravelling to or from work.In general, the insurance covers medicaltreatment, loss of earning capacity,compensation for permanent disability,temporary allowance for survivors in the eventof death and compensation for the loss of aprovider.The premium varies according to occupation.A typical insurance premium is approximatelyDKK 5,000 p.a. per employee.Social security systems around the globe 86

Denmark4. Unemployment benefitsUnemployment benefits are managed throughunemployment funds. In order to earn rightsto unemployment benefits, employees mustvoluntarily sign up to a fund.There are currently 27 recognisedunemployment funds in Denmark. These allrelate to different work sectors. To find outwhich unemployment fund to register with,the Danish Board of Industrial Injuries shouldbe contacted. It is also possible to enrol withan interdisciplinary unemployment fund.Self-employed persons may enrol with anunemployment fund for the self-employed.There is a one-year waiting period to receiveunemployment benefit. Foreign employees canuse insurance periods from other EU MemberStates to complete this period. In that case,they must enrol with the employment fundimmediately after Danish social security coverstarts.Should employees become unemployed, theinsurance fund will pay out a statutory grant.The grant is capped and limited in time.5. Family benefitsFamily benefits in Denmark mainly comprisechild benefit and child allowance.Child allowance is granted to orphans or if oneor both parents retire early.Child benefit is paid out to the mother andis a fixed, tax-exempt amount for each child.The amount varies in accordance with thechild’s age. Child allowances are also grantedif the parent is single or in other specialcircumstances.Child benefit is a tax-exempt benefit.It amounts to the following (2012):After the first 14 weeks following confinement,the parents have a right to parental leave,during which they have a shared right to cashbenefits. Sometimes the employer provides aperiod of salaried leave. If so, the employer isentitled to the statutory cash benefit.It is important that due notice is given to theemployer and the authorities in order to claimbenefits.Non-active persons and students can claim thecash benefit at a lower level.7. PensionChild’s ageYearly benefit (DKK)0-2 years 17,0643-6 years 13,5007-17 years 10,6326. Maternity and paternity benefitsA pregnant employee who is socially securedin Denmark has a right to maternity care,parental examinations and hospital admissionwhen giving birth.Maternity leave starts four weeks before theanticipated date of birth. After giving birth, themother has 14 weeks of maternity leave. Thefather has a right to two weeks’ paternity leavewithin the first 14 weeks after the birth of thechild.Statutory pensionThe public State pension is financed throughtax payments, and it becomes payable at theage of 65 or 67 (depending on the claimant’sdate of birth).The pension is based on the number ofyears during which the claimant built upentitlement. To receive the maximum amount(2012: DKK 68,556 a year), claimants musthave 40 years’ entitlement earnings betweenthe age of 15 and pensionable age. If they haveless, the pension is pro-rated.The statutory supplementary pension scheme(ATP) is based on contributions, which thendetermine the level of pension.Social security systems around the globe 87

DenmarkEmployer-provided pensionPrivate pension9. Pre-retirementIn Denmark, employees normally set up anoccupational pension scheme to supplementthe statutory pension. Such a scheme is oftenmandatory to an employment. Contributionsare made by employees and the employer. Thismay also be governed by a collective labouragreement.The pension plan is normally placed with aDanish pension institute, bank or similar.These pension schemes are administered bythe employer and owned by the employee.Employer contributions to pension schemes aretax-exempt, and the employee’s contributionswill be tax-deductible. When the pensionis withdrawn on retirement, the paymentsbecome taxable in Denmark.Pension schemes are generally definedcontribution schemes, yet defined benefitschemes are also available. There are twodifferent types of pension schemes to choosebetween: an annuity scheme, which willnormally be paid out over ten years from thetime of retirement, and a life annuity scheme,which will be paid out from pensionable ageand as long as the beneficiary lives.Annual contributions up to a maximum ofDKK 50,000 paid into an annuity schemecan be deducted/tax-exempt. Contributionsexceeding DKK 50,000 a year will thereforebe made to a life annuity scheme in order toobtain a deduction or be tax-exempt, and it isnormal to make contributions to both types ofscheme at the same time.Contributions to an annuity pension schemeestablished with a Danish pension fund, aninsurance company or a financial institutionare tax-deductible. As for the employerprovidedpension, it is possible to choosebetween an annuity scheme and a life annuityscheme.8. Early retirementAn early retirement pension may be grantedto employees who have suffered a permanentreduction in their capacity for work. Thisreduction must be such that it is unlikely thatthe claimant will be able to support him/herself. Early retirement pension recipientsmay not receive income in excess of definedlimits. If their income exceeds these limits,the pension will be reduced. The pension mayalso be affected by the earnings of a spouse/partner.A full early retirement pension is granted onthe basis of 40 years of insurance. Otherwise, apro-rata pension may be granted.Pre-retirement is possible from age 60 to age66 (depending on the claimant’s date of birth).The pre-retirement scheme has been subjectto reforms which will take effect by 2017. Thethreshold age will be raised to 66 gradually.In order to benefit, claimants must havecontributed to the scheme for 30 years.Contributions are made through anunemployment fund.10. Death grants/survivors’ benefitsSurvivor’s benefit is paid out to the deceased’sspouse or cohabitant and each child underthe age of 21. It is paid as a lump sum. Thegrant is DKK 50,000 (2012), but will reduceaccording to the age of the deceased. Thegrant is coordinated through the statutorysupplementary pension scheme (ATP).A death grant may be paid if the deceasedwas entitled to health insurance benefits. Theamount is capped at DKK 9,900 (2012).Survivor’s aid may be paid to the spouse asa lump sum. The grant is dependent on thesurvivor’s income and is capped at DKK 13,443.Social security systems around the globe 88

DenmarkCompetent authoritiesVoluntary socialsecurity scheme1. EmployeesCompulsory contributions are paid to ATP, which is the nationalauthority for the statutory supplementary pension. Employerswho have a registered business in Denmark have a withholdingobligation regarding employee contributions. The employee can makecontributions independently on the employer’s behalf.Company executives qualify as employees in Denmark.It is not possible to continue to make compulsory payments to theATP pension scheme while abroad. It is always advisable to contactthe relevant unemployment fund to enquire whether or not voluntarycoverage is allowed, and under what conditions.2. EmployersCompulsory contributions are paid to the ATP. Should the employernot have a registered business in Denmark, the employee can makecontributions on the employer’s behalf.Board members qualify as self-employed in Denmark.Social security systems around the globe 89

DenmarkContactsJonna SkovdalDirectorTel: +45 3945 3322jsv@pwc.dkAdam RewuchaSenior consultantTel: +45 3945 9410adr@pwc.dkSocial security systems around the globe 90

Finland General background Covered personsFinland has an extensive statutorysocial security system.Based on domestic law, Finnishsocial security is due forindividuals living and working inFinland.The Finnish social securityscheme intervenes in thefollowing events:• wage loss (e.g. unemployment,retirement, incapacity forwork) substitute income;• social burdens (e.g. children,survivors) incomesupplements;• no earned income basicincome.The Finnish statutory social security system is divided into twoschemes:• residence-based social security scheme: benefits for all residents,regardless of whether they work or not;• employment-related social security scheme: benefits for employees.Residence-based social security gives access to social security providedby the Social Insurance Institution, KELA. The right to benefits isdecided by reference to the length of residence in Finland. All who arecovered under the residence-based social security scheme of Finlandare issued a personal health insurance card, a KELA card, which alsogrants access to direct, on-the-spot reimbursement of medical costs.The employment-related social security scheme supplements residencebasedsocial security, as it consists of earnings-related unemploymentcoverage, employment pension, group-life and accident insurance.Social security systems around the globe 91

FinlandContributions1. EmployeesSocial security contributions are levied onuncapped gross salary. The employee’s shareof social security contributions amountsto approximately 7.79% (2012), includingcontributions to employment pension,unemployment, daily allowance insurancepremiums (approx. 6.57% in 2012), whichare deductible from tax, and health carecontributions (1.22%) (see also table on nextpage). The employer is liable to withhold theemployee’s part of the contributions from his/her salary on a monthly basis.2. EmployersThe employer’s share of social securitycontributions is approximately 22.8% (2012)in total (see also table). The social securitypremiums cover employment pension,accident, unemployment and group-lifeinsurances as well as the employer’s socialsecurity charge.3. Self-employedThe self-employed have to insure theirpersonal pension rights under the Self-Employed Persons’ Pensions Act. Selfemployedpersons are required to pay theself-employment pension insurance premium,which amounts to 22.5/23.85% (2012) and ispayable on so-called confirmed income. Undercertain conditions, company owners can alsobe regarded as self-employed in Finland.As entrepreneurs are not covered by thestatutory accident insurance system, theyare advised to take out a voluntary accidentinsurance policy. Furthermore, unlikeemployees, entrepreneurs do not have acontractual group-life insurance policy.Entrepreneurs are themselves responsible fortaking out voluntary life assurance coveragewith an insurance company. Entrepreneursmay also voluntarily join the Entrepreneurs’Unemployment Fund if they wish toprovide themselves with earnings-relatedunemployment benefits.Social security systems around the globe 92

FinlandSocial security rates 2012The contribution rates are set annually by theMinistry of Social Affairs and Health.Social security contributionsaccording to paid salaryEmployerSocial security charge 2.12% N/AEmployeePension insurance contribution 17.35% (on average) 5.15% /6.5% 1 (no cap)Unemployment insurance contribution 0.8% 2 / 3.2% 3 (no cap) 0.6% (no cap)Group life assurance premium 0.07% (on average, no cap) -Accident insurance premium 1% (on average, no cap) -Sickness insurance contribution - 2.04% 4 =Daily allowance contribution 0.82%+ Medicare contribution 1.22% 5Total: Approximately 22.8% 7.79% / 9.14%1 Used for employees aged 53 or over.2 If total annual salaries are under EUR 1,936,500.3 On salaries exceeding EUR 1,936,500.4 Already included in the withholding tax rate for the employee’s personal withholding tax card.5 The only non-tax-deductible employee contribution.Social security systems around the globe 93

FinlandBenefits1. Unemployment• Unemployment allowance (basic orearnings-related allowance) or• Labour market subsidy.Basic unemployment allowance and labourmarket subsidy are claimed from and paid byKELA. To qualify for the basic unemploymentallowance, claimants must meet a specificcondition regarding their employment history(i.e. they must have been employed for at leasteight months during the two years precedingunemployment). Basic unemploymentallowance is paid for a maximum of 500 days.If the condition is not met, claimants may beeligible for labour market subsidy. It is payableto unemployed job seekers who enter thelabour market for the first time or otherwisehave no recent work experience. It can also bepaid to long-term unemployed persons whohave exhausted their 500-day eligibility forthe basic or earnings-related unemploymentallowance.Ageing unemployed persons who satisfy thecondition regarding previous employmentare eligible for an extended unemploymentallowance and can avail themselves of a kindof unemployment path to retirement.Unemployed immigrants are paid labourmarket subsidy in the form of integrationassistance for the first three years of theirresidence in Finland.Earnings-related unemployment allowanceis claimed from the unemployment fund.It is only available to the members of anunemployment fund and can be paid for up to500 days.2. PensionsPensions provide economic security in oldage, disability and late-career unemployment.Finland has two statutory pension schemes,which complement each other:• earnings-related pensions; and• national pensions supplemented byguarantee pensions.Earnings-related pension rights are accruedthrough employment and self-employment.The earned income and the accrual rate have adecisive effect on the earnings-related pension.Old-age pensions can be granted at the age of63-68. If the start of the pension is put back,claimants receive a larger pension becausethe pension accrual is based on their averageworking life earnings and the duration of theirworking life. At the earliest, old-age pensioncan begin at age 62, in which case the pensionis referred to as early old-age pension.It is incumbent on employers to insure allemployees between the ages of 18 and 68whose earnings exceed EUR 54.08 a month(2012). An exception is made for foreignemployees posted to Finland for a short time byforeign non-EEA employers.Private sector employers arrange employmentpension coverage for their employees froma pension provider of their own choosing.Pension coverage can be arranged througha pension insurance company, pension fundor industry-wide pension fund. How theemployment pension coverage is arrangeddoes not have an impact on the statutoryemployment pension accrual.National pensions and guarantee pensionsoffer a basic income for persons who areentitled only to a very small earnings-relatedpension or to none at all. To qualify for anational pension, any other pensions orbenefits received may not exceed a certainlimit. Following introduction of the guaranteepension, the minimum pension payable topersons living in Finland has been aboutEUR 714 a month. National pensions andguarantee pensions are awarded and paid outby KELA.Disability pensions can be granted to personswho become disabled between ages 16 and64. Unemployment pension is for long-termunemployed born before 1950.Social security systems around the globe 94

Finland3. Family benefitsWhen a child is born and growing up, theparents are entitled to various family benefitsfrom KELA, as well as to family leave based onthe Employment Contracts Act.• Maternity grant, which is either a maternitypackage or a cash benefit of EUR 140• Maternity allowance and special maternityallowance (until the child is about 3 monthsold)• Paternity allowance (after the child is born)• Parental allowance for the mother or father(when the baby is about 3 to 9 months old)• Daddy month (when the child is about 8.5to 15 months old)• Child benefit (paid monthly from birth untilthe child is 17 years of age)• Child home care allowance for a childunder 3 years of age who is not in municipalday care• Private day care allowance for a child underschool age and not in municipal day care• Child maintenance allowance for a childunder 18 years of age (in divorce cases, ifnot paid by the parent liable to pay)• Various benefits when children fall ill• Adoption grant for international adoptions• Conscript’s allowance for persons inmilitary or non-military service and fortheir families. Those participating inreservist training and women in voluntarymilitary service are also treated asconscripts.To receive parental allowances and otherbenefits for families, the parents mustbe covered by the Finnish social securitysystem. Additionally, the parents musthave lived in Finland for at least 180 daysimmediately before the expected confinement.The insurance period can also includeinsurance periods from another EEA country,Switzerland or Israel.4. Student financial aidStudent financial aid is available from KELAfor post-comprehensive school education. Theamount of financial aid available depends onage, type of accommodation, type of school,income and possibly also the parents’ orspouse’s income5. SicknessKELA provides reimbursements for the costof medical treatment and pays sicknessallowances on account of loss of earnings.No reimbursements are available for medicalservices obtained from public-sector providers.The cost of treatment by a doctor or dentistin private practice is reimbursed according to aschedule of fees. Reimbursements are availablefor prescription medicines. The reimbursementis normally deducted from the price of themedicine right at the pharmacy (a KELA cardor equivalent proof of entitlement to Finnishsocial security must be presented).Sickness allowance is intended to compensatefor loss of earnings during a period ofincapacity for work. There is normally a tendaywaiting period before sickness allowance ispaid. If a person is paid a wage or salary whileon sick leave, sickness allowance is paid to theemployer. Partial sickness allowance can bepaid if the claimant returns to work on a parttimebasis after sick leave of several months.Disability pension can be claimed fromthe KELA where the claimant has beenincapacitated for over a year.Rehabilitation may be sponsored in the caseof an illness or injury that threatens capacity towork or makes it more difficult to work and tofunction in everyday life.Occupational health services are availableto all employees. Besides occupational healthservices, employers may also provide theiremployees with access to medical services.Self-employed persons and entrepreneurs mayalso wish to arrange for access to occupationalhealth and GP-level medical services forthemselves. Part of the cost of such services isreimbursed by the KELA.Special care allowance from the KELA is paidto compensate for the loss of earnings causedby having to take leave of absence from work inorder to look after a child or to attend to his orher treatment in hospital or some other place oftreatment.Social security systems around the globe 95

Finland6. Disability benefits andrehabilitationDisability benefits strengthen the autonomyand quality of life of persons with disabilitiesor long-term illnesses.• Children under 16 can be paid disabilityallowance if they have an illness orinjury that creates a need for care andrehabilitation that lasts at least six monthsand imposes particular strain and requiresa greater commitment than the care of nondisabledchildren of the same age.• Disabled or chronically ill persons aged16 years or over can be paid disabilityallowance if their ability to functionremains diminished for at least a year andtheir illness or injury causes impairment, aneed for assistance or additional expenses.• Disabled or chronically ill pensioners canbe paid care allowance for pensioners iftheir ability to function remains diminishedfor at least a year and their illness or injurycauses impairment, a need for assistance oradditional expenses on a weekly basis.The KELA both funds rehabilitation servicesand provides income security (rehabilitationallowance) whilst claimants are inrehabilitation. Most rehabilitation servicesavailable from the KELA are provided free ofcharge. They include vocational rehabilitation,medical rehabilitation and discretionaryrehabilitation.7. Housing benefitsGeneral housing allowance is intended forlow-income households. It is available for bothrented and owner-occupied homes.Pensioners living alone or with a spouse can bepaid housing allowance for pensioners.Housing supplement can be paid to studentswith no children and living in a rented, rightof-occupancyor partial-ownership home.Housing assistance for conscripts may be paidto persons performing national service.8. Survivors’ benefitsThe KELA provides survivors’ pensionsfollowing the death of a close family member.Finland has two statutory survivors’ pensionschemes, which complement each other: ascheme administered by the KELA and anearnings-related scheme, which providesbenefits linked to the employment/selfemploymentpension accrued by the deceased.The survivors’ pensions available from theKELA are payable as spouses’ pensions andorphans’ pensions.Survivors’ pensions can be paid from bothsystems at the same time. Widows andwidowers are eligible for a pension followingthe death of their spouse, while children under18 can be paid a pension following the death oftheir mother, father or other legal guardian.Widows/widowers and children may also beeligible for a survivor’s pension on the basis ofan employment accident, motor, patient injuryor military injury plan. If such pensions offeradequate economic security, the KELA willnot pay any additional amount on top of thesurvivor’s pension.Surviving spouses and children may also beentitled to lump-sum compensation from agroup life assurance policy if the deceased wasemployed on death.Social security systems around the globe 96

FinlandCompetent authoritiesVoluntary socialsecurity scheme1. Residence-based social security systemResidence-based social security coverage is provided by the SocialInsurance Institution, KELA.Residence-based social security contributions are paid to the taxauthorities and then allocated between the State, municipalities andKELA.Employer-provided voluntary social security schemes likesupplementary company pension plans are not customary in Finland.As a rare exception, it may be possible for expatriates to sign up to avoluntary pension insurance scheme given that certain conditions/criteria are met.2. Employment-related social security systemPrivate insurance companies and the Finnish Centre for Pensions (ETK)deal with employment-based social security matters in the privatesector. The corresponding authority for public sector matters is KEVA.Employment-based contributions are withheld by the employer fromemployees’ salary and remitted to the relevant insurance companytogether with their own shares of statutory social security premiums.Social security systems around the globe 97

FinlandContactsRisto LöfPartnerTel: +358 50 358 2704risto.lof@fi.pwc.comSanna VäänänenDirectorTel: +358 50 351 0687sanna.vaananen@fi.pwc.comSocial security systems around the globe 98

France General background Covered personsFrance has an extensive statutorysocial security system based onsolidarity.The French social security schememainly intervenes in three events:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social burdens (e.g. children,sickness): reimbursement and/or income supplements;• no earned income (outsidethe claimant’s control):subsistence allowances.The French statutory social security system is divided into five schemes:• scheme for salaried persons (individuals who are linked to theiremployer by an employment contract);• scheme for self-employed persons (individuals who work outside thescope of an employment contract/office and outside the agriculturalsector);• scheme for self-employed farmers and employees in the agriculturalsector;• scheme for civil servants (individuals who are subject to the statusof public servants) – not gone into in this country profile;• scheme for employees working in semi-public industries (e.g. Frenchrailways or French electricity and gas companies) – not gone into inthis country profile.Social security systems around the globe 99

FranceContributions1. Salaried personsSocial security contributions are due by bothemployees and by employers. Employeecontributions are deducted from gross pay,whilst employer contributions are paid ontop of that gross pay. Contributions are dueon total or part of gross salary (in cash orkind), excluding reimbursements of businessexpenses.The French social security contributionssystem is complicated. There are differentrates of contributions according to the riskscovered. Some contributions are calculated ontotal gross salary. Some are calculated on grosssalary limited to one time the annual socialsecurity ceiling (i.e. EUR 36,372 for 2012), orto four times that ceiling (i.e. EUR 145,488for 2012). Contributions to the supplementarypension fund for executive staff (AGIRC) arecalculated on the basis of gross salary betweenthe social security ceiling and eight times thatceiling (i.e. EUR 290,976 for 2012).Furthermore, some rates of contributions forsupplementary pension funds for employeesand executive staff may be higher in somecompanies than the statutory ones.Besides the different rates of contributionsaccording to risk covered, special taxes arealso assessed on salaries – ‘taxes para-fiscales’(vocational training, apprenticeship andconstruction).On average, French employee contributionsrepresent 18-23% of gross and employercontributions 40-45%. However, althoughcertain contributions are paid on full salaryand benefits, the higher the pay, the lower therate of contributions, due to applicable ceilings(salary brackets).Employers established in France which arenot subject to VAT on turnover (especiallyinsurance companies and banks) pay a specialtax (salary tax or ‘taxe sur les salaires’). Salarytax is calculated according to a progressivescale. The current French administration isexpected to increase the salary tax base for2013 and introduce a new rate of 20% onannual gross salary above EUR 150,000.Several contribution abatement schemes are inplace. They are structural or apply to certaintarget groups (low levels of salary).2. Self-employed personsThe system of contributions for the selfemployedis very complex since rates dependon the nature of the self-employment(agriculture, crafts, commerce, manufacturing,various liberal professions), the risks coveredand on applicable social security ceilings.Some contributions are capped; others apply toall earned income or a part of income.Social security contributions for self-employedpersons are calculated on the basis ofearned income (i.e. as determined by the taxadministration, except for some items, whichare exempted from individual income tax butsubject to social security contributions).The current French administration is expectedto increase the level of contributions for theself-employed.Social security systems around the globe 100

FranceBenefits(for salaried persons)1. Health careHealth care covers both preventive andcurative care required for maintaining andrestoring health (e.g. physician and outpatientcare, in-patient care, dental care). Allmedical dispensations that can be (partly orcompletely) reimbursed are listed in a so-callednomenclature of medical dispensations.A number of conditions/criteria have to be metin order to access health care (e.g. registrationwith a health insurance fund and paymentof a minimum amount of contributions or aminimum insurance period).The refund by the health insurance fund ofthe cost of medical treatment varies withthe nature of the treatment, the status ofthe insured and the care provider’s capacity.In most cases, the amount is not refundedentirely. As a result, it is common for employersto contribute to private medical insurance fortheir employees (to top up the basic healthscheme).Non-working spouses and children under 20may benefit from health care as dependants.2. Sickness benefitsIn addition to health care, the sick are alsoentitled to benefits covering loss of incomeup to a certain amount. Private insurance canensure that the level of income is maintained.Temporary disabilitySalaried persons entitled to sickness benefitsmust satisfy certain conditions (e.g. minimumcoverage for a period of three, six or 12 monthsand payment of sufficient social securitycontributions).In cases of short-term illness, claimants receiveguaranteed salary paid by the employer forthe first three days of absence but, as from thefourth day, they receive a maximum 360 dailybenefit payments over a three-year period.In cases of long-term illness, claimants receivethe daily benefits for a maximum period ofthree years for each illness.In both cases, the indemnity is based on apercentage of salary, capped at EUR 42.18 aday (figure on 1 July 2012 for incapacity forwork as of 1 January 2012). The amount isincreased according to the claimant’s familysituation (as from three dependent children).Permanent disability (invalidity pension)Salaried persons have to satisfy certainconditions to be entitled to invaliditypension (e.g. must have paid contributions orcompleted a certain number of hours of paidwork prior to the date they stop working orprior to recognition of their disability status).Persons under the statutory retirement age (60to 62, depending on year of birth) are regardedas disabled if they suffer from a conditionthat prevents them from doing gainful workearning a wage equal to at least a third of thewage normally paid for the job in which theywere employed before stopping work or priorto recognition of their disability status.There are three categories of pension,depending on the degree of inability to work:• the first applies to those still able toperform some form of gainful activity: themaximum annual amount is 30% of thesocial security ceiling (i.e. EUR 10,911.60for 2012);• the second applies to those unable toperform any form of gainful activity: themaximum annual amount is 50% of thesocial security ceiling (i.e. EUR 18,186 for2012);Social security systems around the globe 101

France• the third category are disabled persons whobelong to the second category but who needconstant attendance by another person toperform day-to-day activities: the amountof the pension is increased by 40% andcannot be lower than an annual minimumamount fixed by government order (i.e.currently EUR 12,722.03).For recipients who do not work, the disabilitypension is automatically converted into anold-age pension at the statutory retirementage (between 60 and 62). Those that do workmust apply for a retirement pension. Disabilitypension payments stop automatically oncethe recipient reaches the age at which a fullpension is payable, regardless of the totalperiod of insurance (between 65 and 67), orbefore then if the recipient stops working.3. Accidents at workAll salaried persons are covered againstaccidents at work and accidents on the wayto and from work. An accident at work isan accident occurring during and due toperformance of an employment contract andcausing injury. Accidents on the way fromand to work are accidents which occur on thenormal route the claimant has to use to movefrom the threshold of his/her residence to his/her work and vice versa.A victim of an accident at work is in principleentitled to reimbursement of the costs forphysician and outpatient care and in-patientcare at a rate of 100%.During the period of incapacity for workcaused by an accident at work, the victim isentitled to indemnities for loss of income:• Period of temporary incapacity for work: adaily allowance based on a percentage ofsalary. For the first 28 days, the maximumdaily payment is EUR 182 (2012 amount).As from the 29th day, payments increaseto 80% of the claimant’s daily wage(maximum EUR 242.67, 2012 amount).Daily benefit may not exceed the claimant’snet daily wage prior to the injury.• Period of permanent incapacity for work(starts at the time of consolidation):disability pension, depending on salary anddegree of incapacity for work.4. Occupational diseasesThere is a list with diseases acknowledged asoccupational diseases.If the disease is on the list and victims workin a sector in which they have been exposedfor a minimum period to a risk that can causethe disease, it will be acknowledged as anoccupational disease. The burden of proof doesnot lie with the victims: there is an irrefutableassumption in their favour.For non-listed occupational diseases, thevictim has to prove exposure to a risk and thecausal link between the exposure and thedisease. The degree of incapacity for work hasto be at least 25%.Victims of occupational diseases are inprinciple entitled to reimbursement of therelated costs for physician and outpatient careand in-patient care at a rate of 100%.During the period of incapacity for workcaused by an occupational disease, the victimis entitled to indemnities:• Period of temporary incapacity for work:daily allowance based on a percentage ofsalary. For the first 28 days, the maximumdaily payment is EUR 182 (2012 amount).As from the 29th day, payments increaseto 80% of the claimant’s daily wage(maximum EUR 242.67, 2012 amount). Theamount of daily benefit may not exceed theclaimant’s net daily wage prior to onset ofthe illness.• Period of permanent incapacity for work(starts at the time of consolidation):disability pension, depending on salary anddegree of incapacity for work.5. Family benefitsFamily benefits are granted for legitimate,illegitimate, adopted and foster children oncondition that they are dependants of thebeneficiary.The age limit for benefits is 20 years. However,a flat-rate allowance is paid to offset thefinancial loss incurred by families with three ormore children when the eldest child turns 20.Social security systems around the globe 102

FranceFamily benefits include:• basic benefits for maintenance (childbenefit, flat-rate allowance, means-testedfamily income supplement);• early childhood benefits (means-testedbirth/adoption allowance, means-testedmonthly allowance, a supplement for freechoice of working time and a supplementfor free choice of childcare);• benefits for special purposes (educationallowance for a disabled child, meanstestedback-to-school allowance, dailyparental attendance allowance for lookingafter a child suffering from a severedisease or handicap, means-tested familyhousing allowance, means-tested movingallowance).The ordinary family benefits (so-called ‘childbenefits’) are paid to families with two or moredependent children living in France. They arenot means-tested. The monthly amounts as at 1April 2012 are:• Two children EUR 127.05• Three children EUR 289.82• Four children EUR 452.59• Each additional child EUR 162.78The rates increase for each child, exceptthe eldest in families with fewer than threechildren. The increase depends on the age anddates of birth of the children:• for children born before 1 May 1997:additional monthly payment of EUR 35.74 ifaged between 11 and 16 and an additionalmonthly payment of EUR 63.84 for thoseaged 16 and over;• for children born on or after 1 May 1997:additional monthly payment of EUR 63.53if aged 14 or over.6. Maternity and paternity benefitsMothers are required to take a minimum ofeight weeks’ maternity leave, but are entitledto a total of 16 weeks’ leave (usually six weeksprior to the expected date of delivery and tenweeks afterwards). Two additional weeksprior to confinement may be awarded forpregnancies with medical complications. Witha doctor’s recommendation, expectant mothersmay also take part of their prenatal leave aftergiving birth.For a third child, leave is extended to 26 weeks(eight pre-natal and 18 post-natal). Mothersexpecting twins or triplets (or more) areentitled to 12 weeks’ and 24 weeks’ pre-natalleave, respectively, and 22 weeks of postnatalbenefits. In cases of premature birth(more than six weeks before the expecteddate of delivery) the maternity leave period isincreased by the number of days between thedate of delivery and the date six weeks beforethe expected date of birth.During maternity leave, salaried womenare entitled to a daily benefit paymentcorresponding to 100% of their average dailywage in the three-month period precedingtheir pre-natal leave up to the social securityceiling, after deduction of the employee’s shareof statutory contributions and taxes. Witheffect from 1 January 2012, the daily paymentcannot be lower than EUR 8.90 and cannotexceed EUR 80.04.Fathers are also entitled to paternity leave of11 consecutive days, or 18 consecutive days inthe case of a multiple birth, to be taken duringthe four months following the birth. Paternitybenefits are calculated in the same way asmaternity benefits.Social security systems around the globe 103

France7. UnemploymentThe amount and duration of benefit paymentsdepend on the period for which the claimanthas contributed to the scheme and the totalcontributions paid.To qualify, claimants must meet the followingmain conditions:• lost their job further to termination bythe employer, the end of a fixed-termemployment contract, termination bymutual agreement or resignation for a validreason (restrictive conditions);• registered with the unemployment schemefor a minimum period (at least 122 days or610 working hours in the last 28 months, orin the last 36 months for job seekers aged50 and over) before becoming unemployed;On top of a ‘paid holidays notice period-waitingperiod’, a maximum 75-day waiting periodapplies in the case of non-statutory separation/termination pay, as well as a seven-daydeferred compensation payment.The duration of benefit payments depends onthe period for which job seekers have beenregistered with the scheme and their age.Benefits are paid for a minimum of 122 daysand a maximum of 730 days (24 months) foremployees aged under 50, and 1,095 days (36months) for employees aged over 50. Undercertain conditions, individuals aged over 50are entitled to benefits beyond 1,095 days untilthey become entitled to a full basic retirementpension.8. Basic retirement pensionHowever, pensions may be claimed later ifdesired. Individuals who continue to work afterthe statutory retirement age and who have paidcontributions for longer than the qualifyingperiod for a full pension (depending on theyear of birth) can be granted a higher pension.It is also possible to take early retirement undercertain restrictive conditions.The age of automatic entitlement to a fullpension regardless of the period of insurance isbetween 65 and 67.The amount of pension depends on annualaverage earnings (capped at a certain amount),the applicable rate (maximum 50%) and theinsurance periods.Retirement pension may be combined withwork under some conditions.• below the statutory retirement age (or thequalifying age for a full pension).The French scheme provides for twocompulsory retirement systems for employees:• basic retirement: social security retirement;• supplementary pension scheme foremployees (ARRCO) and for executive staff(AGIRC).The daily unemployment allowance iscalculated partly on the basis of a dailyreference wage. The reference wage is basedon earnings subject to contributions duringthe 12 calendar months prior to the last day ofpaid work, up to a limit of four times the socialsecurity ceiling (EUR 145.488 for 2012).The amount of the daily allowance is either:• 40.4% of the daily reference wage plus afixed amount of EUR 11.57; or• 57.4% of the daily reference wage if this ismore advantageous.Basic retirement pension – the statutory basicretirement pension age is 62 for persons bornafter 1 January 1955 and 60 for those bornbefore 1 July 1951, increasing by four months ayear for persons born between 1 July 1951 and31 December 1951, and five months a year forthose born subsequently.Social security systems around the globe 104

France9. Supplementary pension schemesSupplementary pension scheme for employees(ARRCO) and executive staff (AGIRC) –the statutory age to claim these forms ofretirement pension is between 65 and 67depending on date of birth. However, it ispossible to claim early retirement pension as ofage 55 or 57 (depending on the claimant’s dateof birth). In this case, a reduction coefficientis applied. If claimants qualify for a fullratepension under the basic scheme, theirsupplementary pensions are payable withoutany reduction coefficient being applied, exceptfor AGIRC retirement pensions correspondingto points acquired on bracket C of their salaries(i.e. the portion of gross annual salary rangingfrom social security ceiling 4 (i.e. EUR 145,488for 2012) to social security ceiling 8 (i.e. EUR290,976).The calculation of supplementary retirementpensions is points-based. Each year, theamount of contributions paid on the basisof a reference salary or income is convertedinto points, taking into account the unitpurchase value of the point for the relevanttax year. The pension paid to the employeewill be contingent upon the number of pointsaccrued during the employee’s total period ofinsurance and the age at which he/she retires.To calculate the pension, the number of pointsaccrued during the total period of insurance ismultiplied by the value of the point at the timethe pension is calculated.Supplementary retirement pensions may becombined with work under some conditions.10. DeathThe death grant is paid to the relatives of adeceased salaried person. Priority is givento those persons who, at the time of death,were effective, total, permanent dependantsof the insured. If the deceased has severaldependants, a priority ranking applies (forpayments to dependants).The death grant is 91.25 times the insured’sdaily earnings up to 25 % of the social securityceiling (EUR 9,093 for 2012), and not lowerthan 1% of the annual social security ceiling,i.e. EUR 363.72 for 2012.Social security systems around the globe 105

FranceCompetent authoritiesVoluntary socialsecurity scheme1. Salaried personsContributions paid by employers and employees are collected by theURSSAF social security agency.2. Self-employed personsSelf-employed persons join and pay social contributions to a socialinsurance fund for the self-employed overseen by the National Fundfor the Self-employed Social Scheme (RSI) or, for farmers, a socialinsurance fund overseen by the National Fund for the AgricultureSystem (MSA).It is not possible for salaried and self-employed persons working inFrance to be subject to the French statutory social security scheme on avoluntary basis.For all salaried persons who are citizens of a Member State of the EEAor Switzerland who work outside France, it is nevertheless possibleunder certain conditions to sign up on a voluntary basis for all or partof the risks covered in France with the French Overseas Social SecurityFund (CFE), the French Overseas Supplementary Retirement Funds(CRE-IRCAFEX) or the French Overseas Unemployment Fund (PôleEmploi – Service expatriés).The French Overseas Social Security Fund (CFE) provides the followingcoverage:• basic retirement pension (social security scheme);• illness, maternity, disability;• accidents at work.The CFE, CRE-IRCAFEX and Pôle Emploi schemes can be joined on anindividual basis or via the insured’s employer.Social security systems around the globe 106

FranceContactsLaure Poindessault-BernardDirectorTel: +33 1 56 57 46 07laure.poindessault-bernard@fr.landwellglobal.comAnnie ZuterekOf CounselTel: +33 1 56 57 42 56annie.zuterek@fr.landwellglobal.comSocial security systems around the globe 107

Gabon General background Covered personsThe social security scheme inGabon covers the following fields:• family and maternity benefits;• occupational accidents anddiseases, occupational risks;• pensions for retirement,disability and death;• health allowances in cases ofmedical evacuation abroad;• any other field related tosocial security that mightsubsequently be created bylaw.The Gabonese statutory social security system is divided into twoschemes:• scheme for employees: National Social Security Fund (CNSS),benefiting salaried employees as defined by the Gabonese LabourCode, without distinction as to sex or nationality;• scheme for officials and people on low income: National HealthInsurance and Social Guarantee Fund (CNAMGS), which benefitsofficials, independent workers and students not covered as entitledbeneficiaries.Social security systems around the globe 108

GabonContributions1. CNSS system (for employees)Social security contributions due to theNational Social Security Fund (CNSS) arewithheld by the employer on a capped salaryof XAF 1,500,000 a month or XAF 18,000,000a year.The basis subject to social securitycontributions is made up of the wholeremuneration paid to employees, includingbasic wage, compensations, gratifications,bonuses, cash benefits and all benefits inkind evaluated according to the provisionsof the Gabonese Tax Code, after deduction ofreimbursements of expenses.The applicable rate for calculating socialsecurity contributions is 22.6% including theemployee’s share of 2.5% and the employer’sshares of 20.1%, detailed as follows:Fields Employee EmployerFamily allowances 8%Industrial accidents 3%Pensions 2.5% 5%Medical evacuationfund0.6%Medication distribution 2%Hospitalisation 1.5%Sub-total 2.5% 20.1%TOTAL 22.6%2. CNAMGS system (for officials andpeople on low income)Social security contributions due to theCNAMGS are fixed as follows:• 4.1% due by the State as employer;• 2.5% due by officials in office;• 1.5% due by retired officials.Contributions are calculated on a maximumbasis of XAF 6,000,000 a month, made up ofbasic salaries, bonuses, allowances, grants andpensions, without the reduction of the basisused for calculating personal income tax andunder exclusion of family benefits.Social security systems around the globe 109

GabonBenefitsFor CNSS insured1. Family allowancesFamily allowances include several allowancessuch as prenatal allowances for pregnantemployees or employees’ wives, birthpremiums, maternity allowances and childbenefits.2. Maternity benefitsPregnant women are entitled to maternityleave of 14 weeks (which can be increased bythree weeks in cases of illness and two weeksin cases of multiple births) and an allowanceduring that leave.Two periods can be distinguished:• the prenatal rest period: six weeks beforethe presumed date of confinement;• the postnatal rest period: eight weeks afterconfinement (can be supplemented with thefive remaining weeks of the prenatal restperiod).During maternity leave, salaried women areentitled to free medical care and full pay.These benefits are borne by the CNSS, which isliable for paying a daily allowance.3. Occupational hazardsThere is a list of diseases known asoccupational hazards.If the claimant’s disease is listed or the victimworks in a sector in which he/she is exposedto a risk that may cause that disease, it willbe deemed an occupational disease. Thispresumption can be rebutted by the NationalSocial Security Fund or the employer.For non-listed occupational diseases, thevictim has to prove exposure to a risk and thecausal link between the exposure and thedisease.Victims are entitled to:• health care;• daily allowances;• survivors’ pensions;• permanent incapacity pensions;• medical checks;• medical equipment;• rehabilitation, functional re-education.In cases of temporary incapacity, a dailyallowance is paid to the employee.An annuity is awarded to victims of accidentsat work resulting in 15% permanent disability.In the case of work accidents or occupationaldiseases resulting in death, a survivor’spension is due to the victim’s entitledbeneficiaries.4. PensionsThe following pensions and allowances areincluded in the field of pensions:Retirement pensionThis is paid to insured who have worked in theprivate sector as employees or self-employedpersons, have reached retirement age andceased all occupational activity.Old-age pensions correspond to 35% of theclaimant’s average monthly remuneration andare paid quarterly.Old-age allowanceThis is granted to employees who have reachedage 55 and have ceased occupational activitybut do not fulfil the other conditions to beentitled to an old-age pension.It is awarded in the form of a one-off payment.Old-age allowance corresponds to 50% ofthe beneficiary’s average wage times by thenumber of half-years of contributions.Social security systems around the globe 110

GabonDisability pension5. Sanitary evacuation abroad6. HospitalisationThis pension is granted monthly to insuredemployees who have worked in the privatesector and have been recognised as invalid bythe medical commission of the CNSS, providedthat the disability is not work-related.Disability pension corresponds to 60% of thequarterly pension.Survivor’s pensionThis is payable to spouses and orphans ofinsured employees who died at work and areentitled to a disability or old-age pension at thetime of death. It is equal to the pension thatthe insured would have been entitled to, asfollows:• 50% for the invalid widow or widower. Ifthere are several widows, the amount isdivided between them in equal shares, thedistribution being final even if one of themshould subsequently die or remarry;• 20% for each orphan who has lost his/herfather or mother;• 35% for each orphan who has lost his/her father and mother or orphans whosemother does not receive a survivor’spension.The total amount of survivors’ pensions maynot exceed 85% of the initial pension to whichthe insured was or would have been entitled.If the total exceeds this percentage, thesurvivors’ pensions are reduced proportionally.The minimum amount of the monthly pensionis XAF 35,200.Sanitary evacuation (EVASAN) is a benefitgranted to CNSS insured employees and theirrightful claimants and involves payment of theexpenses occasioned by a medical evacuationabroad.For this purpose, a special autonomous fundhas been instituted within the CNSS. It isfunded by employers, at a rate set at 0.6% ofthe salaries reported up to the cap fixed by theapplicable legislation, with the patient payingpart of his/her transportation and hospitalcosts and drug charges (‘moderating ticket’ orpatient charge).The patient charge varies depending on thelevel of the patient’s salary.The Fund pays the following expenses:• the transportation costs of the employeeand any accompanying doctor;• pre- or post-hospital accommodationneeded for medical care in the hostcountry;• medical, surgical or pharmaceuticalcharges in connection with the sanitaryevacuation;• the expenses of sending the accompanyingdoctor;• management fees (allowances paid to staffof the general manager of the NationalSocial Security Fund involved in managingthe Fund, the fees of the outside auditor,fuel allowances for members of the medicalcouncil, fees of commissioners and otherstaff).Employees and their rightful claimants benefitfrom payment of their hospital costs.The costs of hospitalisation in authorisedhealth care centres are covered, totally orpartially, by the Ministry of Economy or theCNSS.7. Distribution of medicinesA list of medications is distributed by the CNSS,which is circulated among all practitioners inGabon.Medicines are dispensed on prescriptionand on presentation of the patient’s socialinsurance card or pension entitlement.Companies that employ 200 workers or moreand have a clinic headed up by a doctor orgraduate nurse may receive some medicationsfrom the CNSS provided that they are in orderwith their social security contributions.Social security systems around the globe 111

GabonCompetent authoritiesVoluntary socialsecurity scheme1. CNSSThe social security contributions due by the employees are withheldfrom their salaries.Employers are liable for paying the overall amount of contributions (i.e.the employee and employer shares) to the National Social Security Fund(CNSS).2. CNAMGSContributions due by officials and people on low income are collectedby the relevant departments at the Ministry of Economy.It is possible to remain subject to the Gabonese statutory social securityscheme on a voluntary basis.Those affiliated to the social security scheme for six consecutivemonths and who cease to fulfil the conditions to continue in thescheme can voluntarily remain affiliated to the pension fund, subject tocomplying with certain conditions.Voluntary CNSS coverage is possible for self-employed workers, whoare those not under the legal subordination of another person asregards their work schedule or their salary.Applicants must complete a CNSS insurance form and fix a salary toserve as the basis for calculating their contributions and benefits.Voluntary insured are liable for payment of their pension contributionsat a rate of 7.5%.Social security systems around the globe 112

GabonContactsChristophe RelongouePartnerTel: +241 01 74 5911christophe.relongoue@ga.pwc.comLaurent PommeraPartnerTel: +241 01 76 2371laurent.pommera@ga.pwc.comInès VazManagerTel: +241 01 76 2371ines.vaz@ga.pwc.comSocial security systems around the globe 113

GermanyGermanyGeneral backgroundCovered personsGermany has an extensivestatutory social security systembased on solidarity.The German social securityscheme comes into play in threescenarios:• wage loss (e.g. unemployment,retirement, incapacity forwork, care-dependence):replacement income;• payments for dependents (e.g.children, survivors): incomesupplements;• no professional income(outside the claimant’scontrol): basic income.The German statutory social security system covers:• those subject to compulsory social insurance: employees, theunemployed plus students, among others;• direct payers, for example the self-employed.Social security systems around the globe 114

GermanyContributions1. Compulsory insured (by virtue ofemployment)Contributions are paid by employees andemployers. The amount differs for eachsector of the social security system. Ratesare based on the employee’s salary. They aremostly fixed by legislation or, in just one case,(accident insurance) by self-governing funds.Contributions are all capped at particularceilings.Health careThe total contribution rate is about 15.5%, ofwhich 7.3% is paid by the employer and 8.2%by the employee. The maximum contributionbasis is EUR 45,900 (2012).If the yearly income exceeds EUR 50,850(2012), German statutory health insurance isno longer obligatory.Long-term careThe total contribution rate is about 1.95%,paid in equal shares by employee and employer(0.975%). Employees with no children have topay an additional charge of about 0.25%. Themaximum contribution basis is the same as forhealth care.Old ageThe total contribution is about 19.6%. Bothemployee and employer have to pay 9.8% ofthe gross income figure, up to EUR 67,200 perannum (2012).UnemploymentEmployee and employer both pay contributionsof 1.5%. The total is therefore 3.0%. Theannual ceiling is about EUR 67,200 (2012).Accident insuranceStatutory occupational accident insuranceis financed exclusively by employercontributions. The amount is determinedon the pay-as-you-go principle and variesaccording to accident risk and industrial sector.Family allowancesFamily allowances are not financed bycontributions. They are financed by taxes.2. Direct payersDirect payers have to pay the full contributionrate.Social security systems around the globe 115

GermanyBenefits1. Health careStatutory health insurance provides a widespectrum of benefits. Benefits in kind to whichinsured persons are legally entitled includemedicines and hospital treatment. Of the manyservices provided, the major ones are medicaland dental treatment. Cash benefits includesickness benefit for those unable to work andmaternity benefit.Medical treatmentInsured can freely choose any registereddoctor, specialist or hospital. Basically, thereare no fees to pay, with a few exceptions.Insured have to pay a practice fee of aboutEUR 10 a quarter, but only for the first visit. Itis only payable if the visit is not for a specificmedical check-up.If inpatient treatment is needed, the insuredhas to pay EUR 10 a day for the first 28 days ineach year.Drugs are subject to a flat patient charge.The insured has to pay 10% of the cost. Theminimum additional charge is about EUR 5 orEUR 10, but in no event exceeds the price of theproduct.Sickness benefitInsured who are unable to work due to illnessreceive sickness benefit from the beginningof the seventh week of illness. This replacescontinued payment of their wages or salary.For the first six weeks of illness, the employercontinues to pay the employee’s normal salary.Sickness benefit is about 70% of the last grossincome, but never more than 90% of netincome.It is calculated per day and may not exceedEUR 89.25 (in 2012). It is paid gross, meaningthat contributions (except health insurance)and taxes have to be paid on it.Benefits during pregnancy and afterchildbirthInsured women entitled to sickness benefitsare also entitled to maternity benefits, usuallyfor six weeks before and eight weeks aftergiving birth, during which period they arenot allowed to work, which is why the healthinsurance company pays a benefit. The amountis based on the salary of the insured. Themaximum has been set at about EUR 13 perday.2. Long-term careLong-term care insurance covers the financialrisk of dependence.To be able to claim benefits, insured mustwait a qualifying period: they must have beensigned up to the long-term care insurancescheme for at least two years. They also have tobe dependent on care.There are three levels of care. The more carethe insured needs, the higher the benefit.Care category I includes persons who are inconsiderable need of care. People who requiresevere care are category II. The third categoryincludes persons who need extreme care.Provided the requirements are met, insuredcan claim benefit for home care as well as forinpatient care. This includes benefits in kindor cash benefits used to finance basic personalcare and help with household chores. Acombination of cash allowances and non-cashbenefits is possible.Home-care benefit claimants receive a cashallowance of EUR 235 in care category I,EUR 440 in category II or EUR 700 in categoryIII.Social security systems around the globe 116

GermanyAssistance can also be provided byprofessionals, whose work will be covered bythe care insurance funds as benefits in kind.For this care option, those in category I areentitled to EUR 450, category II EUR 1,100 andcategory III EUR 1,550. Those whose abilityto care for themselves is particularly impairedcan receive up to EUR 1,918 a month.Where home care is insufficient, care can alsobe provided in semi-inpatient or full inpatientfacilities. For full inpatient care, basic personalcare and treatment as well as householdassistance are covered up to EUR 1,023 incategory I, EUR 1,279 in category II, EUR 1,550in category III and EUR 1,918 in cases ofhardship. Board at the nursing home must bepaid for by the patient.3. RetirementPensionsAs a form of income replacement, pensions aredesigned to offer insured persons an adequatelivelihood after retiring. Pensions are usuallyprovided as:• old-age pensions (e.g. standard old-agepension);• pensions on account of reduced earningcapacity; and• pensions on account of the insured person’sdeath (e.g. widow’s/widower’s pension,orphan’s pension).Unlike in the other areas of social insurance,the extent of benefits that can be claimedunder pension insurance depends on theamount of contributions paid (equivalenceprinciple).To qualify for a pension, the insured must havereached retirement age. The standard age toretire is 67. Furthermore, there is a generalqualifying period of about five years. Insuredmust also apply for their pensions.Pension can be claimed at an earlier age onlyif certain conditions are met, and taking intoaccount deductions calculated using currentactuarial formulas. Applications cannot bemade before age 63.At this time, a minimum pension is underdiscussion but has not yet been legislated on.The old-age pension insurance also providespensions for persons with reduced earningcapacity. The reduced capacity depends onhow many hours the insured is able to workin a five-day working week. Reduced earningcapacity means that, for medical reasons, theclaimant cannot work more than three hoursor can only work between three and six hoursa day.Surviving dependents are also covered bythe pension scheme. Provision is made forwidows’/widowers’ and orphans’ pensions.The last leg of the pension scheme concernsrehabilitation. This sector is designed to restorea person’s ability to rejoin the active workforceand thus avoid retirement and a pensionclaim. The maxim here is ‘rehabilitation beforepension’.Rehabilitation benefits include medicaland other assistance designed to promoteparticipation in working life and restore theearning capacity of ill or disabled persons. Thisincludes treatment at a rehabilitation clinic orretraining for a job more suited to the insuredperson’s abilities.Social security systems around the globe 117

Germany4. Unemployment5. Accidents at work6. Family benefitsUnemployment insurance benefits includespecific measures and especially payments toemployees and employers as well as selectedproviders (e.g. for vocational training oreducational measures).The most important benefit is unemploymentbenefit. To be able to claim it, the employee hasto meet three conditions:1. be unemployed;2. file for unemployment at the employmentagency;and3 wait a qualifying period, meaning that,in the last two years before the startof unemployment, an employmentrelationship must exist for at least 12months.Unemployment benefit is about 60% (67%if the insured has a dependent child) of theaverage earnings of the last year. There is a capdepending on the tax class.Unemployed persons who do not meet theseconditions (e.g. the qualifying period) canget type II unemployment benefit from age15 up to the statutory age of 65 to 67 years(retirement age). These persons receive a fixedamount of about EUR 347 a month.Other benefits are also provided by statute, forexample counselling and placement support(job application costs, travel costs, placementcertificates) or support for those taking up selfemployment.If an insured person has an accident at work(which includes the way to and from work) orsuffers from an occupational illness, statutoryoccupational accident insurance covers theresulting costs. This means that the insurancefund provides the best possible medical,occupational and social rehabilitation, as wellas financial compensation if applicable.In the event of an occupational accidentor illness, statutory occupational accidentinsurance provides:• payment for full medical treatment;• occupational integration assistance (e.g.retraining);• social integration assistance andsupplementary assistance;• cash benefits to the insured and theirsurviving dependents.The top priority of the accident insurancefund is to restore the insured person’s healthand ability to work. Pensions are paid to fundmembers only when it is not possible to fullyrestore their ability to work, i.e. for thosewhose earning capacity is reduced by at least20%.There are several types of family allowances inGermany. Child benefit is the most important.Parents are entitled to child allowance, whichis payable until the child’s 18th birthday. Ifthe child starts a vocational training courseor higher education studies, this entitlementis extended to no later than the child’s 25thbirthday.The monthly amounts are:• first child EUR 184• second child EUR 190• third child EUR 215For these benefits, an application must befiled with the family benefits office at theemployment agency. In addition, families arealso granted special income tax allowances totake account of dependent children.Another family benefit is parental benefit.Parents can claim it for one year after thebirth of a child to compensate for the salarythey earned previously. There is also a cap ofEUR 1,800. Parents that did not work beforehaving a baby can also claim, in which case theamount is EUR 300 a month.Social security systems around the globe 118

GermanyCompetent authoritiesAll contributions are paid collectively to thecollection agency, which is the employee’shealth insurance company.Each sector has its own authority. So, for healthand long-term care insurance, any one of anumber of companies can be chosen.For pension insurance, the ‘DeutscheRentenversicherung Bund’(DRV) isresponsible.Unemployment insurance is administered bythe employment agency located in each town.It is usually the agency in the town where theinsured lives that is responsible.The agency that is responsible for familybenefits – the ‘Familienkasse’ – is mostlylocated at the employment agency.For work-accidents insurance, the relevantauthority depends on the branch of industryworked in.Social security systems around the globe 119

GermanyVoluntary social security schemeThose that meet certain conditions can obtainvoluntary social security coverage in Germany,for which there is no need to be entitled tocompulsory coverage.Under health insurance, people can getvoluntary coverage for a variety of reasons.For example, those who have been insured inGermany but went abroad to work, meaningthat their insurance ended, can take outvoluntary insurance when they return toGermany and start a new job within twomonths.Where voluntary health insurance is taken out,it must include long-term care insurance.Under pension insurance, people can getvoluntary insurance if they are over 16 andreside in Germany. Voluntarily insured personscan fix the amount of their contributionsthemselves. Any contribution of betweenEUR 78.40 and EUR 1,097.60 (2012) ispossible.There is no voluntary unemploymentinsurance. Only compulsory insurance isavailable, for which an application has to bemade. This may be possible for self-employedpersons who work over 15 hours a week. Theapplication has to be filed within a month afterstarting self-employment. The contributions in2012 are about EUR 78.75.Statutory accident insurance offers a voluntaryinsurance for business people if they are notalready covered by compulsory insurance.Coverage begins on the date of the application.The rate of contributions depends on theindustrial sector and the accident risk.Social security systems around the globe 120

GermanyContactsUlrich BuschermöhleDirectorTel: +49 711 25034 3220social.security.de@de.pwc.comIris BrandesManagerTel: +49 211 981 2419social.security.de@de.pwc.comSocial security systems around the globe 121

GreeceGeneral backgroundCovered personsUnder the current Greek socialsecurity system, all employeesworking in Greece are subject tocompulsory insurance from thefirst day of their employment; itoffers individuals mainly medical,hospital and pharmaceuticalcare, pension entitlement (oldage,invalidity pension) andother benefits, e.g. maternity,pregnancy, family, aid, sicknessand accident allowances,unemployment allowances,funeral expenses, transportationexpenses for patients, etc.The Greek statutory social security system is mainly divided into threeschemes:• scheme for salaried persons (individuals who are linked to theiremployer by an employment agreement);• scheme for self-employed persons (individuals who work outsidescope of an employment agreement);• scheme for civil servants (individuals who are subject to the statusof public servants) – not gone into in this profile.Social security systems around the globe 122

GreeceContributions1. Salaried personsBoth employers and employees are liable to paysocial security contributions, which are fixedby law and may be modified from time to time(increased or decreased).The contributions due by the employer arecalculated on the employee’s gross salary atthe rate of 28.56%, whereas the employee’sportion, which is withheld from his/her grosssalary, is calculated at 16.5% of his/her grossmonthly salary.Contributions by employees insured before1 January 1993 in Greece or any other Stateof the European Union or a country withwhich Greece has a social security treaty arecalculated up to a maximum gross salaryof EUR 2,432.25 whereas, for employeesregistered with the social security authoritiesafter 31 December 1992, this ceiling is set atEUR 5,543.55. Salary paid to employees abovethese ceilings is exempt from social securitycontributions.2. Self-employed personsFurther, with a view to providing independentservices, freelancers should also be insuredwith the Greek Freelancers’ Social SecurityFund.Freelancers’ contributions to the relevantsocial security fund are payable at the rate of20%, calculated on the amount of the socialsecurity category to which they are subject.Ten compulsory insurance classes and fouroptional ones are set down for old and newlyinsured employees. Individuals insured forthe first time with the Greek Freelancers’Social Security Fund are classified in the firstinsurance category and transferred in thenext compulsory categories after three years.Transfer to the next category is compulsoryon the first day of the year following thecompletion of three years.Social security systems around the globe 123

GreeceBenefitsFor salaried persons1. Health careHealth care provided by the IKA covers bothmedical appointments and examinations suchas blood tests, X-rays, cardiograms, etc., andis provided by IKA clinics as well as by officescontracted with the IKA (in towns where noIKA clinics exist).In order to receive health care benefitsfrom the IKA, claimants should hold a validinsurance booklet. It should be noted thathealth care is not provided to insured at once,i.e. from the first day of IKA insurance, but onlyonce they have been insured for 50 workingdays and hold an insurance booklet.Health care benefits are provided for the entireduration of the illness, even if the claimantmeanwhile ceases to meet the requirements toreceive the benefit.Entitled persons:• persons directly insured with the IKA;• retired persons in receipt of an IKApension;• family members of the above, i.e.:––spouse;––unmarried children until their 18thbirthday, or 24th birthday if they areunemployed, or 26th birthday if theyare still studying;––mother and father;––the orphans of a father and mother,grandchildren and siblings, as wellas orphans only of their father ormother, grandchildren or siblings ifthe surviving parent is a member of thefamily of the insured, until the age of 18is reached.2. Hospital careHospital care is considered as a benefit in kindand covers residence, board, medical attention,the provision of pharmaceuticals, etc.In order to be entitled to hospital care benefits,claimants must have a contribution recordof a certain number of working days, whichdepends upon the type of hospital care theywish to receive (regular or advanced).These benefits may be claimed by personsdirectly insured with the IKA and persons inreceipt of an IKA pension, plus their familymembers.3. RetirementThe categories of persons insured with the IKAare the following:• persons already insured with the IKAbefore 1 January 1993;• persons who first affiliated with the IKAafter 1 January 1993.The amount of the main pension is calculatedaccording to different methods for thoseinsured before or after 1 January 1993. TheIKA may award either a full or a reducedpension. The entitlement to pension, theamount of the pension and the time for whichit is payable depend on numerous factors, suchas the number of insurance days, the age andoccupation of the claimant or whether he/shebelongs to a vulnerable social group.4. SicknessClaimants not able to carry on employment dueto illness are entitled to sickness benefits thatconsist of cash allowances.Social security systems around the globe 124

GreeceClaimants must satisfy the followingconditions:• be directly insured with the IKA;• incapable of work due to illness;• a contribution record of at least 100working days during the year precedingnotification of the illness or during the 15months prior to notification. In the secondcase, working days in the last three monthsare not taken into account;• absence from work should last at least threedays following notification to the IKA.Daily sickness benefit amounts to 50% of theestimated income of the insurance class towhich the claimant belonged during the last 30working days of the year preceding notificationof the illness.5. Maternity• Maternity benefit, provided only to directinsured persons for 119 days, i.e. 56 daysbefore birth and 63 after birth, providedthat the claimant is absent from work. Theemployer may not oppose the claimant’sabsence. Maternity benefit is paid also onnon-working days. Claimants must have acontribution record of at least 200 workingdays during the two years preceding theexpected day of confinement.6. UnemploymentEligible persons receive unemploymentbenefits from the Workforce EmploymentOrganisation (OAED). Claimants mustsatisfy certain conditions, e.g. salariedperson, employment contract terminatedby the employer, involuntarily unemployed,registered with the unemployment sector ofthe OAED, contribution record of a certainnumber of working days.Applications must be submitted within 60 daysof the date of dismissal to the beneficiary’slocal office. Benefit is paid on a monthly basisfor between five and 12 months, depending onthe applicant’s age and occupation, as well ason the contribution record that the applicanthas built up, and is scaled according to thenumber of days the applicant worked beforethe termination of his/her employment.Unemployment benefit consists of a basicamount of EUR 360 and if there are familydependants, i.e. for every family member, thebenefit is increased by 10%.7. Family benefitsFamily benefits are provided by the WorkforceEmployment Organisation (OAED) to workingparents insured with the IKA who have:• children under 18 years of age;• children under 22 years of age who study;• older children if they are incapable of work,provided they are unmarried and reside inGreece or an EU Member State.Working parents must have a contributionrecord of at least 50 working days during theyear before applying. Non-Greek claimantsmay also receive family benefits provided theirchildren reside in Greece.Annual family benefit starts from EUR 98.64per child. For the third child, the annualbenefit is increased by EUR 35.16. For eachchild following the fourth, it increases byEUR 11.298 a month.There are two categories of maternity benefits:• Lump-sum labour benefit, which is paid tothe direct insured or retired person, insteadof hospital and medical care. It is equal to30 times the minimum wage of an unskilledworker. Since the benefit is paid instead ofhospital and medical care, it is considered acontribution in kind and, therefore, in orderto receive it, the insured person should havea contribution record of 50 working daysduring the previous year or the previous 15months.Social security systems around the globe 125

GreeceCompetent authoritiesVoluntary socialsecurity scheme1. Salaried personsContributions are paid by employers and employees to the Instituteof Social Security (IKA-ETAM), which is the leading social securityinstitution, for individuals who provide employed/dependent serviceson either an open-ended or fixed-term as their main occupation.2. Self-employed personsSelf-employed persons join and pay contributions to the GreekFreelancers’ Social Security Fund (OAEE).On termination of their employment, those insured with the IKA-ETAMmay request continuation of their insurance coverage for a pensionscheme and/or medical care, provided, mainly, that:• for old insured employees:––they have completed 500 days of insurance within the five yearsbefore their insurance with the IKA ceased; if so, they mustsubmit the relevant application form within 12 months of thelast day of employment;––if they have completed 3,000 days of employment, they canapply at any time. For the purpose of the requisite number ofinsured days, time insured with other funds is also taken intoaccount, provided the last insurance agency was the IKA.• for newly insured employees:––they have completed 1,500 days of insurance, of which 300 dayswithin the last five years;––they are not subject to any other social security fund.It should be noted that a voluntary social security scheme is possibleonly if no employment exists in Greece (or in the EEA/Switzerland/athird country with which Greece has a bilateral agreement) by virtueof which the individual is registered with the compulsory insurancesystem of Greece (or that EEA territory/Switzerland/third country withwhich Greece has a bilateral agreement).Social security systems around the globe 126

GreeceContactsFredy YatracouDirectorTel: +3 210 68 74 017fredy.yatracou@gr.pwc.comArtemis KarathanassiSenior managerTel: +3 210 68 74 567artemis.karathanassi@gr.pwc.comOlga KoromiliaSenior consultantTel: +3 210 68 74 443olga.koromilia@gr.pwc.comSocial security systems around the globe 127

Hungary General background Covered personsHungary has an extensivestatutory social security systembased on solidarity.Insured persons include:• persons engaged in employment under a contract;• students attending vocational schools under apprenticeshipagreements;• persons receiving job-seeking assistance, private entrepreneurs(if not engaged in auxiliary activities), business partners (if notengaged in auxiliary activities);• persons performing gainful work in any work-related relationship(outworkers, those under agency contracts or in self-employment,other than private entrepreneurs).Insured persons are basically eligible to all services provided within thesocial security system.There may be exemptions from the above based on internationaltreaties and in the case of individuals assigned to Hungary from a non-EEA jurisdiction for a period not exceeding two years.Social security systems around the globe 128

HungaryContributionsSocial security contributions are due by bothemployees and employers. The employer part,called social tax, is a new tax in 2012, whichreplaces the old social security contributionsthat were payable by employers. The tax baseis the gross income paid to the employee. Thetax rate is 27%. There are some social taxabatements if certain conditions are met.Employee social security contribution ratesare:• 10% pension contribution (subject to anannual gross income cap of HUF 7,942,200(approx. EUR 25,620));• 8.5% health insurance and unemploymentcontribution (7% + 1.5%).Contributions are payable on at least theminimum wage (HUF 93,000 (approx.EUR 300)).Individuals aged over 18 with a Hungarianregistered address and not covered inHungary are obliged to pay health-care servicecontributions of HUF 6,390 in order to beeligible for health-care services in kind.Social security systems around the globe 129

HungaryBenefits1. Family benefitsFamily benefits are generally provided topersons having a registered Hungarianaddress.Family benefits consist of child-rearing benefitand school grants. Child-rearing benefit isavailable to claimants whose child has notreached compulsory school age. Once that ageis reached, parents can claim a school grant,which is paid whilst the child is in full-timeState education (grammar school, secondaryschool, vocational school) and until his/her20th birthday.The monthly child benefit amount depends onthe number of children and whether one or twoparents rear them (between HUF 12,200 andHUF 17,000 per child per month).2. UnemploymentJob-seekers’ benefit is available to those thatare in search of a job, have spent at least 360days in employment over the three-year periodprior to becoming a job-seeker, are not eligiblefor an allowance for reduced ability to work,are not in receipt of sick pay, and wish to findemployment but have been unsuccessful andthe government employment agency cannotoffer suitable employment. Benefit is availablefor no more than 90 days. The amount of theunemployment benefit is in general calculatedas 60% of the previous 4 quarter’s averagesocial security base.3. RetirementRetirement pension is available to claimantswho have reached the requisite retirement ageand have at least 20 years of service. Partialold-age pension is available for those with15 years’ service and who have reached therequisite retirement age. Even if they have notyet reached retirement age, women are alreadyeligible for the retirement pension if they have40 years’ service.The normal retirement age in Hungary is 62,which will gradually increase to 65 by 2022.The amount of retirement pension dependson monthly salary and years of service. Theminimum is currently HUF 28,500 a month.Dependant pension benefits are also available(orphan’s pension, widow’s pension, parent’sbenefit, etc.).4. Maternity benefitsUnder Hungarian law, women are entitled tomaternity benefits if they were insured underthe Hungarian social security system for atleast 365 days within the last two years.The following maternity benefits are available:• Maternity leave benefit (TGYÁS): thisis paid for 24 weeks (168 days). Theamount is 70% of the claimant’s dailyaverage earnings. It ceases once theclaimant resumes work or if she receivesremuneration from her employer.• Child-care benefit (GYED): this is paidafter entitlement to maternity leave benefitceases and until the child is two. Theamount is 70% of daily average earnings,capped at HUF 130,200 gross in 2012.Entitlement to this benefit also stops oncework is resumed or if remuneration isreceived from the claimant’s employer.Social security systems around the globe 130

Hungary5. Sick paySick pay is payable to any person who becomesincapacitated for work during the period ofinsurance coverage. It is paid for the durationof the incapacity for work, up to a maximum ofone year. The amount is 60% of the calendardaily average relevant income in the case of anuninterrupted insured period of two years ormore, or 50% if the insured period is less thantwo years. However, please note that the sickpay payable for one day may not exceed 1/30of twice the effective minimum wage (whichwas HUF 93,000 in 2012) on the first day ofeligibility.6. Accident benefitsAccident benefits are paid to victims ofaccidents at work or occupational diseases.They are provided in the following forms:• Emergency medical services: medicinalproducts, medical aids and medical carerequired in connection with any healthimpairment sustained from an accident atwork or occupational disease will be paidin full.• Accident sick pay: sick pay for accidentrelatedinjuries is due to any personwho sustains an accident at work duringthe insurance period or within 30 daysfollowing termination of his insurancecoverage and that accident results in him/her becoming incapacitated for work. Itcan be claimed for one year, which may beextended by a maximum of one additionalyear. It is paid in the amount of the insuredperson’s income of the month preceding thefirst day of eligibility, or 90% of that incomeif incapacity results from a commutingaccident. Please note that accident sick payis not paid if the claimant is in receipt ofan accident allowance based on the sameaccident at work.• Accident allowance: accident allowance isdue to any person who sustains an accidentat work and, consequently, a degree ofhealth impairment of over 13%, but is noteligible to the benefits provided to peoplewith disabilities. If the degree of healthimpairment is below 20%, the accidentallowance is paid for up to two years; if it isover 20%, it is paid for the entire durationof the health impairment. The amount ofaccident allowance is based on the monthlyaverage income earned in the year prior tothe date of the accident and the degree ofhealth impairment.7. Disability and rehabilitationbenefitsOn 1 January 2012, the system of disabilityallowances changed totally. Disability pensionshave now ceased to be part of the Hungariancompulsory pension system. They have beenmoved from the National Pension InsuranceFund to the National Health InsuranceFund and remodelled as disability andrehabilitation benefits, which differ from theold rehabilitation benefit, which has also beenabolished.Rehabilitation benefit is paid for a maximumof three years to persons whose employabilitycan be restored and are in social securitydisability category III or less, and youngerthan 57. The amount depends on the degree ofdisability and varies between 35% and 45% ofaverage salary. The minimum is 30% and themaximum 50% of the official minimum wage(HUF 93,000).Disability benefit is paid to those whoserehabilitation is advised against and who are insocial security disability category I or II, or areolder than 57 regardless of disability category.The amount of benefit varies between 40%and 70% of average salary, the minimum being40% and the maximum 150% of the officialminimum wage (HUF 93,000)8. Benefits in kind provided under theHungarian health insurance systemThe following health care services canbe provided free of charge under certainconditions set down in local law: health careservices for the prevention and early diagnosisof diseases, therapeutic services, dentalcare, outpatient services, inpatient care inmedical institutions, maternity care, medicalrehabilitation, patient transport and rescueoperations.Social security systems around the globe 131

HungaryCompetent authoritiesVoluntary socialsecurity schemeContributions and social tax paid by employers and employees arecollected by the Hungarian tax authority (NAV). Alongside the taxauthority, health care services are coordinated by the OEP (HungarianHealth Care Insurance Fund) and pension payments are coordinated bythe ONyF (the Hungarian Pensions Directorate).Any person resident from a Hungarian social security perspective underlocal law (other than private pension fund members and pensionerswith a freely exercisable entitlement to draw a pension and who arenot engaged in a relationship that is subject to compulsory insuranceunder local law or whose insurance coverage is suspended) can enterinto a voluntary agreement with the Hungarian Social Security Officefor the purpose of allocating income to a pension base and determininga service period. Based on the agreement, a 34% pension contributionshould be paid on the agreed amount, which cannot be less than theminimum wage in effect on the date of the agreement (HUF 93,000in 2012) but cannot exceed the annual pension cap on that date(HUF 7,942,200 in 2012).Individuals not insured under local law and not eligible for healthcare services on any other basis may enter into an agreement with theHungarian Health Care Office to get health services for themselvesand their dependent children. The amount of monthly contributionspayable under the agreement should be:• 50% of the minimum wage (HUF 93,000 in 2012) in the case ofcitizens of legal age;• 30% of the minimum wage in the case of children under the age of18.Health care services under voluntary agreements with the HungarianHealth Care Office are available – with the exception of emergencyservices – as of the first day of the sixth month following the dateof signature of the agreement, except if the stipulated contributionamount is paid at the time of signature for the previous six months, inwhich case health services are available as of the first day of the monthfollowing the date of signature.Social security systems around the globe 132

HungaryContactsDr. Tamás LőcseiPartnerTel: +36 1 461 9358tamas.locsei@hu.pwc.comBeáta HorváthnéDirectorTel: +36 1 461 9283beata.horvathne@hu.pwc.comMelinda BíróManagerTel: +36 1 461 9250melinda.biro@hu.pwc.comSocial security systems around the globe 133

IndiaIndiaGeneral backgroundIndia has a social security system which providesfor retirement and insurance benefits to employeesworking in factories or other establishments. Thesystem is governed by the PF Act and the schemesmade thereunder, namely the Employees’ ProvidentFund Scheme (‘EPF’) and the Employees’ PensionScheme (‘EPS’). The EPFO, a statutory bodyestablished by the government of India, administersthe social security regulations in India.Social security systems around the globe 134

IndiaCovered personsEvery establishment in India employing 20persons or more is required by law to registerwith the social security authorities unless itqualifies as an exempt establishment.An establishment employing fewer than 20persons can voluntarily opt to register with theauthorities for the welfare of its employees.Upon voluntarily registration, the provisionsof the Indian social security regulations applyin exactly the same way as if such registrationwere mandatory.1. International workersIn October 2008, the government made theIndian social security scheme mandatory forcross-border workers by introducing a newcategory of employee, called ‘internationalworkers’, within the ambit of the PF Act. Priorto this amendment, such workers qualified forexclusion from the provisions of the Indiansocial security regulations and were not subjectto the Indian social security system.Thus, foreign nationals qualify as internationalworkers if they come to work for anestablishment in India to which the Indiansocial security regulations apply. Similarly,Indian nationals qualify as internationalworkers if they have worked or are going towork in a country with which India has enteredinto a social security agreement (SSA) and areeligible for the social security programme ofthe host country according to the terms of therelevant SSA.However, it has been clarified that Indianemployees holding a certificate of coverage(COC) from India and contributing to theIndian social security schemes will not becomeinternational workers and will continue tobe treated like any other domestic Indianemployee.2. Excluded employeesInternational workers are exempt from theIndian social security regulations where they:• are from a country with which India has areciprocal SSA; and• contribute to their home country socialsecurity, either as a citizen or resident; and• enjoy the status of ‘detached worker’ forthe period and the terms specified in therelevant SSA.Recently, the EPFO announced that employeesthat came from countries with which Indiahas a Comprehensive Economic PartnershipAgreement (‘CEPA’) on or before 1 October2008 and that contribute to their home countrysocial security scheme also qualify as excludedemployees.Social security systems around the globe 135

IndiaContributionsInternational workers are required tocontribute 12% of their salary to the socialsecurity system. The term ‘salary’ is broadand covers basic wages (all emolumentspaid or payable in cash while on duty oron leave/holiday), expense allowances,retention allowances and the cash value ofany food concessions. However, house rentalallowances, overtime allowances, bonuses,commissions and similar allowances or giftsare excluded from the salary figure used tocalculate contributions.Employers require to deduct the social securitycontribution from the employee’s monthly payand, after making a matching contributionof 12%, pay the sum over to the Indian socialsecurity authorities/fund by the 20th of thefollowing month. A five-day grace period isincluded within this time limit.Contributions are payable on the full salarywhere an international worker is on a splitpayroll. For converting foreign salary figuresinto the equivalent in rupees, the month-endtelegraphic transfer buying exchange rateas published by the State Bank of India is tobe used. Employers’ contributions to Indiansocial security are not taxable in the hands ofinternational workers. In relation to their owncontributions, international workers can claima deduction of up to INR 100,000 per annumfrom their taxable income in India.Of the employer’s 12% contribution, an amountequal to 8.33% of the salary is allocated to theinternational worker’s pension fund and theremaining amount is allocated to the ProvidentFund. The employee’s entire contribution of12% is allocated to the Provident Fund.The accumulated balance in the ProvidentFund earns interest at a specified rate, whichis announced by the government from time totime.1. Withdrawal benefitsThe EPF and the EPS lay down detailed rulesfor withdrawals.Provident fundInternational workers can withdraw theiraccumulated balance from the Provident Fundin the following circumstances:• retirement from service in theestablishment or after attaining 58 years ofage, whichever is later;• retirement on account of permanent andtotal incapacity for work due to bodilyor mental infirmity as certified by anaccredited medical officer/registeredpractitioner;• when suffering from certain diseasesdetailed in the terms of the scheme;• according to the provisions specified in therelevant SSA covering the internationalworker.Social security systems around the globe 136

IndiaIn cases where the international worker isfrom an SSA country, withdrawal from theProvident Fund must be according to theterms of the relevant SSA. In all other cases,the amount withdrawn will be credited to theinternational worker’s Indian bank account.Amendments have been made in the Indianregulatory framework to permit internationalworkers to open Indian bank accounts in orderto receive Provident Fund money.Any lump sums withdrawn by internationalworkers from the Provident Fund on retirementor otherwise after completing five years ofcontinuous service in a covered establishmentin India or under other specified circumstancesis exempt from tax.In all other cases, the employer’s contributionand interest earned on that contribution(on both the employer and employee’sshare) is taxable in the year of withdrawal.Furthermore, where an international workerhas claimed a deduction on his/her owncontribution in previous years, the deductionis taxable in the year in which the withdrawalis made.Pension fundAccumulated sums in the pension fund areused to pay a pension to employees uponretirement or in certain circumstances asspecified in the EPS. International workers arenot permitted to withdraw from the pensionfund unless they have rendered eligible servicefor a period of ten years. However, whereinternational workers are covered underan SSA, earlier withdrawal is possible. Themonthly pension received from the pensionfund on retirement is taxable as earnedincome. However, commutation of pensionpayments is exempt from tax, subject to thefollowing conditions:• in cases of a receipt of a gratuity, thecommuted value of one third of the pensionis exempt from tax;• in other cases, the commuted value of onehalf of the pension is exempt from tax.Insurance benefitDuring the period of service, a nominalcontribution is made by the employer and/orgovernment to provide insurance benefit tofamily members (nominees) if the employeedies whilst in employment.2. SSA benefitsSSAs are bilateral agreements between Indiaand other countries designed to protect theinterests of cross-border workers. They providefor avoidance of ‘no coverage’ or ‘doublecoverage’ and equality of treatment of theworkers of both countries. An SSA generallyprovides for the following:• Detachment: Applies to employees postedto the other country provided they complywith the social security requirements oftheir home country.• Exportability of pension: Provision forpayment without any reduction in theemployee’s home country or any othercountry.• Totalisation: The period of service in aforeign country is counted on a pro ratabasis when determining eligibility linked tolength of service.Social security systems around the globe 137

IndiaCompetent authoritiesThe Employees’ Provident Fund Organisation (‘EPFO’).Social security systems around the globe 138

IndiaContactsKaushik MukerjeeLeaderInternational Assignment ServicesTel: +91 (80) 40796002kaushik.mukerjee@in.pwc.comKuldip KumarExecutive directorTel: +91 (124) 3306516kuldip.kumar@in.pwc.comSocial security systems around the globe 139

Ireland General background Covered personsSocial security contributions inIreland are referred to as PRSI(Pay-Related Social Insurance).An individual can be insured as:• an employed contributor;• a self-employed contributor; or• a voluntary contributor.Social security systems around the globe 140

IrelandContributionsThe amount of PRSI payable depends onearnings and the classes under which theindividual is insured. There are 11 differentsocial security insurance classes in Ireland,and a number of subclasses.1. Employed contributorIndividuals are insured as employedcontributors if they are employed undera contract of service (i.e. an employmentcontact) and are working in Ireland.The amount of PRSI paid by employeesdepends on their age, level of earnings andthe type of work performed. The majority ofemployees pay PRSI under Class A, where, withthe exception of low-paid workers, a rate of 4%applies to all employment earnings (includingshare-based remuneration), with no upper cap.A separate employer PRSI charge applies underClass A at a rate of 10.75% (a reduced rateapplies to low-paid workers). Employer PRSIis due on all employment earnings, with theexception of share-based remuneration.2. Self-employed contributor andcompany directorsIndividuals are insured as self-employedcontributors generally if they have selfemployment,trading or investment income.A self-employed individual pays PRSI underClass S at a rate of 4% on all earnings. There isno employer contribution.In general, a company director will be insuredas a self-employed contributor if, on a review ofall the circumstances, he/she is not employedunder a contract of service. Typically this willbe an owner (proprietary) director or a nonexecutivedirector.3. Voluntary contributorIndividuals can opt to pay voluntarycontributions if they are between the agesof 16 and 66 and are no longer coveredby compulsory PRSI by way of insurableemployment or self-employment. In orderto qualify, an individual must have at least260 weeks’ PRSI paid under the compulsoryPRSI scheme in either employment or selfemploymentin addition to meeting certainother qualifying requirements.Payment of voluntary contributions canhelp maintain or improve an individual’scontributory pension entitlements. They do notprovide cover for any short-term benefits suchas job-seekers’, illness, maternity or treatmentbenefits.Under EU legislation, it is not possible for anindividual to be subject to the social insurancesystems of two or more Member States at thesame time. This means that an individualcannot pay voluntary contributions inIreland at the same time as being in insurableemployment or self-employment or receivingcredited contributions or paying voluntarycontributions in another EU Member State.Social security systems around the globe 141

IrelandBenefitsIrish social welfare benefits are of three maintypes:1. Contributory benefitsThese benefits are based on the PRSIcontribution record of the claimant, withspecific contribution requirements for eachtype of benefit. (Please note that the range ofbenefits available to self-employed contributorsis more limited than that for employedcontributors.)2. Non-contributory benefitsThese benefits are means-tested and areintended for individuals who do not qualify forcontributory benefits due to their having madeinsufficient PRSI contributions. Contributoryand non-contributory benefits fall within twoheadings: long-term benefits (e.g. pensions);and short-term benefits (e.g. unemploymentbenefits).3. Universal paymentsThese include benefits such as child benefitand free travel and are paid regardless ofthe claimant’s means or social insurancecontributions.Employees’ and employers’ social insurancecontributions are paid into the SocialInsurance Fund. The social insuranceschemes are financed by this Fund, which isadministered by the Department of SocialProtection. Non-contributory payments andChild Benefit are financed by general taxation.Benefits are categorised as follows:Health careAll people ordinarily resident in Ireland areentitled to the following services free ofcharge:• hospital services for children suffering fromspecified long-term illnesses;• drugs and medicines for people sufferingfrom specified illnesses;• hospital, diagnostic and preventive servicesfor infectious diseases.Entitlement to health services in Ireland isprimarily based on residence and means. Anyperson who is accepted by the Irish healthservice executive as being ordinarily residentin Ireland is entitled to either full eligibility orlimited eligibility.Full eligibility: medical card holdersThere is a means test to determine medicalcard eligibility.The following services are available to medicalcard holders: GP services; specialist services inout-patient clinics; certain dental, ophthalmicand aural services and appliances; prescribeddrugs, medicines and medical and surgicalappliances; maternity care and infant welfareservices.Medical card eligibility also brings secondarybenefits such as an exemption fromexamination fees in second-level schools,assistance with school books and free schooltransport for certain children.Individuals working in Ireland assigned froman EEA country with an A1 and S1 portabledocument in place are entitled to a medicalcard; there is no means test in this regard.SicknessIllness benefit is paid weekly to insured peopleduring periods of incapacity for work.To be eligible for illness benefit:• the claimant must be unfit for work;• the claimant must satisfy the contributionconditions of a minimum of 104 weeklycontributions paid since first startingemployment and have the required weeklycontributions for the relevant contributionyear.Social security systems around the globe 142

IrelandIllness benefit is normally paid from the fourthday of illness. It is considered as income for taxpurposes and it is taxed from the first day ofpayment.Illness benefit entitlement continues for aslong as the claimant is unfit for work, subjectto a maximum of two years, provided thathe/she has at least 260 weeks’ paid PRSIcontributions.When moving to another country of theEEA, whenever certain conditions have to befulfilled in order to become entitled to sicknessbenefits, the institution in the country in whichthe individual is insured must take account ofperiods of insurance, residence or employmentthat he/she has completed under the legislationof any of the EEA countries. This ensures thathe/she will not lose his/her sickness coveragewhen changing employment and moving toanother State.Maternity and paternityMaternity benefit may be payable to womenwho are in employment. To qualify they musthave paid:• at least 39 weeks’ PRSI contributions in the12 months before the first day of maternityleave; or• at least 39 weeks’ PRSI since first startingwork and have at least 39 weeks’ PRSIcontributions paid or credited in therelevant tax year or in the year followingthe relevant tax year; or• at least 26 weeks’ PRSI contributions inthe relevant tax year and at least 26 weeks’PRSI contributions in the tax year prior tothe relevant tax year.Self employed women must have at least 52contributions paid in either the last or secondlastcomplete tax year before the benefit year inwhich the claim is made.Maternity benefit is payable for a period of 26weeks, at least two of which must be takenbefore, and four after, the date on which thebaby is due. The amount paid is 80% of theindividual’s earnings in the relevant incometax year, subject to a fixed minimum andmaximum weekly payment. The start date ofthe maternity leave determines the relevantincome tax year.When moving to another country of theEEA, whenever certain conditions have tobe fulfilled in order to become entitled tomaternity benefits, the institution in thecountry in which the individual is insuredmust take account of periods of insurance,residence or employment that the individualhas completed under the legislation of any ofthe EEA countries.InvalidityInvalidity pension is payable weekly insteadof illness benefit to insured people who arecertified as permanently incapable of work andwho satisfy the PRSI contribution conditions.Generally, before qualifying for invaliditypension, the claimant must have receivedillness benefit for at least 12 months. In certaincircumstances, however, it may be possible toqualify earlier.Invalidity pension is a flat-rate amountdepending on age. Subject to conditions,recipients may also qualify for fuel allowance,electricity allowance, TV licence, telephonerental allowance and free travel.When moving to another country of theEEA, whenever certain conditions have tobe fulfilled in order to become entitled toinvalidity pension, the institution in thecountry in which the individual is insuredmust take account of periods of insurance,residence or employment that the individualhas completed under the legislation of any ofthe EEA countries.Each country applies its national criteria whendetermining degree of invalidity.Social security systems around the globe 143

IrelandOld-age pensionState pension (contributory) is payable frompension age (currently 66 years, increasing to68 years by 2028) to any insured person whosatisfies certain PRSI contribution conditions.An individual can receive it even if he/shecontinues working. The pension should beclaimed within three months before pensionage is reached. Anyone receiving invaliditypension will, upon reaching pension age,automatically transfer onto the State pension(contributory).Where an individual who reaches pensionage does not qualify for a State pension(contributory), he/she may be entitled to aState pension (non-contributory), subject tohabitual residence and means tests.The State pension (contributory) is a flatrateweekly payment (subject to a maximumamount) and a reduced pension is payablewhere conditions for the maximum pension arenot met. Supplements are paid for qualifyingadults and for each dependent child.The State pension (non-contributory) is a flatrateweekly payment (subject to a maximumamount). Supplements are paid for qualifyingadults and for each dependent child.Widows’, widowers’ or surviving civil partners’(contributory) pensions are payable as longas the recipient remains a widow/widower,or does not live with a new partner. There isalso an increase for qualifying children. Theamount varies according to the age of thesurviving spouse or divorced spouse.Accidents at work and occupationaldiseasesOccupational injuries benefits are payableto insured people who are injured at work orwho contract certain occupational diseases.Accidents while travelling between homeand work are covered. Fifty-six occupationaldiseases are identified.Injury benefit is paid while an individualcontinues to be unfit for work. It is payablefrom the fourth day of incapacity up to amaximum period of 26 weeks commencingwith the date of the accident or the onset ofthe occupational disease. After 26 weeks, theindividual may be entitled to illness benefit.Disablement benefit is payable if, as a resultof an occupational accident or disease, anindividual suffers from a loss of physical ormental ability, even where he/she is not unfitfor work.The occupational injuries scheme covers thecost of certain medical expenses over andabove the expense already paid by the Irishhealth services executive or treatment benefit.Family benefitsChild benefit is paid regardless of insurance ormeans. It is paid in respect of each child underthe age of 16. The age limit is extended to 17where the child is receiving full-time educationor is incapacitated. It is a monthly benefit paidto the child’s mother or step-mother and theamount depends on the ranking of the child inthe family, with rates per child rising up to thefourth child.UnemploymentJob-seeker’s benefit is payable weeklyto insured people during periods ofunemployment. PRSI contribution conditionsmust be satisfied and an individual must becapable and available for work, genuinelyseeking work and be aged over 16 and under66. It is normally paid for 312 days, but islimited to 234 days if an individual has paidless than 260 weekly contributions since firstentering insurance.Job-seeker’s allowance is payable on largelysimilar conditions. It is, however, subject toa means and residence test. It is paid for anunlimited period up to the age of 66, subject tothe conditions mentioned.Survivors’ benefitsWidows’, widowers’ or surviving civil partners’(contributory) pensions are payable regardlessof age, if the contribution conditions aresatisfied on either the late spouse’s or theclaimant’s own insurance record.Social security systems around the globe 144

IrelandCompetent authoritiesThe Department for Social Protectionadministers the Irish social security systemunder the direction of the Minister for SocialProtection.1. Employed contributorContributions are paid by employers andemployees through the PAYE withholdingsystem to the tax authorities, which thenforward the contributions to the Department ofSocial Protection.2. Self-employed contributorSelf-employed contributors calculate theirannual PRSI liability through their year-endincome tax return and pay the liability directlyto the tax authorities, which then forwardthe contributions to the Department of SocialProtection.Social security systems around the globe 145

IrelandContactsKen O’BrienDirectorTel: +353 1 792 6818ken.obrien@ie.pwc.comJohn KellyManagerTel: +353 1 792 6072john.b.kelly@ie.pwc.comKevin DugganConsultantTel: +353 1 792 5508kevin.duggan@ie.pwc.comSocial security systems around the globe 146

Italy General background Covered personsThe Italian social security schemeintervenes in these events:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social burdens (e.g. children,sickness, maternity): incomesupplement.The Italian statutory social security system is divided into two mainsystems:• scheme for salaried persons (individuals who are linked to theiremployer by an employment agreement);• scheme for self-employed persons (individuals who work outside thescope of an employment agreement/office).There are also some minor systems related to specific scenarios such asagents, artists, etc.Social security systems around the globe 147

ItalyContributions1. Salaried personsSocial security contributions are due byboth employees and employers. Employeecontributions are deducted from gross pay,whilst employer contributions are paid on topof this gross pay. Contributions are due on totalgross pay. Ceilings apply if certain conditionsare met. Employee contributions amount toabout 10% and employers’ are approximately35%. Both are tax-deductible. The realapplicable rate depends on the company’sbusiness and related percentage assigned bythe social security authorities.2. Self-employed personsSocial security contributions for self-employedperson are calculated on the basis of theearned income (i.e. as determined by the taxadministration) during the calendar year.Qualifying earned income for determiningcontributions is capped at a maximum amount(i.e. for 2012, EUR 95,026).The applicable rates for 2012 are:• 27.72% for workers not covered under anyother compulsory social security scheme;• 18% for workers covered under anothercompulsory social security scheme and forretired people.Social security systems around the globe 148

ItalyBenefitsFor salaried persons1. Sickness benefitsCash sickness allowance is not really a cashbenefit, but a statutory continuation of salaryfor employees in the form of a per diemallowance to replace pay lost through sickness.It begins on the fourth day of illness (the firstthree days are covered by the employer), and ispaid for a maximum of 180 days per calendaryear.There are additional criteria for workerson fixed-term contracts. Except for certaincategories of workers, the benefit is paiddirectly by the employer and deducted fromthe amounts payable to the INPS as insurancecontributions. The allowance is generally equalto 50% of the person’s pay for the first 20 daysof illness, rising to 66.66% thereafter.2. InvalidityAll employed persons are covered for disabilityinsurance. Self-employed professionals arealso entitled to a disability pension, but therules governing this sector vary considerably,depending on the insurance category. Thereare no supplements for dependants.To be entitled to invalidity allowance, thedegree of disability must exceed 66%.For entitlement to incapacity pension, thedisability must be total (100%). Furthermore,to be entitled to an invalidity allowance,claimants must have been insured for atleast five years and have paid five years ofcontributions, of which at least three in thefive calendar years preceding the date ofapplication.The ordinary invalidity allowance is paid toany insured person whose capacity to work,without the assistance of an attendant, attasks suitable for his or her abilities is reducedpermanently due to a disability or a mental orphysical infirmity or incapacity. The allowanceis initially granted for a period of three yearsand can be confirmed after reassessment bythe Institute – at the beneficiary’s request –for further periods of the same length. Aftertwo successive renewals, the allowance isconfirmed for life. This allowance does notrevert to any survivors.When claimants reach retirement pension age,the invalidity allowance is converted into anold age pension if:• they meet the insurance period andcontributions criteria; and• they stop working (if they were in paidemployment).The periods while in receipt of the benefit andnot engaged in any gainful employment aretaken into account for pension entitlement butnot for the value of the allowance.If an illness or a physical or mental deficiencymakes it totally and permanently impossiblefor a claimant to engage in any gainfulemployment whatsoever, she/he will beentitled to an ordinary disability pension.To be entitled to this pension, the claimantmust have been insured for at least five yearsand have paid five years of contributions, ofwhich at least three in the five calendar yearspreceding the date of application. This is areversionary pension, which can be ‘inherited’by the survivors of the deceased pensioner.Disability pension is incompatible withincome from salaried or independent work,unemployment benefit or other allowancesreplacing or supplementing earned income.Invalidity benefits are paid by the INPS.Invalidity benefits and disability pensions arepaid from the first day of the month followingthe application or onset of disability orincapacity.Social security systems around the globe 149

Italy3. Maternity benefitsFemale employees eligible for maternitybenefits are required to stop working twomonths before the estimated date of childbirthand return to work three months after theactual date of childbirth. Under certaincircumstances, benefits are also paid to fatherswho work instead of the mother (e.g. death orserious illness of the mother, abandonment,etc.), and to workers, independent workers,self-employed professionals and workersregistered with the separate administration(women in these last categories are not obligedto stop work).During the mandatory period of maternityleave, the compensation paid is 80% of thebeneficiary’s pay. Both parents (who are inpaid employment) are entitled to a total periodof up to 11 months’ paid leave until the child iseight years old, at the same time if they wish.Fathers can take leave even while the motheris on mandatory maternity leave or nursingleave. Mothers who are self-employed are alsoentitled to parental leave, but only for threemonths during the child’s first year. If they takethis leave, they must stop working during thattime. Their compensation, in the amount of30% of their pay or of ‘standard pay’, is payablefor an overall maximum, for both parents, ofsix months in the child’s first three years (foradopted and foster children, the first threeyears that the child is with the family).The INPS also pays self-employed womena direct per diem maternity benefit for twomonths before the estimated date of childbirthand three months following the actual date ofbirth.4. UnemploymentOrdinary unemployment benefit is a form ofcompensation paid to workers who have beendismissed. To be eligible, claimants must havebeen insured with the INPS for at least twoyears and have accumulated at least 52 weeksof contributions in the two years preceding thecessation of employment. Workers with lessthan 52 weeks of contributions in the past twoyears but who have worked for at least 78 daysin the previous year or who have been insuredfor at least two years and had accumulated atleast one week of contributions before the twoyears preceding their application are generallyentitled to unemployment benefit for a periodequal to the number of days actually workedin the preceding year, up to a maximum of 156days.This benefit is also paid to workers whohave been suspended by companies affectedby temporary events for which neither theworkforce nor the employer is responsible. Itis not paid to workers who resign voluntarily,unless they do so for what is assessed as beinga good reason.Any worker who, without notifying thecompetent INPS office, engages in gainfulemployment while receiving an unemploymentallowance forfeits his or her right tobenefits. An employer who hires a workeron unemployment benefit is also subject toa penalty. Periods of suspension for whichunemployment compensation is authorised aretaken into account for pension entitlement.Unemployment benefit is paid for a period of240 days. This can be extended to a maximumof 360 days for persons over the age of 50.Workers who have been suspended can receiveunemployment benefit for a maximum of65 days. Workers who have been suspendedreceive 50% of their pay. The amount of thebenefit is equal to 40% of the claimant’s payin the three months preceding the cessation ofemployment, within the limits of a maximumgross monthly amount fixed by law.5. Old-age pensionThe 1995 pension reform introduced anew system for calculating old-age pensionin respect of contributions. This definedcontribution system (sistema contributivo)applies to all workers insured for the first timeon or after 1 January 1996.For those whose pension is based exclusivelyon the defined contribution system, thecontribution and pension base is limited to anannual ceiling. Pensions paid under this systemcannot be topped up by the minimum pensionsupplement.Social security systems around the globe 150

ItalyThe defined benefits system (sistemaretributivo) is for persons who hadaccumulated at least 18 years of insurancecontributions on 31 December 1995. Thepension will continue to be calculated on thebasis of the defined benefits system, partiallymodified by Law 335 of 8 August 1995 onreform of the compulsory and supplementarypension system in respect of the referenceperiod for earnings. The maximum pensionis based on 40 years of contributions, and foreach year of payment there is an incrementof 2% of the average pay that is taken intoaccount for the pension. Regressive rates areapplied to pay above a certain ceiling.A hybrid system (sistema misto) runs inparallel. For persons who had not accumulated18 years of insurance contributions on 31December 1995, the pension is calculatedaccording to the defined benefits system forthe portion corresponding to this period andaccording to the defined contributions systemfor the portion corresponding to the old agepension contributions accumulated since 1January 1996.All employed persons are conditionallyentitled to an old-age pension. Self-employedprofessionals are also entitled to a pension,but the rules governing this sector varyconsiderably, depending on insurancecategory. Employees must stop working inorder to receive a pension.Applications for retirement benefits must bemade directly to the competent Cassa or to theINPS. Many forms can be obtained from theINPS website.6. SurvivorsThe survivors’ pension is paid to certainmembers of a deceased’s family; it is apensione di reversibilità (survivors’ pension)if the deceased worker was receiving a directpension and a pensione indiretta (indirectpension) if, at the time of his or her death, thedeceased worker was not receiving a directpension but was fully entitled, with regard toinsurance and contributions requirements,to receive an ordinary invalidity allowanceor disability pension, or to receive an old-agepension before 1 January 1993.The family members who are entitled to thepension are: the spouse and any children who,at the time of death, are minors, students ordisabled; parents who, at the time of death,are 65 years of age or older, have no pensionand are dependent on the deceased, if thereis neither spouse nor children, or, if theydo exist, they are not eligible; unmarriedbrothers and sisters who, at the time of deathof their predecessor are disabled, without adirect or indirect pension, and dependent onthe deceased, if there is no spouse, childrenor parents, or, if they do exist, they are noteligible.The pension is paid following application fromthe first day of the month following that of thedeath of the retired or insured person. Therate of the direct survivors’ pension is 60% fora surviving spouse, 20% for each child. Anyeligible parents, brothers and sisters receive15% each.The sum of all fractional survivors’ pensionscannot exceed 100% of the direct pension. Forpensions payable after 1 September 1995, thepercentage for a single surviving child risesfrom 60 to 70%, and to 80% for two children.Since 1 September 1995, the amount of thesurvivor’s pension can be reduced by 25, 40or 50% if the beneficiary’s income is above acertain level. From this same date, survivors’pensions paid by the compulsory generalinsurance following an accident at work oroccupational disease cannot be drawn atthe same time as a life annuity for the sameevent, up to the amount of the annuity. Themore favourable provisions in effect prior to1 September 1995 remain in force and will beretired gradually as future improvements areenacted.Application for survivors’ pension must bemade directly to the competent Cassa or to theINPS. Many forms can be obtained from theINPS website.Social security systems around the globe 151

Italy7. Benefits in respect of accidents atwork and occupational diseasesAll employed persons engaged in certain typesof occupation or business that can give rise tooccupational injury or disease according toItalian law are insured against these risks.A worker who suffers an accident at workis entitled to medical assistance and cashbenefits. Note that, in order to receive orcontinue receiving cash benefits, claimantscannot refuse a treatment that is judgednecessary, even if they are already receivinga pension. INAIL supplies free prostheses toreduce the degree of disability, either ex officioor upon application. The employee may beeligible for different types of cash benefits paidby INAIL.The principal benefits are:Permanent loss of working capacityINAIL pays a monthly allowance incompensation for permanent disabilityresulting from an accident at work or anoccupational disease when it is assessed asexceeding a certain degree.In this regard, we note an important recentchange in the Italian system: whereas, untilrecently, only the revenue consequences ofthe injury were compensated, since 2000,compensation has been paid for any permanentdamage to the victim’s physical and mentalintegrity. INAIL now pays – in the form ofa capital settlement if the damage done isassessed at between 6 and 15% and in the formof a life pension if the damage is at least 16%– compensation for the ‘biological damage’suffered. This is intended to compensateworkers for the diminution in their ability toperform the activities through which they canexpress their personality (affective, social,political, cultural, religious, etc.).When the damage to claimants’ health is atleast 16%, it is considered to also have aneffect on their earning capacity, and so, insuch cases, compensation is paid to cover theincome consequences as well as the ‘quality oflife’ consequences. The amount of the pensionpaid is calculated on the basis of the pay theclaimant was receiving in the year before thedate of the accident or the onset of the illnessand the degree of disability.Permanent incapacity pensions are re-assessedannually. The degree of disability can be reassessed,ex officio or at the worker’s request,at any time during the first two years and atleast annually afterwards. The applicationfor review must be accompanied by a doctor’scertificate. The amount of the pensionis augmented by one twentieth for eachdependent child.Constant attendance supplementWhen total permanent disability makesconstant attendance necessary, a monthlyallowance is paid for this purpose if thisassistance is not directly supplied by the INAILwhere the person was hospitalised or by anyother organisation. This allowance is paid as asupplement to the disability pension.In the case of an accident at work, workersmust notify their employer immediately. If theaccident causes injuries that will take morethan three days to heal, the employer mustreport it to INAIL within two days of becomingaware of the event.Social security systems around the globe 152

ItalyCompetent authorities1. Salaried personsContributions paid by employers andemployees are collected by the National SocialSecurity Office (INPS/AGO) for salariedpersons, which then distributes them amongthe different institutions responsible for payingallowances and benefits.2. Self-employed personsSelf-employed persons join and pay socialcontributions to a social insurance fund forthe self employed under the oversight of theNational Social Security Office for the selfemployed(INPS/Gestione separata). Undercertain conditions, company directors can beself-employed.Social security systems around the globe 153

ItalyContactsLuca BarberaPartnerTel: +39 02 91605300luca.barbera@it.pwc.comMarco BarberaSenior managerTel: +39 02 91605307marco.barbera@it.pwc.comSocial security systems around the globe 154

Lithuania General background Covered personsLithuania has an extensivestatutory social security systembased on solidarity.Three events trigger entitlementunder the Lithuanian socialsecurity scheme:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social burdens (e.g.children, survivors): incomesupplements;• no earned income (outsidethe claimant’s control): basicincome.All persons working under an employment contract in Lithuania mustbe covered by a social security scheme.Social security contributions are also compulsory for self-employedindividuals, sportsmen, performers, individuals receiving incomeunder copyright agreements, farmers, notaries and bailiffs, etc.Social security contributions are not deductible from personal incomefor taxation purposes. At present, no lower or upper limit is set forsocial security contributions on employment-related income.Social security systems around the globe 155

LithuaniaContributionsSocial security contributions are due by boththe employee and the employer. Employeecontributions are deducted from gross pay,whilst employer contributions are paid on topof gross pay. Contributions are due on totalgross salary (in cash or in kind), without anyceiling.For persons working under employmentcontracts, the current social security rates are30.98%-32.6% for employers (insurers) and9% for employees (insured) (including 6%compulsory health tax).According to the Lithuanian legislation,an insurer is a legal entity or an individualwho has an obligation to pay social securitycontributions on particular income inLithuania.Other social security contribution rates are asfollows:Rate29.7% for insurersand 9% for insured28.5% for insurersand 9% for insured30.98% - 32.6% forinsurers and 9% forinsuredType of incomeIncome derived undercopyright agreements notreceived from an employerIncome derived from sportsactivities and performers’activities not received from anemployerIncome derived from sportsactivities, performers’activities or income derivedunder copyright agreementsreceived from an employer37.5% Income received fromindividual activities as aperson, including lawyers,notaries, bailiffs, exceptfor income derived underbusiness certificates 1Individuals with income from professionalactivities, sports activities and performers’activities not received from an employer,and under copyright agreements not enteredinto with an employer only have to paysocial security contributions on 50% of theirtaxable income. Moreover, contributionsare capped for such individuals, and in 2012are calculated on the amount not exceedingLTL 5,952 (EUR 1,724) a month or LTL 71,424(EUR 20,688) a year.1 A business certificate is a form of registered individualactivities when personal income tax is fixed and paid inadvance. In most cases it does not depend on the receivedamount of income.Social security systems around the globe 156

LithuaniaBenefits1. Health careHealth care covers both preventive andcurative care required for maintaining andrestoring a claimant’s health (e.g. generalmedical care, dental care, hospital care).The Lithuanian Ministry of Health hasapproved a list of prescription medicines withbasic prices and patient charges. This list isavailable at all pharmacies. Basic prices arereimbursed and patient charges are paid bypatients themselves.2. Sickness benefitsIn order to be eligible for sickness benefit inLithuania, claimants must have paid socialsecurity contributions for at least three monthsduring the last 12 months or for at least sixmonths during the last 24 months.The employer pays sickness benefit for thefirst two days of sick leave, amounting to80%-100% of the claimant’s average monthlyinsured earnings.The sickness benefit paid by the LithuanianSocial Security Fund is equal to 40% of theaverage monthly insured earnings of thethree months preceding the last calendarmonth before that when sickness started andis paid from the third to the seventh day ofsickness. It rises to 80% from the eighth dayof sickness until capacity for work has beenrestored, or the level of incapacity for work hasbeen defined, or until the first day on whichthe claimant takes part in an appropriatevocational rehabilitation programme.The maximum monthly reimbursed pay usedfor calculating sickness benefit is capped andcannot exceed the sum of 3.2 insured incomeamounts. As of 1 January 2012, the amountof insured income is LTL 1,488 (EUR 431)and so the monthly maximum is LTL 4,762(EUR 1,380), applying on the first day oftemporary incapacity for work.3. Maternity and maternity/paternitybenefitsThe maternity allowance is granted and paidfor the period covering the pregnancy andchildbirth leave. Expectant and new mothersare eligible for maternity benefits in Lithuaniaif the following conditions are met:• they work under an employmentagreement;• they are entitled to maternity leave;• the period of work was not less than12 months in the previous 24-monthperiod.When the child is born maternity/paternitybenefit is paid to one of the parents if thefollowing conditions are met:• the claimant works under an employmentagreement; and• they are entitled to maternity/paternityleave; and• the claimant has worked for a period ofnot less than 12 months in the previous24 months.Social security systems around the globe 157

LithuaniaSince 1 July 2011, maternity (or paternity)benefit has been 100% of the compensatedsalary amount if the recipient chooses only toreceive it during the first year after childbirth.Claimants opting to receive benefit for twoyears receive 70% of the compensated salaryamount during the first year and 40% duringthe second year.The monthly maximum and insured incomeare the same as for sickness benefit.4. RetirementRetirement pension is a benefit to whichpermanent residents of Lithuania are entitledbased on their work record and age. To beeligible for the State retirement pension,claimants must have worked and contributedfor 15 years.Currently, the retirement age is 62 years andsix months for men and 60 years for women.However, it has been decided to increase theretirement age for both men and women to 65,with gradual increases starting in 2012 andending in 2026.The State pension consists of a basic part, asupplementary part and a bonus based onwork record. A special formula is used forcalculating pensions in Lithuania.5. DisabilityA disability pension is granted to individualsmeeting the following requirements:• permanent resident of Lithuania;• recognised as incapable or only partiallycapable of work by the Disability andCapacity for Work Establishment Office(‘DCWEO’);• minimum qualifying period of work andcontributions.Claimants are deemed incapable of work ifthe DWCEO recognises that they have lost75‐100% of their capacity for work (i.e. theyare only capable of working 0-25%).Claimants are deemed partially capable ofwork if the DWCEO recognises that they havelost 45-70% of their capacity for work (i.e. theyare only capable of working 30-55%).Persons recognised as having lost 0-40% oftheir capacity for work (i.e. recognised ascapable of working 60-100%) are deemedcapable of work and are ineligible for adisability pension.The minimum and compulsory socialsecurity contribution record to be eligiblefor a disability pension is fixed depending onthe age of the claimant on the day his/herwork incapacity/partial capacity is fixed, i.e.the older the applicant, the longer the socialinsurance period that is required.The minimum record ensures the right forobtaining this pension, in other words, if thisrequirement is not met, the claimant willnot receive the pension. If a claimant has theminimum record, however does not have thecompulsory record, he/she will not be awardeda work incapacity pension of full amount; inother words, he/she will be paid a ‘partial’pension. If a claimant has the compulsoryrecord, he/she has the right to receive thefull amount of the pension. For example,a 22-year‐old claimant should have fourmonths of minimum required record and thecompulsory record is one year; a 60-year-oldindividual should have 14 years of minimumrequired record and 28 years of the compulsoryrecord.Social security systems around the globe 158

Lithuania6. PensionsSurvivor’s and orphan’s pensions are paid ifthe deceased met certain conditions relating tohis/her work record and any incapacity on thedate of death.Survivor’s pensionThe following individuals are entitled to asurvivor’s pension:• widows or widowers who have reachedretirement age, regardless of their age atthe time of their spouse’s death;• widows or widowers recognised asincapable of work or partially capableof work (prior to 1 July 2005, disabled)provided they meet certain conditionsrelated to the incapability.The amount is the basic amount for the Statesurvivor’s pension, which is laid down by thegovernment on a recommendation from theMinistry of Social Security and Labour. It maynot be less than LTL 70 (EUR 20) per month.Orphan’s pensionA deceased’s children and adopted childrenwho are under 18, or older if rated as disabled,and those who are duly registered as fulltimepupils and students of higher andpost-secondary educational institutions andvocational and general education schools andare over 18 are eligible for the orphan’s pensionuntil such time as they leave school or their24th birthday, whichever occurs earlier.The amount of orphan’s pension depends onthe age and capacity for work of the diseasedindividual and the number of children(including adopted children) eligible for apension.Pensions to orphans who have lost both parentsare paid for each. Where, after the death oftheir biological parents, orphans also qualifyfor an orphan’s pension due to the death ofan adoptive parent, they can opt to claim thelatter if that results in a higher payment.7. Benefits for occupational accidentsand occupational diseasesThere is no minimum qualifying periodfor accident-related disability benefits andoccupational diseases. In general, accidentsthat occur while working or commuting toand from work are covered and include caseswhere an employee becomes partially or fullydisabled.Benefit can be granted in the form of:• sickness benefit due to an accident at workor occupational disease;• lump-sum compensation/payment;• periodic compensation/payments fordisability as the result of an occupationalaccident or disease.Benefit for accidents at work is paid in theform of sickness benefit when temporarydisability occurs as a result of an accident atwork and sick leave is approved. It is equalto the average compensated income of thethree months before that when the temporarydisability started. It is paid for the entire periodof disability.Social security systems around the globe 159

LithuaniaA lump-sum payment is made in cases oftemporary disability resulting in a temporaryloss of ability to work not exceeding 30%.Where the claimant’s working ability isimpaired by up to 20%, a lump sum is paidamounting to 10% of the claimant’s averageearnings in the last 24 months. With 20 to 30%impairment, it rises to 20%.In cases of permanent disability representingimpairment not exceeding 30%, the benefit istrebled.Workers can claim periodic payments/compensation for disability if the impairmentpercentage exceeds 30%. The benefit is paid ona monthly basis.It is equal to 50% of the amount calculatedon the basis of the impairment percentagemultiplied by the compensation coefficient,multiplied by the insured income level for thecurrent year (LTL 1,170).Loss of capacity for work is certified by theDCWEO (see 5, above). The compensationcoefficient is calculated on the basis of averageannual insured earnings before the onsetof disability and average monthly insuredearnings at the onset of disability. Thecompensation coefficient must not be less than0.25 or greater than 3 (all the related detailsare set down in law).8. Unemployment benefitUnemployment benefit in Lithuania is grantedif:• the period of work was not less than18 months in the previous 36-month periodbefore the registration with the LithuanianLabour Office; or• an individual’s employment contractwas terminated without the fault of theemployee and on the employer’s initiative(or in a case of a bankruptcy).The unemployment insurance benefitconsists of a fixed amount which equalsto the amount of State Supported Income(LTL 350/EUR 101) and the variable partwhich is related to the unemployed person’samount of insured income received before theunemployment period. The maximum amountof unemployment benefit in 2012 amounts toLTL 650 (EUR 188) per month.Social security systems around the globe 160

LithuaniaCompetent authoritiesVoluntary socialsecurity schemeLithuanian social security is coordinated by the Ministry of SocialSecurity and Labour. All social security contributions are paid to theState Social Insurance Fund Board under the Ministry of Social Securityand Labour (‘SODRA’).Most State social insurance benefits are granted and paid by theterritorial units of SODRA. However, some benefits/allowances are paidby local municipalities or agencies under the Ministry.1. Voluntary social pension insurancePermanent residents of Lithuania or any Member State of the EuropeanUnion not younger than 16 years may apply for State voluntary socialpension insurance cover for just the periods when they are not coveredby compulsory state social pension insurance. Plus, individuals coveredby compulsory pension insurance for only the basic part of theirState social insurance pension may also apply for voluntary pensioninsurance under the relevant rules.2. Voluntary social insurance for sickness and maternitybenefitsPermanent residents of Lithuania or any Member State of the EuropeanUnion not younger than 16 years may apply for State social insurancefor sickness and maternity benefits on a voluntary basis, provided that:• they are not covered under compulsory sickness and maternitysocial insurance;• they have not reached retirement age;• they have not been recognised as incapable or partly capable ofwork (disabled), irrespective of what pension is given.Social security systems around the globe 161

LithuaniaContactsInga AbraškevičėTax consultantTel: +370 5 239 23 82inga.abraskevice@lt.pwc.comRasa ValatkevičiūtėSenior tax consultantTel: +370 5 254 69 35rasa.valatkeviciute@lt.pwc.comSocial security systems around the globe 162

Macedonia General background Covered personsMacedonia has an extensivestatutory social security systembased on solidarity.Three events trigger socialsecurity benefits:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social dependants (e.g.children, survivors, warinvalids): income supplement;• no earned income (outsidethe claimant’s control): basicincome.Social security contributions are due by:• Macedonian residents employed by a Macedonian or foreigncompany in Macedonia;• Macedonian residents employed abroad where they cannotparticipate in or benefit from the social security scheme in thecountry of employment;• Macedonian non-residents employed in Macedonia or working thereunder an assignment for a foreign entity, unless otherwise providedin a social security treaty; and• self-employed persons, individual farmers, independent artists, etc.in Macedonia.Social security systems around the globe 163

MacedoniaContributions1. Salaried personsUnder Macedonia’s Social SecurityContributions Act, social security contributionsare only due by employees. Their employersmust calculate contributions, withhold themfrom their employees’ gross salary and paythem over to the relevant authorities. Thecurrent levels of contributions are as follows:• Pension insurance........................18%• Health insurance......................... 7.3%• Additional health insurance........0.5%• Unemployment insurance............1.2%Total.......................................... 27%There is a prescribed minimum base forcalculating contributions equal to 50% ofthe average salary in Macedonia (which iscurrently EUR 497). There is also a prescribedmaximum base, which is six times the averagesalary in Macedonia.2. Self-employed personsSelf-employed persons have to calculate andpay their own social security contributions.They are calculated on the basis of theperson’s earned income, i.e. the monthlyadvance payments of personal income tax.The minimum base is the average salary inMacedonia for the previous year.Social security systems around the globe 164

MacedoniaBenefitsfor salaried persons1. Health careThe rights arising from health insurancecontributions include:• health protection in cases of illness andinjury not related to work;• health protection for work-related injuryand diseases;• salary compensation in cases of absencefrom work due to illness, injury orpregnancy and motherhood;• compensation of certain travel expenses.Health protection is defined as a system forcitizens of community and individual acts andmeasures with the purpose of retainment andbetterment of health, inhibition, cure and earlydiscovery of diseases, injuries and other healthhazards, timely and effective treatment, andhealth care and rehabilitation.2. Sickness benefitsAccording to the Health Insurance Act,which imposes mandatory health insurance,insured persons have a right to basic healthservices and health protection arising fromillness, work-related injuries and occupationaldiseases.Insured persons are also entitled to salarycompensation due to illness-related workabsences. In order to be entitled to salarycompensation, a person should have beenemployed for at least six months.The employer is obliged to compensate theemployee for his/her loss of salary during thefirst 30 days of sick leave by paying a varyingpercentage of the monthly average salary forthe last 12 months, as follows:• days o-7: 70%• days 8-14: 80%• days 15-30: 90%After that period, any salary compensationshould be paid by the Health Insurance Fund.3. Accidents at workAll salaried persons are covered againstaccidents at work and they are entitled toreceive an allowance in the amount of 100%of their salary during the period of theirabsence. This allowance is calculated and paidby the employer within the first month andafter this period by the Macedonian HealthInsurance Fund. If the injury or accidentwas made because of a fault of the employer,the employer bears the cost for paying theallowance during the whole period of absence.Victims of accidents at work are entitled toreimbursement of the costs of hospital care,physiotherapy and medical, surgical, dentaland pharmaceutical care as well as orthopaedicequipment, as per the Health Insurance Act.4. Occupational diseasesThere is a list of diseases recognised asoccupational diseases published in a rule book.If the disease figures in the list, sufferersworking in a sector in which they are exposedto a risk that may cause it will be recognisedas suffering from an occupational disease. Therule book lays down certain conditions andcriteria for each disease in the list.5. Family benefitsThe Child Protection Act lists several childsupport rights, including child allowanceand parental allowance. The child allowanceis allocated to the child, but can be realisedby the parent or other person(s) responsiblefor the child (e.g. legal guardians). The childallowance is realised depending on the child’sage and its family’s economical status.Social security systems around the globe 165

MacedoniaThe right to child allowance belongs to anychild who is resident in Macedonia and isstudying in Macedonia. Child allowance isdependent on the child’s age and the financialposition of the family. Amounts are:• child age 0-15: MKD 740 (EUR 12)• child age 16-18: MKD 1,175 (EUR 19)The monthly child allowance can be grantedfor families with monthly income notexceeding MKD 2,415 (EUR 39) or for singleparents with income not exceeding MKD 4,226(EUR 69). The total monthly allowance forchildren realised by the parent(s) is MKD 2,415(EUR 39).Furthermore, a parental one-time allowancecan be claimed by one parent of a family for thefirst newborn or adopted child. The allowedamount is MKD 4,829 (EUR 79), modified byan annual statistical living expenses factorpublished by the National Statistical Office.An additional parental allowance can beclaimed by mothers resident in Macedonia fortheir third child. It is paid monthly for a periodof ten years in the amount of MKD 8,048(EUR 131).6. Maternity benefitsUnder the Labour Relations Act, women aregiven special protection. Female employeesare entitled to nine months’ uninterruptedleave from work during pregnancy, birthand maternity, and one year’s leave in casesof multiple births. Based on the findingsof authorised medical institutions, femaleemployees may go on maternity leave 45 daysbefore giving birth and must do so 28 daysbefore the date the baby is expected. Duringmaternity leave, female employees are entitledto pay according to the health care regulations.A female employee entitled to maternity leavemay return to work prior to the end of thematernity leave period.Compensation during maternity leave isequal to the employee’s actual remuneration,capped at twice the average net salary paid inMacedonia in the previous year. It is paid bythe Health Insurance Fund.7. UnemploymentContributors to unemployment insurance areentitled to claim the following rights uponbecoming unemployed (defined as unemployedperson actively seeking a new employment):• monetary allowance, in the amount of 50%of the average monthly salary for the last12 – 24 months of their last employment(this amount cannot exceed 80% of thepublished average monthly salary perworker in the republic);• employment-related training;• health cover;• pension and health insurance for someunemployed categories;• beneficial employment conditions for thedisabled.8. RetirementThe pensionable age for an employee is64 years (men) / 62 years (women), anda minimum period of active employmentspanning 15 years is required.The rights arising from contributions topension and disability insurance include:• retirement and disability pension;• vocational training;• family pension;• monetary allowance for work-related injuryand diseases.In addition, the Pension and DisabilityInsurance Act sets down a pension systemcomprising three tiers:• first tier – a compulsory State pension fund,into which 65% of total compulsory pensionand disability contributions are paid;• second tier – a compulsory private pensionfund, into which 35% of total compulsorypension and disability contributions arepaid; and• third tier – a private pension fund made upof voluntary contributions.For the second tier, employees can contributeto either of two private pension funds.Voluntary pension contributions can be madeto voluntary pension funds.Social security systems around the globe 166

MacedoniaCompetent authoritiesVoluntary socialsecurity schemeThe Public Revenue Office is the authorised body overseeing thecalculation and payment of social security contributions. All employerssend their calculations to the Public Revenue Office, which checks themand, if they are correct, issues a declaration of acceptance, which is usedby the bank to pay the social security contributions and net salaries.In Macedonia, there is a voluntarily social security scheme for pensionand health insurance.Under the Pension and Disability Insurance Act, there is a multi-tierpension system in Macedonia. The third tier is for additional voluntarilycontributions by individuals over the age of 15 into a pension insurancescheme. The third tier is available to individuals who are alreadyentitled to regular pension insurance, individuals that are not entitledto regular pension insurance and individuals who are able to allocatefunds on behalf of others.Further, under the Health Insurance Act, besides regular healthinsurance, voluntary health insurance can be offered by insurancecompanies established under Macedonian law. Voluntary healthinsurance can cover the costs of medical services not covered by regularhealth insurance and individuals already entitled to regular healthinsurance. Voluntary health insurance is contracted with an insurancecompany.Social security systems around the globe 167

MacedoniaContactsPaul TobinPartnerTel: +359 2 935 5 116paul.tobin@bg.pwc.comMiroslav MarchevDirectorTel: +389 2 3140 908miroslav.marchev@mk.pwc.comSocial security systems around the globe 168

Malta General background Covered personsThe Maltese social securityact provides for a number ofbenefits, including retirementand disability pensions, sickness,injury and unemploymentbenefits, medical assistanceand other social allowances andbenefits. Entitlement to certainassistance arises regardless ofcontributions while other benefitscan be claimed on the basis of thecontributions paid, or deemed paid, by the beneficiary. Maltese law alsoprovides free hospitalisation for all Maltese citizens.The Maltese social security scheme is mainly aimed at assistingindividuals in three particular circumstances:• wage loss (e.g. unemployment, retirement, incapacity for work):substitute income;• social burdens (e.g. children, sickness): income supplements;• no earned income (outside the claimant’s control): assistanceallowances.For the purpose of contribution obligations, the social security actcategorises individuals as persons in insurable employment, selfoccupiedpersons and self-employed persons.Generally speaking, persons in insurable employment are all personsemployed in Malta, save for certain exceptions. Foreign (non-EU)workers who are not ordinarily resident in Malta should not bedeemed to be in an insurable employment if their employer is alreadypaying or has opted to pay contributions in respect of them under asocial insurance scheme in another country. Self-occupied personsare persons who are ordinarily resident in Malta and who deriveincome from a gainful occupation, other than employment. Personswho are ordinarily resident in Malta and who are not in an insurableemployment or self-occupied are categorised as self-employed persons(i.e. generally persons in receipt of passive income).Social security systems around the globe 169

MaltaContributions1. Salaried personsSocial security contributions are due bothby the employee and by the employer. Theemployee’s contributions are deducted fromhis/her gross pay, whilst the employer’scontributions are paid on top of his/her grosspay. Contributions are due on the total grosssalary, excluding remuneration for overtime,any form of bonus, any extra allowances, anyremuneration in kind and commissions.Social security contributions amount to 10% ofthe employee’s basic weekly wage, payable byboth the employee and the employer subject toa minimum and maximum contribution. Themaximum contribution varies depending onthe age of the insured person – for employeesborn before 1 January 1962, the currentmaximum weekly contribution is EUR 33.50and for employees born on or after 1 January1962, it is EUR 37.85.Certain reduction schemes are in place andapply to certain targeted groups (e.g. students).Employees’ contributions are paid by meansof a deduction from salary. Each employer isresponsible for forwarding both the employees’and his share of social security contributionsto the Department of Inland Revenue eachmonth.2. Self-employedSocial security contributions amount to 15%of annual net income, and are also subjectto a minimum and maximum contribution.The maximum varies depending on age – forpersons born before 1 January 1962, thecurrent maximum weekly contribution isEUR 49.54 and for persons born on or after1 January 1962, it is EUR 53.08.Contributions due by self-occupied and selfemployedpersons are payable every fourmonths in arrears.Social security systems around the globe 170

MaltaBenefitsfor salaried persons1. Health careMaltese law also provides free hospitalisationfor all Maltese citizens.2. Sickness benefitsAccording to Maltese law and collectiveagreements, employees are entitled to wagesduring illness. The length of entitlement tosick pay depends on how long the employeehas worked for the employer. When the illnesscontinues in the long term, the employer is nolonger obliged to pay wages. Employees areentitled to sickness benefits provided that theyare insured under the social security act.Conditions of entitlementProof of incapacity: a medical certificate froma general practitioner is required from the firstday of sickness. The patient is re-examinedevery week if the period of sickness exceedsone week. If, after 60 benefit days, the patientis still producing medical certificates, he/she isexamined by a medical panel appointed by theSocial Security Division to determine whethersickness benefit is still warranted.Qualifying period: entitlement to sicknessbenefit is subject to at least 50 weekly paidcontributions, of which 20 should have beenpaid or credited in the preceding two years.3. Unemployment benefitAny person in employment prior to applyingcan claim unemployment social benefit.Conditions of entitlementUnemployed persons must be registered withthe Employment and Training Corporation(ETC), be fit and available for work and have50 weeks of paid contributions, of which atleast 20 should be paid or credited in the twoprevious years.If the claimant leaves employment voluntarilyor because of misconduct, no benefit is paid fora period of six months. Registered unemployedlose their unemployment benefit entitlementif they refuse work offers for no justifiablereason.4. Maternity benefitsEmployed women who have recently givenbirth and avail themselves of the full 14-weekmaternity leave entitlement as stipulatedin Maltese labour law will be eligible formaternity leave benefit. It is paid for two weeksin 2012 and for four weeks from 2013 on.A self-employed woman who has recently givenbirth and is eligible for Maternity Benefit willalso be eligible to a Maternity Leave Benefit.This benefit is paid for 2 weeks in 2012 andfor four weeks from 2013 onwards and is inaddition to the maternity benefit entitlement.Conditions of entitlementA medical certificate from a generalpractitioner should confirm that the claimantis pregnant and the expected date ofconfinement.The employee may apply for maternity leavefor an uninterrupted period of 14 weeks. Shehas to notify her employer at least four weeksbefore the maternity leave begins, in so far aspracticable.An employee on maternity leave is entitled tofull wages during the first 14 weeks. In 2012,the government will pay maternity leavebenefit for two weeks following these 14 weeksand for four weeks in 2013.Social security systems around the globe 171

Malta5. Family benefits6. Retirement pensionConditions of entitlementBeneficiaries are all families residing in Malta,subject to means testing.There are various family benefits but two of themain ones are:(a) the supplementary allowance which ispayable subject to a ‘means testing’ wherethe latter means, in respect of a singleperson, aggregate income not exceedingEUR 8,405 per annum and, in respectof a married person, aggregate incomenot exceeding EUR 10,573 per annum.In order for persons to benefit from thesupplementary allowance they must notbe in receipt of a children’s allowance;(b)the energy benefit which is provided toboth single and married persons and issubject to a ‘means test’ which is set atannual income not exceeding EUR 8,401.Conditions of entitlementFor a family to claim, children of the householdmust reside in Malta and not have past their16th birthday, and the recipient must have careand custody of the child(ren).One of the main benefits under the socialsecurity system is the two-thirds retirementpension. Every insured person (subject tominimum paid contributions) is entitled toa retirement pension at retirement age. Thefull pension is equivalent to two-thirds ofthe pensionable income. The pensionableincome for employees and self-employed/self-occupied persons is the average annualbasic wage calculated by reference to a numberof years, where the calculation basis maydiffer on the basis of the date of birth of theparticular individual. The current maximumtwo-thirds retirement pension is EUR 223.31a week. It reduces in cases where the retireedoes not have a full contribution record.Those not entitled to the two-thirds pensionor whose two-thirds pension would otherwisebe reduced to below the national minimumpension are entitled to the national minimumpension, which is EUR 123.01 weekly for amarried person (maintaining his/her spouse)and EUR 102.71 weekly for any other person.The pensions reform introduced by Act XIXof 2006 provided for a new pensions systemthat is more adequate and sustainable for thefuture. The amending act provided for theestablishment of a mandatory second pensionand a voluntary third pension.The full rate of the two-thirds pension is equalto two-thirds of the pensionable income of aperson who, following his or her 18th birthdayhas paid or been credited with a yearly averageof 50 weeks of contributions over a period of:• 30 years in the case of a person born on orbefore 31 December 1951;• 35 years for a person born during 1952 to1961;• 40 years in the case of a person born on orafter 1 January 1962.7. Survivor’s pensionA survivor’s pension may be due to a widow(er)of a deceased contributor who was entitled to aretirement pension.Conditions of entitlementThe surviving spouse of a contributor must,immediately prior to widowhood, have hada legal right to be maintained by the otherspouse. A surviving spouse can be gainfullyoccupied and still entitled to a survivor’spension regardless of his/her earnings if he/she has children who have not yet reachedtheir 18th birthday or is over 65 years of age, orif his/her earnings are less than the minimumwage.Social security systems around the globe 172

MaltaCompetent authoritiesVoluntary socialsecurity schemeThe Income Tax Department collects contributions made by salariedpersons as well as those for self-employed/self-occupied persons. Thesocial security authorities administer any funds payable to insuredpersons.It should not generally be possible to pay voluntary contributions intothe Maltese social security scheme.Social security systems around the globe 173

MaltaContactsBernard AttardPartnerTel: +356 2564 6726bernard.attard@mt.pwc.comMark LautierManagerTel: +356 2564 6744mark.lautier@mt.pwc.comSocial security systems around the globe 174

Mexico General background Covered personsThe Mexican Social SecurityInstitute (IMSS) system ismandatory with regard to allnon-government employeesthroughout the country andis also applicable to foreignemployees working in Mexico forMexican companies. Employersand employees are required toregister at the IMSS and paypremiums.Anyone who renders a remunerated, subordinate, personal service toanother on a full-time or part-time basis is covered by the mandatoryscheme.Self-employed workers are covered by the Voluntary scheme.Social security systems around the globe 175

MexicoContributionsSocial security premiums are imposed via acontribution as a percentage of workers’ wages.Premiums are determined as a percentageof each employee’s wages. The computationdiffers depending on the following categories:sickness and maternity, life and disability, daycarecentres and social benefits, retirement andold age, and occupational risks (see table). Thepremiums are higher for the employer than theemployee.1. Base salary for calculatingpremiumsThis base salary is the daily wage registered foreach worker with the IMSS, and is the basis fordetermining premiums and benefits.Under the Social Security Law (SSL), basesalary is composed of payments made incash for daily wages, food, housing, bonuses,commissions, allowances in kind and any otheramount paid to the employee for his/her work.The SSL also contemplates that certain itemsprovided to employees are not part of basesalary, such as: working tools, savings funds,food baskets, attendance and punctualityawards and payments for overtime, amongothers. Certain prerequisites must be compliedwith in order to exclude those items.For the purpose of determining the basis forcalculating premiums, daily salary must beat least as high as the daily general minimumwage, but it is limited to 25 times the generalminimum wage per day.Social security premiums are deductiblein determining the taxable income of theemployer.Insurance Sub-insurance Employer Employee GovernmentIllness and maternity Benefits in kind 20.40% 1 13.90% 11.10% 2 0.40% 2Cash benefits 0.70% 3 0.25% 3 0.05% 3Medical expenses forpensioners1.05% 3 0.375% 3 0.075% 3Disability and life 1.75% 3 0.625% 3 0.13% 3Childcare and other socialbenefits1.00% 3 - -Early retirement and old age 3.15% 3 1.13% 3 0.2340% 3Retirement 2.00% 31 Applied to one daily Mexico City minimum wage (MCMW)2 Applied to the difference between the daily base salary and three times the daily MCMW3 Based on the daily base salarySocial security systems around the globe 176

Mexico2. Housing FundIn addition to the premiums required by theSSL, the Labour Law requires employers tocontribute to the National Worker’s HousingInstitute (INFONAVIT) in an amount equal to5% of employees’ daily basic salary. The basisfor determining housing fund contributionsis generally the same as that for calculatingIMSS benefits, capped at 25 times the generalminimum wage per day.3. Premium for Occupational RisksAs part of the social security system, theemployer must also pay a premium foroccupational risks (workers compensation).The basis for determining the premium is thesame as for calculating general IMSS benefits,capped at 25 times the general minimum wageper day. The rate varies from 0.5% to 15%,depending on the risk level of the company’soperations (type of industry and the company’sown history of work-related injuries).Social security systems around the globe 177

MexicoBenefitsOld-age pension benefitsCurrently, employees can qualify for one oftwo different pensions, depending on certaineconomic conditions and rules, and when theemployee first enrolled with the IMSS.Pre-1997 Social Security LawFor employees first enrolled before 1 July 1997.To qualify for monthly early retirementpension, the employee must:• be over 60;• have contributed to the IMSS for at least500 weeks;• not be enrolled with IMSS at the time of theapplication;• not currently be in employment.To qualify for a monthly old-age pension, theemployee must:• have reached 65 years of age;• have contributed to the IMSS for at least500 weeks;• not be enrolled with the IMSS.1997 Social Security LawFor employees first enrolled from 1 July 1997and voluntary for employees registered before1 July 1997.To qualify for monthly early retirementpension, the employee must:• be over 60;• have contributed to the IMSS for at least1,250 weeks;• not be enrolled with the IMSS at the time ofthe application;• not currently be in employment.To qualify for monthly old-age pension, theemployee must:• have reached 65 years of age;• have contributed to the IMSS for at least1,250 weeks;• not be enrolled with the IMSS at the time ofthe application.The IMSS provides the following coveredbenefits:• retirement;• disability;• hospital insurance (Medicare);• maternity;• occupational disease and accidents.Social security systems around the globe 178

MexicoCompetent authoritiesThe contributions are remitted to the social security authorities everymonth, except for retirement and old-age premiums, which are paidbimonthly to the AFORE (special financial-system entities that managethese funds).Social security systems around the globe 179

MexicoContactsJuan Manuel OrtizPartnerTel: +52 55 5263 5768juan.manuel.ortiz@mx.pwc.comDolores Enríquez MedinaManagerTel: +52 55 5263 8590dolores.enriquez@mx.pwc.comSocial security systems around the globe 180

Netherlands General background Covered personsThe Netherlands has an extensivestatutory social security systembased on solidarity.The Dutch social security schemeintervenes in three events:• wage loss (e.g. unemployment,retirement, incapacity forwork): substitute income;• social burdens (e.g.children, survivors): incomesupplements;• no earned income (outsidethe claimant’s control): basicincome.The Dutch statutory social security system is divided into two schemes:• scheme for residents: National insurance (benefits for all residents,regardless of whether they work or not);• scheme for employees: Employees insurances (benefits foremployees).Social security systems around the globe 181

NetherlandsContributions1. National insuranceNational insurance contributions are dueby all residents. Contributions are leviedtogether with wage tax. For people who donot have a Dutch wage tax withholding agent,contributions are paid via their personalincome tax return. Corrections to the amountswithheld via wage tax are also taken care ofvia personal income tax returns. Contributionsare due on taxable income, up to a maximumincome of EUR 33,863.The National insurance contributions arecalculated at a rate of 31.15%. This results in amaximum contribution amount of EUR 10,548.This is reduced by a levy rebate of EUR 3,356for people with income from employment. TheNational insurance rate is lower for those over65. People without income from employmentreceive a lower levy rebate.Those who are covered by Nationalinsurance but do not earn any income pay nocontributions.Contributions for health insurance are notincluded in the 31.15% rate. An incomedependentcontribution is levied via thepayroll. For employees, the rate is 7.1% at amaximum contribution base of EUR 50,064.Employers must reimburse this amount. Thisconstitutes taxable income for the employee.Those who are not employed pay an incomedependentcontribution of 5%. Apart from thiscontribution, everyone must take out medicalinsurance. The average annual premium isEUR 1,287. Children under 18 are covered forthe basic package free of charge.The first EUR 220 of annual medical costs arenot reimbursed by the insurance company.However, general practitioner charges areexcluded for this purpose.2. Employees’ insurancesEmployees’ insurance contributions are fullypaid by employers. Contributions are leviedvia the wage tax return and paid to the Dutchtax authorities. The premiums depend on theemployer’s type of business and the company’shistory of employee disability.The maximum income on which contributionsare charged is EUR 50,064. The average ratefor unemployment contributions is 7.32%. Forcalculating part of the contributions, there isa contribution-free amount. The maximumamount of unemployment contributions atthe average rate is EUR 5,684. The averagerate for disability contributions is 5.6%. Themaximum amount of disability contributions atthe average rate is EUR 2,804. As a result, themaximum contributions (at average rates) forEmployees’ Insurances is EUR 5,684.Social security systems around the globe 182

NetherlandsBenefits1. National insuranceRetirementRetirement pension is a benefit to whichclaimants are entitled based on age and yearsof Dutch social security coverage. It is notdependent on income earned or years worked.The normal retirement age in the Netherlandsis 65. It will be increased to 66 in 2019 and67 in 2023 by being increased by one or moremonths annually as of 2013.Pension is calculated on the basis of years ofDutch social security coverage and familysituation. A resident builds up an entitlementof 2% a year between the ages of 15 and 65.People with a full build-up receive the sameamount regardless of their employmenthistory.Survivors’ benefitsSurvivors’ benefits are paid to those who havelost their partner, and children who havelost one or both of their parents. Widow(er)sonly receive benefits if they were born before1 January 1950 or are at least 45% disabled.Widow(er)s’ benefit is reduced if the claimantreceives employment income. In order toreceive benefits, the deceased must have beencovered by Dutch social security for at leastpart of his/her career.The amount of widowers’ benefit is EUR 13,534a year. The benefit for a child who has lostone parent is EUR 3,236. For a child who haslost both parents, the amount varies betweenEUR 4,460 and EUR 8,730 depending on age.Health careThose subject to Dutch social security aremandatory covered for health care. Theymust take out a health insurance policy with aDutch insurance company. It needs to providea basic package (set by the government) toall applicants. This covers ordinary medicalcare by a general practitioner, hospital care,medicines, etc.Those who want more extensive coveragethan the basic package can take out additionalinsurance. Insurance companies can domedical checks before accepting applicants orcan refuse requests for additional coverage.Additional packages usually cover dental carefor adults, more extensive treatment from aphysiotherapist, etc.People who become subject to Dutch socialsecurity should apply for medical insurancewithin four months of their arrival.Specific types of long-term care for the elderly,handicapped and other categories are notcovered by medical insurance from insurancecompanies but by National Insurance.Examples are homes for the elderly, homes forthe handicapped, medical/practical assistanceat home.Family benefitsThere are several types of family allowances inthe Netherlands, of which child benefit is themost important.The amounts of child benefit depends on age.No child benefits are paid for children 18 andolder. The amounts are paid quarterly.Age of child:• 0 – 5: EUR 191.65• 6 – 11: EUR 232.71• 12 – 17: EUR 273.78If both parents work, they can be entitled to anallowance for child care or nursery if they meetcertain conditions.Social security systems around the globe 183

Netherlands2. Employees’ insurancesSickness benefitsSick employees are also entitled to benefitscovering loss of income.Employers must continue to pay salary forthe first 104 weeks of sickness. There is noentitlement to sickness benefits based on socialsecurity during this period. The employerneeds to pay at least 70% of the employee’ssalary, though limited to the maximum socialsecurity base of EUR 50,064. However, in mostcollective labour agreements, it is agreed thatemployers continue to pay full salary duringthe first 52 weeks.Sickness benefits based on social security areavailable to a limited category of people, suchas those on temporary contracts.Employers must make every effort toreintegrate the employee into the company.If the employee is still sick or incapable ofworking after 104 weeks, he/she will need toapply for disability benefit.DisabilityEmployees who are not able to earn at least65% of the wage they earned before theybecame sick can be entitled to disability benefitafter 104 weeks. There are two different typesof benefit: one for employees who are not ableto work at all and are not expected to do so inthe near future; and one for employees who areable to work partly.The former are entitled to 75% of themaximum social security base of EUR 50,064.This benefit ends when the employee reachespensionable age (currently 65) or is (partly)able to resume work.The latter receive benefits based on the level oftheir disability and their employment history.Disability benefit for partly disabled employeesvaries between a maximum of 70% of themaximum social security base of EUR 50,064and 28% of the minimum wage (EUR 18,872).UnemploymentReplacement income is granted to employeesin cases of involuntary loss of employment.However, it is not enough for claimants justto be subject to the social security scheme forsalaried persons. The first condition they needto meet is to have worked at least 26 of the last36 weeks. If this condition is met, claimantsare entitled to unemployment benefit for threemonths.In order to qualify for unemployment benefitsfor a longer period of time, claimants’employment history in years is looked at.Employees that have worked at least four outof the last five years receives unemploymentbenefits for a total of four months; those thatworked at least five out of the last six yearsreceive benefits for a total of five months, andso forth.In addition, claimants must comply withcertain formalities (e.g. register with theauthorities, write application letters, etc.).During the first two months, claimants areentitled to 75% of the maximum social securitybase (EUR 50,064). After that, the amountis reduced to 70%. Those who lose theirentitlement to unemployment benefit and stillhave no job should apply for special welfare atthe minimum level if they qualify.Maternity benefitsExpectant mothers are entitled to maternityleave of 16 weeks and an allowance during thatleave.Two periods can be distinguished:• the prenatal rest period: 6–4 weeks beforethe presumed date of delivery;• the postnatal rest period: 10–12 weeksafter delivery (ten weeks if six weeks ofprenatal rest are taken and 12 weeks ifthere are four weeks of prenatal rest).During maternity leave, employees are entitledto full pay up to a maximum of the maximumsocial security base of EUR 50,064. The benefitis usually paid to the employer, who at thesame time continues to pay regular wages.Most employers pay an additional allowance ifthe employee earns more than the maximumsocial security base. This is often regulated bycollective labour agreement or the company’sterms of employment.Fathers are also entitled to paternity leave oftwo days, to be taken during the four weeksfollowing the birth.Social security systems around the globe 184

NetherlandsCompetent authorities1. National insuranceContributions are paid to the Dutch taxauthorities by employers via wage tax returns.A final calculation is made via the Dutchincome tax return. People who are not subjectto wage tax pay their contributions to the taxauthorities via the Dutch income tax return.The competent authority with respect tobenefits is the ‘Sociale Verzekeringsbank’(SVB).2. Employees’ insurancesContributions are paid to the Dutchtax authorities via the wage tax return.The competent authority with respectto benefits is the ‘UitvoeringsinstantieWerknemersverzekeringen’ (UWV).Most company directors qualify as employeesin the Netherlands.Social security systems around the globe 185

NetherlandsVoluntary social security schemeProvided certain conditions are met, it ispossibly to get voluntary social securitycoverage in the Netherlands. Applicants mustnot fall under compulsory coverage.Applicants for voluntary retirement andsurvivors’ pension coverage should have beensubject to Dutch social security for at leastone year prior the time at which compulsorycoverage ended. Applications should be filedwith the SVB within one year.It is also possible to get voluntary retirementand survivors’ pension coverage if theapplicant did not work before the assignment.Hence, non-working partners can also obtaincoverage. They pay 10% of the maximumpremium.Applicants for voluntary unemployment anddisability coverage need to be employeesand have been subject to Dutch or EU/EEA/Swiss social security for at least one year priorto the time at which compulsory coverageended. Furthermore, employees should haveeither a Dutch employer or be resident in theNetherlands. Applications should be filed withthe UWV within 13 weeks.Voluntary coverage for sickness benefits(substitute income) is possible but notusually beneficial since only a small group ofemployees receive benefits and the conditionsare very strict. Most situations are covered bythe fact that employers are under an obligationto continue salary payments during the first104 weeks under Dutch labour law.It is the employee who takes out voluntaryinsurances but, in practice, most employers paythe contributions.Social security rates 2012AOW = RetirementANW = Survivors’ benefitsAWBZ = Exceptional medical expensesAKW = Child benefitsZVW = Health InsuranceWW = Unemployment benefitsWIA = DisabilitySocial security systems around the globe 186

NetherlandsNational insurance rates 2012National insurance Maximum income RateMaximum employeecontributionsAOW EUR 33,863 17.90% EUR 6,061.48ANW EUR 33,863 1.10% EUR 372.49AWBZ EUR 33,863 12.15% EUR 4,114.35AKW - - -Total 31.15% EUR 10,548.32Less: general levy rebate (N.I. part) (EUR 1,913.23)Less: employment levy rebate (N.I. part) (EUR 1,442.69)Total net costs EUR 7,192.40Employment levy rebate (national insurance part):• 1,442.69 for employees with income higher than EUR 51,418;• 1,516.09 for employees with income below EUR 45,178.Employment levy rebate is reduced gradually for income between EUR 45,178 and EUR 51,418.Health insurance rates 2012Health insurance Maximum income Rate Maximum contributionEmployer Employee Employer EmployeeZVW EUR 50,064.00 7.10% 0.00% EUR 3,554.54 EUR 0.00Taxation EUR 3,554.54 0.00% Max 52% EUR 0.00 EUR 1,848.36People who are not employed pay a rate of 5.0%.Social security systems around the globe 187

NetherlandsDutch employees’ insurance rates 2012Employees’ insurance Maximum income Rate Maximum contributionEmployer Employee Employer EmployeeWW> Awf> Wgf (average)> SurchargeEUR 50,064.00EUR 50,064.00EUR 50,064.004.55%2.27%0.5%0.00%0.00%0.00%EUR 1,494,00EUR 1,136.45EUR 250.320.00%0.00%0.00%WIA> basic> diff. (average)EUR 50,064.00EUR 50,064.005.05%0.55%0.00%0.00%EUR 2,528.23EUR 275.350.00%0.00%Total EUR 5,684.35 0.00%Unemployment benefits act (WW)• Contribution is paid on max. amount per wage period (EUR 4,172.00 a month or EUR 192.55 a day).• Contribution-free allowance applies to Awf (EUR 1,435.75 a month or EUR 66.27 a day).Disablement benefits act (WIA)WIA contribution is paid on a max. amount per wage period (EUR 4,172.00 a month or EUR 192.55 a day).Social security systems around the globe 188

NetherlandsContactsJustien HendriksManagerTel: +31 88 79 23987justien.hendriks@nl.pwc.comWendy ToonenAssistant managerTel: +31 88 79 24433wendy.toonen@nl.pwc.comSocial security systems around the globe 189

Norway General background ContributionsNormally all persons who areeither resident or workingas employees in Norway oron permanent or movableinstallations on the NorwegianContinental Shelf are mandatorilyin the Norwegian NationalInsurance Scheme (provided theyare not exempted under a socialsecurity agreement). Mandatorycover also extends to certaincategories of Norwegian citizensworking abroad.Compulsory contributors to theNorwegian National InsuranceScheme are entitled to old-age,survivors’ and disability pensions,basic benefit and attendance benefit in cases of disablement, workassessment allowance, occupational injury benefits, benefits to singleparents, cash benefits in cases of sickness, maternity, adoption andunemployment, medical benefits in cases of sickness and maternity, andfuneral grants.Most benefits from NAV are determined according to a basic amount(referred to as ‘G’). As per 1 May 2012, G amounts to NOK 82,122. Thisamount is adjusted by parliament each year in accordance with changesin the general income level.Rates for social security contributions applicable per September 2012:• employee: 7.8% of gross income;• employer: 14.1%;• self employed: 11%.The contribution is calculated on total Norwegian gross salary (andtaxable benefit) costs. The employer’s contribution is levied at a rateof 14.1%, but it can be lower if the employer is established in one of anumber of sparsely populated areas.Contributions from employees (7.8 %) and self-employed persons(11%) are calculated on the basis of pensionable income. Contributionson pensionable income are not paid on income less than NOK 39,600.Contributions do not exceed 25% of income exceeding this thresholdamount.They are calculated on the full amount and there is no cap. Paid-upsocial contributions are not reimbursed.Social security systems around the globe 190

NorwayBenefits1. Health CarePersons covered by the Norwegian socialsecurity system receive free ‘health care’, i.e.free accommodation and treatment, includingmedicines in hospitals, with the followingexceptions:• an own contribution is payable for doctor’svisits (approx. NOK 140 per visit – NOK 310for visits to specialists). Children under theage of 16 are free of charge;• individuals only get reimbursed 38% of theexpenses of important medication (max.NOK 520 per prescription);• dental care is fully payable by theindividual. Children under the age of 18 arefree of charge.There are some exemptions from the costsharingprovisions. A ceiling for cost-sharingis fixed by parliament from year to year.The ‘fastlege’ personal doctor system givesall residents of Norway the right to havetheir personal doctor: patients under thissystem need to be registered at a Norwegianaddress with the national registration office.In addition, a Norwegian national identitynumber must be provided.2. Sickness benefitEmployee with an annual income of at least0.5G are entitled to daily cash benefits in thecase of sickness. The occupational activitymust have lasted at least four weeks prior tothe sickness. Daily cash benefits for employeesequal 100% of pensionable income (themaximum benefit basis is 6G) and are paidfrom the first day of sickness and for up to52 weeks, including the employer’s part of16 days.Self-employed persons receive sicknessbenefits corresponding to 65% of pensionableincome from the 17th day of sickness for aperiod of 248 days. It is possible to pay a higherrate of contributions in order to receive bettercoverage.3. Parental benefitEmployee can receive parental benefit if theyhave had pensionable income for at leastsix of the last ten months before the benefitperiod starts (where both parents fulfil therequirements). The annual income must be atleast 0.5G. The self-employed are also entitledto parental benefit.The benefit period for parental benefit is 47weeks for full benefit, or 57 weeks at 80%of full benefit. Three weeks before the birthand six weeks thereafter are reserved for themother. Twelve weeks are reserved for thefather (the paternal quota). The rest of thebenefit period can be shared between theparents. Parental benefit is granted for incomeup to 6G.4. Lump-sum maternityWomen who do not qualify for parental benefitcan be granted a lump sum of NOK 35,263.Social security systems around the globe 191

Norway5. Child benefitChild benefit is granted for children who areresident in Norway and under the age of 18. Itamounts to NOK 970 per month per child andis not taxable.Cash benefit for families with smallchildren or cash-for-care benefitCash benefit can be granted for a child residentin Norway between the ages of one and twowho does not have a full-time place in a daycare centre that receives public subsidies(public grant). The rates depend on weeklyattendance at the day care centre. Themaximum benefit period is 11 months.6. Unemployment benefitDaily cash benefits during unemploymentcompensate loss of income due tounemployment. Working hours must havebeen reduced by at least 50%. Claimantsmust be capable of work and be registered atthe employment office (the local NAV (socialsecurity) office).Claimants must previously have earnedemployment income to be entitled to daily cashbenefits. They must have had income fromwork of at least 1.5G the preceding calendaryear or at least 3G during the three precedingcalendar years.The benefit period varies depending on theclaimant’s income from work record. Thedaily cash benefits amount to around 62.4% ofprevious income (the maximum benefit basisis 6G).7. Old-age pensionOn 1 January 2011, new legislation wasintroduced for drawing a national insuranceretirement pension.The pension reform made it possible forpensioners aged 62 to 75 to draw their old-agepensions flexibly with effect from 1 January2011. In order to draw an old-age pensionbefore age of 67, the pension must be equal toor more than the minimum pension level forpersons with an insurance period of 40 yearsonce the claimant reaches age 67.The effect the transition from the oldlegislation to the new legislation has on theaccumulation of pension rights dependson when the claimant was born. There aretransitional rules for all persons born between1943 and 1962. Those born in 1954 will receivea pension calculated nine tenths according tothe ‘old legislation’ and one tenth according tothe ‘new legislation’. For those born in or after1963, the new pension legislation will apply infull.8. ‘Old’ pension system – basicpension and supplementarypensionThe old age pension benefit consists of a basicpension and a supplementary pension and/or aspecial supplement.1. Basic pension is calculated on the basis ofperiods of residence and a full basic pensionrequires a minimum insurance period of40 years. As a main rule, a minimum ofthree years is required to earn any pensionentitlements at all. If the insurance period isless than 40 years, the basic pension will bereduced proportionally. A full basic pensionamounts to 100% of the basic amount(NOK 82,122) for a single person. A specialsupplement may be granted.2. There is entitlement to a supplementarypension if the claimant’s annual income hasexceeded the average G of any year for threeyears. Full pension points are earned forincome up to 6G (NOK 492,732). In addition,one third of the income between 6G and 12Gis credited as pensionable. Income exceeding12G is disregarded and the maximumachievable pension point is seven. The amountof supplementary pension depends on thenumber of pension-earning years and theyearly pension points. A full supplementarypension requires 40 pension-earning years.The aim of the supplementary pension is toprevent a marked decline in standard of livingupon retirement.Social security systems around the globe 192

Norway9. New pension reform10. Income-based pension11. Guaranteed pensionAs mentioned above, a new pension reformis being introduced in Norway. The newlegislation will have an impact on pensionsalready earned.The main features are:• employment income and retirementpension can be combined withoutrestriction;• optional retirement from age 62 ifsatisfactory contribution record;• possibility of part pension;All pensionable income earned betweenthe ages of 13 and 75 counts towards theState pension. The income-based pension isdetermined on the basis of the pension pot atthe time of drawing. The pension pot is thenconverted into an annual pension by dividingit by the pensioner’s annuity divisor, whichreflects his/her remaining life expectancy atthe time of drawing. The pension reserve willincrease by 18.1% of the contributor’s grossincome each calendar year. Income exceeding7.1G is disregarded.Persons insured for pension purposes andwho have a total insurance period of threeyears between the age of 16 and the yearthey become 66 are entitled to a guaranteedpension. It is not a requirement that claimantshave to be contributing at the time of claimingif they have been insured for at least 20 years(on the basis of periods of residence).• the retirement pension will be adjustedaccording to the anticipated duration of theclaimant’s life;• all years of employment will be counted/included in the pension benefit.Social security systems around the globe 193

NorwayCompetent authoritiesVoluntary socialsecurity schemeNAV – the Norwegian Labour and Welfare Administration(www.nav.no).Persons working/staying outside Norway may apply to contributevoluntarily to the Norwegian National Insurance Scheme. Applicantsmust have been insured in Norway for at least three of the last fivecalendar years preceding the application, and having close connections(business/social) with Norwegian society.Social security systems around the globe 194

NorwayContactsElin SaraiPartnerTel: +47 952 61 283elin.sarai@no.pwc.comKristin JacamentFast AdvokatTel: +47 952 60 394kristin.jacament@no.pwc.comSocial security systems around the globe 195

PolandPolandGeneral backgroundCovered personsPoland has an extensive statutorysocial security system based onsolidarity.The social security system inPoland consists of:• old-age pension insurance;• invalidity and survivor’spension insurance;• sickness and maternity/paternity insurance;• work accidents and occupational diseases insurance;• health insurance (within the health care system).Additionally, Poland has a system of family benefits, social assistancebenefits and unemployment benefits.The Polish social security system covers virtually all people in activeemployment, including:• employees;• self-employed persons;• farmers (special scheme not gone into in this country profile);• judges and public prosecutors (special scheme not gone into in thiscountry profile);and their family members.Social insurance may be compulsory or voluntary. Insurance iscompulsory for all people in active employment and they need to beaffiliated to the social security system either by virtue of their employerpaying contributions for them (in the case of employees) or by theirpaying their own contributions (e.g. for the self-employed or the clergy).Social security systems around the globe 196

PolandContributionsContributions in Poland should be reconciled,paid and declared on the appropriatedeclarations on a monthly basis by the tenth(for self-employed persons) or 15th day of thefollowing month (for employees).1. Salaried personsContributions to old-age pension insuranceare financed in equal parts by insured personsand contribution payers (i.e. employers). Therate is 9.76% of the assessment basis for each ofthese groups, which makes a total of 19.52%.Contributions to invalidity pension insuranceare financed at a rate of 1.5% of the assessmentbasis by beneficiaries, and 6.5% by employers,totalling 8% (as of 1 February 2012). Old-agepension and invalidity pension contributionsare paid on gross earnings up to an annual capof PLN 105,780 in 2012 (it changes for eachcalendar year).Contributions to sickness insurance (2.45%)and health insurance (9%) are fully financedby insured persons.Contributions to work accident insuranceare fully financed by employers. Differentpercentage rates apply for individualcontribution payers. It is 1.93% if workaccident insurance is taken out for up to nineemployees, and 0.67%-3.86% depending onthe type of economic activity/risk categoryif more than nine employees are affiliated.Contributions to the Labour Fund (at a rate of2.45%) and the Fund for Guaranteed EmployeeBenefits (at a rate of 0.1%) are also fullyfinanced by employers.Apart from employees, persons engaged undercivil law agreements (e.g. personal servicecontract or specific task agreement) arecovered under the Polish social security systemto a similar extent.2. Self-employed personsThe percentage rates presented above forsalaried persons apply accordingly to selfemployedindividuals, but they are fullyfinanced by the insured persons.The assessment basis for calculation of thesocial security contributions is the amountdeclared by the beneficiaries. However, itcannot be lower than 60% of the forecastaverage monthly income for a given year (i.e.PLN 2,115.60 a month in 2012), while, forcertain contributions (pension and disabilityinsurance), it cannot be higher than the capfor a given year (PLN 105,780 in 2012). As forhealth insurance contributions, the declaredbasis cannot be lower than 75% of the averagemonthly remuneration in the relevant businesssector in the fourth quarter of the previousyear (i.e. PLN 2,828.31 a month for 2012).A reduction scheme is available for personscommencing business activities (not in favourof a former employer) for up to two years.The basis for calculating the social securitycontributions for such persons is the declaredamount, but no less than 30% of the minimumremuneration in a given year (i.e. PLN 450 in2012).Social security systems around the globe 197

PolandBenefitsFor insured persons and their family members1. Health careBeneficiaries of free health care in Polandinclude those covered by general healthinsurance (either compulsory or voluntary) aswell as persons who are not directly insured:these are Polish citizens that require to meetcertain conditions.Free health care benefits are provided byservice providers with which the NFZ hascontracted. Such providers include doctorswho practise within the health insurancesystem (general practitioners, dentists),health care establishments (hospitals, firstaidservices, dispensaries, health centres,outpatient clinics, etc.) and private surgeries.Beneficiaries and eligible persons are entitledto medicines and medical devices on thebasis of a prescription issued by a doctor whopractises within the health insurance systemor by a doctor who does not practise withinthat system but has a contract with the NFZauthorising him to issue prescriptions.2. Sickness cash benefitsSickness insurance provides cash benefitsif the insured or a member of their familyfalls ill or becomes pregnant. The fund paysthe following benefits: sickness allowance,rehabilitation allowance, compensationallowance and child-minding allowance.Sickness allowances are granted on the basis ofmedical certification using the ZUS’s form ZLAto confirm temporary inability to work after acertain period of sickness. For the first 33 daysof sickness, employees continue to be paid bytheir employers. The allowance is due for eachday they are unable to work, including legalholidays. It is calculated on the basis of 1/30of monthly pay and paid for a period of up to182 days, or 270 days if the inability is causedby tuberculosis or occurred within the periodof pregnancy. The sickness allowance usuallyamounts to 80% of the calculation basis, withsome exemptions (e.g. 70% for the periodof hospitalisation, 100% if the inability wascaused by an accident at work, and so on).3. Accidents at work and occupationaldiseasesSickness, disability pension and indemnitybenefits connected with an accident at workor an occupational disease are paid fromthe accident insurance fund. They can be asfollows:• sickness allowance – paid from the first daythat the person is unable to work becauseof an accident at work or occupationaldisease;• rehabilitation allowance – paid for up to12 months to persons still unable to workwhen their eligibility for sickness allowancelapses, and who are expected to be ableto recover the ability to work with furthertreatment or therapeutic rehabilitation;• compensation allowance – paid to a personwho has suffered a reduction in pay due topermanent or long-lasting damage to hishealth;• invalidity pension.In addition, an insured person who hassuffered permanent or long-lasting damage tohis health as a result of an accident at work oran occupational disease may receive from theZUS lump-sum refunds of the costs of dentaltreatment, vaccinations and orthopaedicequipment as provided by law.The above insurance is only available withinthe compulsory social security system.Social security systems around the globe 198

Poland4. Invalidity benefitsInvalidity benefits are paid in the event of lossof cash income if an insured person becomesunable to work. They include invaliditypension due to inability to work, training, andsurvivors’ pensions.The right to an invalidity pension due toinability to work may be claimed by peoplewho meet the following requirements:• they are unable to work (they are deemedpartially or totally unable to hold anygainful employment because of the state oftheir health);• they can demonstrate that they havecompleted the required period for coverage(contributory and non-contributory);• the inability to work arose during periodsspecifically set out in the regulations (e.g.during the period of employment, etc.) ornot later than 18 months after the end ofthese periods.5. Survivor’s benefitsSurvivors’ benefits consist of a survivor’spension and a funeral allowance. Both are paidto members of the family (mainly children andthe spouse) of a deceased person.Children may receive a survivor’s pension ifthey have not reached the age of 16 (or 25 ifthey are still in education). Widow(er)s receivethe pension if, at the time of death, they are50 years of age or unable to work. They arealso eligible if they are younger than 50 butare raising at least one child who is under 16and eligible for a survivor’s pension in respectof the deceased. If the child of the deceasedis in education, the widow(er) may also claimthe survivor’s pension until the child’s 18thbirthday. Widow(er)s who reach the age of50 and become unable to work within lessthan five years after their spouse’s death arealso entitled to a survivor’s pension. Divorcedwidow(er)s are still eligible to receive thepension (even if they remarry) if they werereceiving alimony from the deceased.The amount of the survivor’s pensioncorresponds to 85-95% (depending on thenumber of beneficiaries) of the pension towhich the deceased was entitled. The statutoryminimum pension is PLN 728. All eligiblefamily members receive a single joint survivor’spension, which, if necessary, is divided equallyamong all the beneficiaries. To receive asurvivor’s pension, an application needs to besubmitted to the social security authorities.The funeral allowance is paid only once. Itmay be granted to the person who has coveredthe funeral costs. The funeral allowance is aone-off payment of PLN 4,000. The relevantapplication to the authorities has to besubmitted within 12 months of the death.Social security systems around the globe 199

Poland6. Family benefitsFamily benefits comprise family allowance andits supplements as well as attendance benefits.Family benefits may be claimed by people whoreside in Poland and whose family incomedoes not exceed PLN 504 per person in thefamily (PLN 583 per person if one of the familymembers is a disabled child).Family allowance is payable from the child’sbirth until his/her 18th birthday, or until thechild completes his/her education (but nolater than his/her 24th birthday if the child isdisabled and is in education, and his/her 21stbirthday for other children in education).The allowance is paid monthly and amounts toPLN 68-98 depending on the child’s age.Supplements amount to:• a childbirth lump-sum supplement –PLN 1,000;• a childcare allowance paid to persons onparental leave – PLN 400 monthly (paid forthe period not exceeding 24 months afterthe child’s birth);• a single-parent’s supplement – PLN 170monthly per child (but no more thanPLN 340 in total) or, for a disabled child,PLN 250 monthly per child (the maximumthen being PLN 500);• a large-family supplement – PLN 80monthly;• a disabled child’s training andrehabilitation supplement – PLN 60-80monthly;• a school year starter’s supplement –PLN 100 (yearly);• a supplement for educating a childaway from home – PLN 50-140 monthly(10 payments a year).Family benefits also cover attendance benefits(medical care allowance and nursing benefit)and are granted regardless of the family’sincome.The medical care allowance, which amounts toPLN 153 monthly, is paid for disabled childrenuntil age 16 and those over 16 who holdan official certificate of severe or moderatedisability that arose before their 21st birthday.This allowance is also granted to people over75 who are not eligible for an allowance inaddition to the old-age or invalidity pension.Nursing benefit is paid to people forced to giveup their job to take care of a child of theirs whosuffers from an officially certified disability. Itamounts to PLN 520 monthly.7. Maternity and paternity benefitsMaternity allowance is paid to any insuredperson who gives birth (or adopts a child).It amounts to 100% of the average monthlyremuneration paid over the last 12 calendarmonths before the claimant became unable towork and is paid by the employer during thematernity leave period. The period for which itis paid depends on the number of children bornand corresponds to 22-39 weeks (22 in the caseof a single birth).Maternity allowance may also be granted tothe father of the child, if he is insured, wherethe child’s mother has taken at least 14 weeksof maternity leave. In this case, the child’smother may transfer the remaining leave tothe child’s father, who is eligible for maternityleave or has ceased gainful activity to takecare of the child. If the child’s father does notwish to use the remaining maternity leave,the child’s mother is required to use at least20 weeks in the case of a single birth, and shecannot shorten it.Social security systems around the globe 200

Poland8. UnemploymentReplacement income is granted to persons whoinvoluntarily lose their salaried employment.However, being subject to the social securityscheme for salaried persons is not sufficient toclaim unemployment benefits. The claimantmust also prove a sufficient number of workingdays (e.g. invalidity, holidays) during aparticular reference period. Unemploymentinsurance is also only granted if there are nooffers of employment, training or internshipswith an employer, or public works appropriatefor an unemployed person.Unemployment benefit amounts to PLN 794a month for a period of three months, andPLN 624 thereafter.Depending on the length of the claimant’semployment period and the unemploymentrate within the area where he/she lives,the benefit may amount to 80-120% of theaforementioned amounts and may be paid for aperiod of from six to 12 months.In order to receive benefit, claimants mustregister as unemployed with the employmentagency.If the unemployed person is close to retirementage, there is also an early retirement benefitwhich may be granted by the social securityauthorities.9. Old-age pension and benefitsRetirement pension is a benefit to which aperson is entitled based on his or her workinglifetime and once a retirement age is reached.The normal retirement age in Poland is 65for men and 60 for women. Recently, higherlimits have been laid down: 67 for men and65 for women. This change will be graduallyimplemented by increasing the retirement ageby one month every four months as from 2013,which process will last till 2020 for men andtill 2040 for women.Depending on the year of birth, the retirementpension may be paid on the basis of the lengthof the claimant’s working career (for peopleborn before 1949) or on the basis of the capitalpaid into the system throughout their workinglife (for people born after 1968). People bornbetween 1949 and 1967 may receive a pensiondepending on their choice of one of the abovebases.More favourable conditions for old-age pensioneligibility are enjoyed by some special groups,such as war invalids or the military, publicsector employees, teachers, miners and railwayemployees.The statutory minimum pension is PLN 799and the maximum is 100% of the referencewage.Social security systems around the globe 201

PolandCompetent authorities1. Social securityThe social security system for people employedoutside the special schemes (for farmers,judges and public prosecutors) is managed bythe Social Insurance Institution (‘ZUS’) and itsregional branches.It collects all contributions to the system andtransfers them to the appropriate organisations(e.g. health insurance contributions to theNational Health Fund, a part of the pensioninsurance contribution to the open pensionfunds selected by each insured). It is alsoresponsible for sickness and maternity cashbenefits, retirement, invalidity and survivors’pensions, and employment injuries andoccupational diseases benefits.An Agricultural Social Insurance Fund(‘KRUS’) operates in Poland to provideadministrative services for the social securityscheme for farmers.2. Health insuranceThe health care system is managed by theNational Health Fund (‘NFZ’) and its localbranches. It is broadly responsible for financinghealth care benefits and refunding the costsof medicines. The regional health fundsare responsible for providing sickness andmaternity health care benefits.3. Other authoritiesOther authorities also provide specific socialbenefits in Poland, i.e. Community SocialPolicy Centres providing family benefits,Local and Regional Labour Offices providingunemployment benefits, and the State Fundfor Rehabilitation of the Disabled, which isresponsible for rehabilitation and employmentprogrammes for disabled persons.Social security systems around the globe 202

PolandVoluntary social security schemeIn Poland, it is possible to pay just pension anddisability insurance premiums on a voluntarybasis. Therefore, the scope of potential benefitsresulting from the voluntary social securityscheme may not include:• part of the funding for a future pension (ifthe declared basis for pension contributionsis lower than under the compulsoryscheme);• an allowance from the social securitysystem for periods of sickness exceeding 33days;• benefits resulting from contributionspayable solely by the employer (accident,labour fund and employee guaranteedbenefits fund).It is also possible to contribute separately tothe voluntary health insurance scheme. Forthat purpose, individuals need to enter into aspecial agreement with the NFZ.Voluntary contributions are payable on thedeclared value of income.1. Social security rates 2012 in Poland (binding from 1 April 2012)Type of insuranceTotal percentagerateEmployer’s partEmployee’s partPension 1) 19.52% 9.76% 9.76%Disability 1) 8.00% 6.50% 1.50%Sickness 2.45% – 2.45%Accident 1.93% 2) /(0.67% – 3.86%) 3) 1.93% 2) /(0.67% – 3.86%) 3) –Labour fund 2.45% 2.45% –Employee guaranteed benefits fund 0.10% 0.10% –Total 34.45% 2) /(33.19% – 36.38%) 3) 20.74% 2) /(19.48% – 22.67%) 3) 13.71%1)Contributions paid on gross earnings up to annual cap of PLN 105,7802)Employing up to nine employees3)Employing above nine employees – percentage rate depends on type of economic activity2. Health insurance contribution in poland for 2012The contribution in 2012 amounts to 9.00% of the assessment basis, i.e. gross income less theamount of the employee’s part of social security contributions. The amount of 7.75% of theassessment basis is deducted from the employee’s personal income tax liability while the remaining1.25% is financed from the employee’s net income. There is no cap on the basis for assessing healthinsurance contributions.Social security systems around the globe 203

PolandContactsBarbara KolimeczkowSenior managerTel: +48 22 523 4825barbara.kolimeczkow@pl.pwc.comAgnieszka JaneczekSenior consultantTel: +48 22 523 4062agnieszka.janeczek@pl.pwc.comSocial security systems around the globe 204

RomaniaRomania General background Covered personsThe Romanian social securitysystem includes a range ofcontribution-based and meanstestedbenefits and is based onsolidarity. The following mainareas are covered:• retirement;• bereavement;• incapacity for work;• job-loss;• family support;• health care.As a general rule, all individuals with a temporary or permanentresidence in Romania must pay into the Romanian social securitysystem. Liability depends on the type of income the individual is inreceipt of.Social security systems around the globe 205

RomaniaContributions1. Social security contributions onsalary incomeSocial security contributions are due by bothemployers and employees. The employee’sare deductible for tax purposes. They arecharged on the entire gross income receivedby employees; general and special exemptionsapply.The applicable social security rates are:Insurance type Employer EmployeeSocial security insurance –pension(old age pension, bereavement andsurvivor’s benefits)20.8%-30.8% (capped)(depending on working conditions)Cap: RON 10,585/ EUR 2,350multiplied by the number ofemployees10.5% (capped)Cap: 5 times the annual averagegross salary (RON 10,585/ EUR2,350)Health insurance 5.2% (uncapped) 5.5% (uncapped)Unemployment insurance 0.5% (uncapped) 0.5% (uncapped)Sick leave and sickness benefitinsuranceAccidents at work andoccupational diseases insurance0.85% (capped)Cap: RON 8,400/ EUR 1,865multiplied by the number of insuredemployees0.15%-0.85% (uncapped)(depending on working conditions)In addition, companies failing to employthe minimum number of employees withdisabilities required by law may insteadeither pay a monthly amount to the Treasuryor purchase products or services created orprovided by individuals with disabilities.Salary payment guarantee fund 0.25% (uncapped) N/AN/AN/ASocial security contributions on incomefrom self-employmentIncome from self-employment is subject toindividual health insurance contributions of5.5%.In addition, social insurance contributions of31.3% are due unless the individual alreadycontributes to the public pension system in agiven capacity, e.g. as employee. Contributionsare due on insured income, which can varybetween 35% of the annual gross averagewage (RON 741/EUR 165) and five times thatamount (RON 10,585/EUR 2,350).2. Social security contributions dueby self-sufficient individualsRomanian nationals keeping their domicilein Romania and foreign nationals residingin Romania have to pay monthly healthinsurance contributions of 5.5% of theRomanian minimum wage (RON 700/ EUR155) unless they are subject to the socialsecurity legislation of a country for whichRomania applies international social securityarrangements.Social security systems around the globe 206

RomaniaBenefits1. PensionsThe following main types of pensions may begranted in Romania to individuals insuredunder the public pensions system:Standard old-age pensionIn order to be eligible for a standard old-agepension, two cumulative conditions must bemet on the date of retirement: the standardpensionable age must have been reached(currently 65 for men, 63 for women) as mustthe minimum period of contributions into thepublic pensions system (currently 15 yearsfor both men and women). The completecontribution period is 35 for both sexes.Early old-age pensionIn order to be eligible for an early old-agepension, claimants must have exceeded thecomplete contribution period by at least eightyears (i.e. 43 years or more in total). Forindividuals working in the army, the police orother, related public sector institutions, specialconditions apply. Early pension may be appliedfor five years before the standard retirementage. This reduction cannot be combined withany other reductions.Part early old-age pensionTo be eligible for part early old-age pension,claimants must have contributed for thecomplete period or have exceeded it by up toeight years. The pension may be applied forno more than five years before reaching thestandard retirement age. The amount paid isreduced by 0.75% for each month the pensionis brought forward.Invalidity pensionsInvalidity pensions are paid to claimants whohave either partially or entirely lost theircapacity to work due to employment injuries,occupational diseases and other causes.Under certain conditions, invalidity pensionsare paid irrespective of the period the claimantcontributed for. In other cases, the requiredcontribution period varies depending on theclaimant’s age at the time the invalidity occurs.If the conditions for granting an old-agepension are met, it takes the place of invaliditypension. The amount more favourable to theclaimant will apply.Survivor’s pensionsThe children and surviving spouse of thedeceased are entitled to a survivor’s pensionprovided the deceased was a pensioner or wasentitled to a pension. The pension amount andthe time for which it is paid vary depending oncertain conditions (age, duration of marriage).Survivors’ pensions are based on the deceased’sold-age pension (entitlement or already paidout) or his/her first degree invalidity pension.The amount varies according to the number ofentitled survivors (50% for one survivor, 75%for two, 100% for three or more).Social security systems around the globe 207

Romania2. Unemployment benefit3. Family benefits4. Health care benefitsUnemployment benefit is available to claimantswith completed contribution periods of at least12 months during the last 24 months beforesigning on. They must actively look for work,be able to work and not be eligible for old-agepension benefits; their income must also bebelow a certain level.Benefit may be granted for periods from sixto 12 months depending on the length of thecontribution period. The amount depends onthe claimant’s gross average salary during thelast 12 months and the period for which he/shehas contributed.In addition to unemployment benefit, theunemployed may be entitled to other servicesprovided by employment agencies, which aremeant to increase the chances of integratinginto the labour market (e.g. career-orientationservices, vocational training or advice onstarting a business).There are several types of family supportallowances in Romania, like State childallowance, child-raising benefit and leave, andfamily support benefit.Children up to 18 or up to secondary or postsecondaryschool-leaving age are entitledto receive State child allowance. It is paidmonthly and is RON 200 for children up to twoand RON 42 for children aged two to 18.In addition, parents are entitled to childraisingbenefit and leave, provided they livetogether with the child who is in their care andhave received taxable income from employed/self-employed/agricultural activities for atleast 12 months. It may be paid monthly for12 or 24 months and represents 85% of theaverage net revenue received by the applicantparent during the last 12 months. The amountof benefit cannot be less than RON 600 ormore than RON 3,400, if paid for 12 months, orhigher than RON 1,200 if paid for 24 months.Family support benefit is social aid aimed atfamilies with at least one child in their careand whose average monthly income is belowa certain level. The benefit varies dependingon the number of children and the averagemonthly income of the family.Insured individuals may benefit from healthcare services in Romania for cases of illness oraccident, from the first day of sickness or thedate of the accident until full recovery.In particular, claimants are entitled: tochoose their medical service provider; to bereferred to a family physician of their choice;to receive medical services, certain medicines,sanitary products and medical devices in annon-discriminatory manner, in accordancewith the law; to reimbursement of expensesincurred during hospitalisation in respectof medicines, sanitary products and othermedical tests and examinations to which theyshould be entitled without charge; to undergomedical examinations for preventive purposes;to receive medical assistance services aimedat illness prevention and health promotion;to receive medical services in infirmaries orhospitals that are contracted with the healthinsurance authorities; to receive medicalservices in cases of emergency; to receivelimited dental care services; and to receivemedical care at home.Social security systems around the globe 208

Romania5. Sickness/maternity cash benefitsVictims of illness or those unable to work maybe entitled to leave and benefits intendedto replace the attendant loss of income. Theminimum contribution period to qualify forsickness/maternity cash benefits and leave isone month during the last 12 months beforethe benefit is granted.Sick leave and benefit for temporary incapacityof work are usually granted for up to 183 dayswithin 12 consecutive months counting asfrom the first day of sickness. Starting with the91st day of sickness, sick leave can be extendedby a specialist physician with the approval of asocial insurance practitioner. Sickness benefitis 75% of the patient’s average monthly incomefor the last six months, capped at 75% of theamount representing 12 times the nationalminimum wage (RON 8,400).Maternity leave and allowances are aimed atexpectant/new mothers and may be grantedfor periods of up to 126 days, of which 63 areprior to giving birth and 63 afterwards. Theallowance is 85% of the claimant’s averagemonthly income for the last six months, cappedat 85% of the amount representing 12 timesthe national minimum wage (RON 8,400).Child care leave and allowances maybe granted to one of the child’s parents,foster parents or guardians, provided theycontributed for a minimum of one monthduring the last 12 months and their sick childis under 7, or 18 in the case of children withdisabilities. Child care leave and allowancesmay be granted for up to 45 days for each childwithin a calendar year; the amount is 85% ofthe claimant’s average monthly income for thelast six months, capped at 85% of the amountrepresenting 12 times the national minimumwage (RON 8,400).6. Accidents at work and occupationaldiseases benefitsIndividuals insured within the Romanianinsurance system for accidents at work andoccupational diseases are entitled to thefollowing main services and benefits:Rehabilitation and job retraining servicesThese services are provided to insuredindividuals who can no longer perform theirusual activities as result of a work accidentor occupational disease. They are entitledto medical and psychological services toassess their physical and medical conditionand the skills they possess with a view to jobretraining. They are also entitled to receiveretraining courses, and allowances are paidduring the qualification and retraining period.The allowances are paid monthly at 70% ofthe claimant’s gross basic wage at the timethe accident at work or occupational diseaseoccurred.Allowances for temporary incapacity forworkIndividuals suffering a temporary loss of workcapacity as the result of an accident at workor an occupational disease are entitled to anallowance which covers 80% of the averagegross salary earned during the last six monthsbefore the risk occurred. In cases of medicaland surgical emergencies, this figure risesto 100%. It is paid for up to 180 days withina reference period of one year as from thefirst day of medical leave. In exceptionalcircumstances, it may be paid for longer, butthe extension may not exceed 90 days. It ispaid by the employer for the first three days ofincapacity of work and then by the insurer.Allowances for temporary transfer toanother work place and a reduction inworking timeIndividuals may be temporarily transferred toanother work place or their normal workingtime may be reduced by 25% if they can nolonger carry out their work at their currentwork place or according to current workpatterns due to an occupational disease or anaccident at work. The allowance is equal to thedifference between the average gross salaryearned over the last six months and the grosssalary earned after the change, but cannotexceed 25% of the claimant’s basic income.It is paid monthly for up to 90 days within acalendar year.Social security systems around the globe 209

RomaniaCompetent authorities1. Social security contributionsSocial security contributions due onemployment income are calculated, withheldand paid by employers to the Romanian TaxAdministration Agency (Agenţia Naţională deAdministrare Fiscală – ANAF) via its local taxoffices. Employers are required to file monthlyincome tax and social security contributionsreturns.As of 1 July 2012, social security contributionsdue by self-employed and self-sufficientindividuals are also payable to the ANAF,which has taken over responsibility formanaging and collecting their social securitycontributions from the social securityauthorities.The ANAF is also the competent authority toregister EEA/Swiss employers in Romaniafor social security purposes, and to manageand collect social security contributions duein Romania on the salaries of foreign nonresidentemployers.2. Social benefitsCompetence for implementing the legalprovisions in the area of social benefits lieswith:• the National Office for Public Pensions(Casa Nationala de Pensii Publice) inrespect of old-age pensions, bereavement,survivor’s pensions and benefits relatedto accidents at work and occupationaldiseases;• the National Agency for Employment(Agentia Nationala pentru Ocuparea Forteide Munca) in respect of unemploymentbenefit and labour market integrationmeasures;• the National Office for Health Insurance(Casa Nationala de Asigurari de Sanatate)in respect of sickness benefits in cash andin kind;• the National Agency for Social Benefits andInspection (Agentia Nationala pentru Platisi Inspectie Sociala) in respect of familyand social assistance benefits.Social security systems around the globe 210

RomaniaVoluntary social security schemeRomanian nationals and foreign nationalsresiding in Romania may take out voluntaryinsurance under the Romanian public pensionsand unemployment insurance systems.Voluntary insurance is allowed for those notcompulsorily insured under the Romaniansocial security system, and for persons whoare already insured and want to increase theirinsured amount up to the maximum providedby regulation.Voluntary insurance contributions are 31.3%and apply to an insured amount freely chosenby the individual, which cannot be less than35% of the Romanian annual gross averagewage (RON 741/EUR 165) or more than fivetimes that amount (RON 10,585/EUR 2,350).Voluntary insurance in the unemploymentsystem is allowed provided contributors arealso insured under the Romanian publicpensions and health insurance systems.Individuals wishing to voluntarily insureunder the unemployment system have to paycontributions of 1%, charged on an insuredamount freely chosen by the individual, whichcannot be less than the Romanian minimumwage (RON 700/EUR 155) or higher than fivetimes the Romanian annual gross averagewage (RON 10,585/EUR 2,350).Social security systems around the globe 211

RomaniaContactsOana ManuceanuSenior managerTel: +40 21 225 3722oana.manuceanu@ro.pwc.comBogdan Carpa-vecheSenior consultantTel: +40 21 225 3334bogdan.carpa-veche@ro.pwc.comSocial security systems around the globe 212

Russia General background Covered personsThe obligation to pay socialsecurity contributions in Russiagenerally lies with the payer ofincome, not the recipient.• Salaried individuals (including those who work under civil lawagreements);• civil servants;• individual entrepreneurs.Social security systems around the globe 213

RussiaContributions1. Salaried individualsUnder Russian law, employees do not paysocial insurance contributions on theiremployment income. Contributions are paidsolely by employers, on top of employees’remuneration.Insurance contributions to the social securityfunds for 2012 are calculated at 30% on payup to RUB 512,000, calculated as a cumulativetotal from the beginning of the year.Contributions on pay exceeding RUB 512,000are charged at 10%. The threshold is subject toannual indexation.The 30% contributions up to RUB 512,000 aresplit among the funds as follows:• 22% – State Pension Fund• 2.9% – Social Insurance Fund• 5.1% – Medical Insurance FundThe 10% contributions on amounts exceedingRUB 512,000 are paid to the State PensionFund only.In addition, Obligatory Accidental InsuranceContributions (‘OAIC’) are also due. The ratesvary from 0.2% to 8.5% depending on the levelof risk associated with the company’s industry.2. Foreign nationals temporarilystaying in RussiaEffective 1 January 2012, insurancecontributions are due to the State Pension Fundon the pay of foreign nationals temporarilystaying in Russia, except for highly qualifiedspecialists (‘HQSs’) and those whoseemployment is for a term of less than sixmonths. No contributions are paid to the SocialInsurance and Medical Insurance Funds on thepay of foreign nationals on a temporary stay.Hence, the rates charged are 22% for the firstRUB 512,000 and 10% on anything over thatthreshold.Therefore, the rates applicable to the annualremuneration of employees who are foreignnational employees temporarily staying inRussia (except for HQSs and those the termof whose employment is less than six months)are 22% for the first RUB 512,000 and 10% foramount exceeding that figure.3. Individual entrepreneursIndividual entrepreneurs pay annual insurancecontributions to the State Pension Fund andthe compulsory Medical Insurance Fund at therate based on the ‘cost of an insurance year’,which is the minimum monthly wage set downfor the year for which insurance contributionsare paid, multiplied by the relevant tariff andthen multiplied by 12.The minimum monthly wage as of1 January 2012 was RUB 4,611.The following tariffs apply for 2012:• Pension Fund – 26%;• Medical Insurance Fund – 5.1%.Thus, the cost of insurance year 2012is RUB 14,386.32 (Pension Fund) andRUB 2,821.93 (Medical Insurance Fund).Contributions are payable by 31 December ofthe current year.Social security systems around the globe 214

RussiaBenefits1. Contributions to State PensionFundFund contributions can be paid out as a labourpension on retirement (for individuals workingin normal conditions, at age 55 for women,60 for men; in cases of disability, loss ofbreadwinner, etc.). However, please be awarethat only Russian citizens and foreign nationalspermanently living in Russia are entitled to aRussian pension. Foreign nationals temporarilyliving and staying in Russia (the vast majorityof expatriates to Russia) have no right to thispension.The amount of the actual contributions paid byemployers to the State Pension Fund conferringentitlement to a Russian labour pension andthe length of service for which contributionsare paid (so-called ‘pensionable service’, whichmay not be less than five years) have a directimpact on the amount of pension that may beclaimed.2. Contributions to Federal MedicalInsurance FundAll employees who have an obligatory medicalinsurance policy should be covered by freemedical care.Foreign nationals temporarily staying in Russiaand HQSs plus their family members have noright to state medical insurance.3. Contributions to Social InsuranceFundIn practice, social insurance (i.e.unemployment material aid, material aidfor confinement, etc.) is available to allRussian citizens and foreign nationals (aswell as stateless persons) permanently andtemporarily living in Russia irrespectiveof their employment status. However, inthe absence of contributions with respectto a particular employee, material aid isin some cases calculated on the minimummonthly wage set down by the government(since 1 June 2011 and up to the present –RUB 4,611).4. Obligatory Accidental InsuranceContributionsIn the case of disability due to an accidentor occupational disease, compensation willbe paid to employees during the period ofdisability. The compensation is paid by theemployer, and costs are recoverable fromcentral government providing all supportingdocumentation is in order.Social security systems around the globe 215

RussiaCompetent authoritiesVoluntary socialsecurity scheme• Ministry of Labour and Social Protection;• Ministry of Health Care;• State Pension Fund;• Federal Medical Insurance Fund;• Social Insurance Fund.Individuals may continue to contribute to the State Pension Fund ona voluntary basis, in which case they have to register with the StatePension Fund and then pay the relevant contributions themselves.The scheme entails a certain administrative burden for individuals.Social security systems around the globe 216

RussiaContactsKarina KhudenkoPartnerTel: +7 (495) 232-5418karina.khudenko@ru.pwc.comEvgeny SivoushkovDirectorTel: +7 (495) 967-6286evgeny.sivoushkov@ru.pwc.comElizaveta MikhalkinaSenior managerTel: +7 (495) 287-1190elizaveta.mikhalkina@ru.pwc.comIlona ShataevaManagerTel: +7 (495) 967-6453ilona.shataeva@ru.pwc.comSocial security systems around the globe 217

Sierra Leone General background Covered personsSierra Leone has a statutorysocial security system to provideretirement and other benefits tomeet the contingency needs ofworkers and their dependantsand to provide for other relatedmatters.Sierra Leone’s statutory social security covers the following persons:• salaried persons – individuals who are linked to their employer byan employment agreement;• self-employed persons – individuals who do not have an employerbut work on their own account, including members who have lefttheir formal employment before retirement but desire to continuecontributing to the fund.Social security systems around the globe 218

Sierra LeoneContributions1. Salaried personsSocial security contributions are due byboth employees and employers. Employeescontribute 5% of their total monthly earnings,whilst employers contribute 10% of theiremployees’ monthly earnings.Contributions are due on the total emolumentsearned by employees without any ceiling,except for the value of any food concessions,rent allowances, overtime allowances, travelallowances, bonuses, commissions or any othersimilar allowance payable to workers.2. Self-employed personsThe self-employed and other voluntarycontributors contribute 15% of their monthlyincome from their profession, vocation,business or occupation.Contributions are expected to be remitted tothe NASSIT within 15 days after the end of themonth to which they relate.Social security systems around the globe 219

Sierra LeoneBenefitsFor both salaried and self-employed persons1. Old-age pension and old-agegratuityAn old age pension is paid when a memberattains the age of 60 and has contributed to thefund for a minimum of 180 months (15 years).The amount payable is calculated on the basisof 30% of average earnings for the first 15years of coverage, plus 2% of average earningsfor each additional 12-month period. The oldagegratuity is a lump sum equal to 12 monthsof initial pension paid when members qualifyfor the old-age pension.2. Retirement grantThis is paid to members who reachedretirement age but have not reached theminimum contribution period of 15 years. Agrant is paid equal to 1.5 times the insured’saverage monthly earnings for each 12-monthperiod of contributions.3. Invalidity pensionThis is granted when a determinable physicalor mental impairment prevents a memberfrom engaging in any meaningful gainfulemployment. A medical board appointed bythe authority certifies whether the member ispermanently and totally incapable of furtheremployment. To qualify, members shouldhave contributed to the fund for 15 years. Thepension is calculated on the basis of 30% of theinsured’s average earnings for the first 15 yearsof coverage, plus 2% of their average earningsfor each additional 12-month period. A sixmonthcredit period is awarded for every yearbefore age 60 that the claim is made.4. Invalidity grantWhere members are permanently and totallyincapable of further employment but do notqualify for invalidity pension as a result of notmeeting the minimum contribution period of15 years, they are given an invalidity grant.It is equal to 1.5 times the insured’s averagemonthly earnings for each 12-month period ofpaid contributions.5. Survivor’s pensionThis payment is made on the death of amember who was in receipt of old-age pensionor invalidity pension, or would have beenentitled to an old-age pension at the time ofdeath, or contributed for a minimum of 60months, of which 12 months’ contributionshad been paid in the 36 months precedingdeath and would have entitled him/her to aninvalidity pension at the time of death.Surviving widow(er)s are entitled to 40% ofthe insured’s pension payment and dependentchildren up to the age of 18 ( not in formaleducation) and 23 (in formal education) areentitled to 60%.6. Survivor’s grantIf the qualifying conditions for a survivor’spension are not met, a grant is paid equal to 1.5times the deceased’s average monthly earningsfor each 12-month period of contributions.Social security systems around the globe 220

Sierra LeoneCompetent authoritiesNational Social Security and Insurance Trust (NASSIT).Social security systems around the globe 221

Sierra LeoneContactsDarcy WhitePartnerTel: +233 302 761576darcy.white@gh.pwc.comGeorge KwatiaPartnerTel: +233 302 761459george.kwatia@gh.pwc.comSocial security systems around the globe 222

Singapore General background Covered personsThe Central Provident Fund (CPF)scheme is a statutory savingsscheme which aims to assistworking Singapore citizens andSingapore permanent residents(SPRs) with their retirementplanning and with meeting theirbasic needs in terms of health careand housing.The CPF scheme is a fully vested scheme whereby all contributionsmade by the employer and employee are credited to the account of themember.Singapore citizens and SPRs working in Singapore, as well as theiremployers, are required to contribute to the CPF.Foreigners are exempt from CPF contributions. Further, Singaporecitizens and SPRs working outside Singapore are also exempt from CPFcontributions.Social security systems around the globe 223

SingaporeContributionsEmployers and covered employees aremandatorily required to contribute to theCPF on a monthly basis. Contributions arecomputed by applying rates prescribed underthe CPF rules to employees’ ordinary wagesand additional wages. The terms ‘ordinarywages’ and ‘additional wages’ are defined asfollows:• Ordinary wages – wages due or grantedwholly and exclusively in respect ofan employee’s employment in a givenmonth and payable before the due datefor payment of CPF contributions for thatmonth. This usually comprises basic wagesfor the month, plus any overtime pay,commission or allowances earned in thatmonth.• Additional wages – wages which arenot granted wholly and exclusively forthe month. This usually refers to annualbonuses, annual commissions and othersuch payments that are paid at intervals ofmore than a month.However, the statutory employer and employeecontributions to the CPF based on bothordinary wages and additional wages aresubject to capping as follows:Ordinarywage ceilingAdditionalwage ceilingMaximum amount payableto the CPF is based on amonthly salary ceiling ofS$ 5,000 (since 1 September2011) for ordinary wages.Maximum amount ofadditional wages on whichCPF contributions arepayable = S$ 85,000 – totalordinary wages subject toCPF contributions in theyear, or actual additionalwages, whichever is lower(since 1 January 2012).The monthly contributions to CPF get allocatedto the following three accounts:1. ordinary account – savings can be usedto buy a home, pay for CPF insurance,investment and education;2. special account – for old age andinvestment in retirement-related financialproducts;3. medisave account – savings can be usedfor hospitalisation expenses and approvedmedical insurance.1. Rate of CPF contributionsThe rate of CPF contributions is dependent onthree factors:• Singapore citizen or SPR;• age group;• wage band.With respect to SPRs, CPF contributions arepayable once a foreign employee obtains SPRstatus. To help an SPR employee adjust tothe lower take-home pay, both the employerand employee are permitted to make CPFcontributions at graduated rates for the first twoyears. The first-year rate is payable from theday the employee obtains SPR status (which isthe date indicated on the entry permit (Form5/5A) that is issued by the Immigration andCheckpoints Authority of Singapore).Social security systems around the globe 224

Singapore2. CPF rates (since 1 September 2012)A. Rates applicable for:• Singapore citizens;• SPRs in the third and later years ofobtaining SPR status;• SPRs in the first and second years ofobtaining SPR status but who have jointlyapplied with their employer to contribute atfull employer and employee rates.Employeeage (Years)Employer(% of wage)Contribution rate(for monthly wages ≥ $ 1,500)Employee(% of wage)Total(% of wage)Ordinaryaccount(% of wage)Credited intoSpecialaccount(% of wage)Medisaveaccount(% of wage)35 & below 16 20 36 23 6 7Above 35-45 16 20 36 21 7 8Above 45-50 16 20 36 19 8 9Above 50-55 14 18.5 32.5 13.5 9.5 9.5Above 55-60 10.5 13 23.5 12 2 9.5Above 60-65 7 7.5 14.5 3.5 1.5 9.5Above 65 6.5 5 11.5 1 1 9.5Social security systems around the globe 225

SingaporeB. Rates applicable for SPRs in the firstand second years of obtaining SPRstatusEmployee’s totalwages for themonthTotalcontributions35 years and below Above 35-50 yearsContribution byemployeeTotalcontributionsContribution byemployeeFirst-year ratesAbove S$ 1500[9% (OW)]#+ 9% (AW)[5% (OW)] #+ 5% (AW)[9% (OW)] #+ 9% (AW)[5% (OW)] #+ 5% (AW)# Up to a maximumof S$ 450# Up to a maximumof S$ 250# Up to a maximumof S$ 450# Up to a maximumof S$ 2502 nd year rates[24% (OW)] #+ 24% (AW)[15% (OW)] #+ 15% (AW)[24% (OW)] #+ 24% (AW)[15% (OW)] #+ 15% (AW)# Up to a maximumof S$ 1200# Up to a maximumof S$ 750#Up to a maximumof S$ 1,200#Up to a maximumof S$ 750OW – Ordinary wagesAW – Additional wagesTW – Total wages (original + additional wages)Note:1. The above rates are applicable for private sector and non-pensionable employees.2. For first and second-year SPRs, rates for age bands above 50 and wage bandsbetween S$ 50.01-S$ 1500 can be accessed at the following link:http://mycpf.cpf.gov.sg/Employers/Gen-Info/cpf-Contri/ContriRa.htm.Social security systems around the globe 226

SingaporeBenefitsCompetent authoritiesContributions to CPF give rise to the following benefits for contributingemployees:• Retirement: CPF savings can be withdrawn when employees turn55, after meeting the CPF minimum sum (MS) requirements underthe MS Scheme. The CPF MS can be used to buy a life annuity froma participating insurance company or can be left in the retirementaccount (RA) with the CPF Board.• Health care: Medisave can be used to pay for the employee’s orhis/her dependants’ hospital expenses. It can also be used forcertain outpatient treatments like chemotherapy and radiotherapytreatments. Employees can also use Medisave savings to pay thepremiums for MediShield or private medical insurance plans underthe Private Medical Insurance Scheme (PMIS).• Home ownership: ordinary account savings can be used to buy ahome under the CPF housing schemes.CPF is managed by the CPF Board.Employers have a grace period of 14 days to make payment ofcontributions to the Board after the end of the month for which CPFcontributions are due. If the due date falls on a Saturday, Sunday orpublic holiday, CPF contributions must be paid by the next working day.The details of the CPF contribution also need to be submitted alongwith the payment.Employers are entitled to recover the employee’s share when thecontributions are paid for that month. If they fail to do so and thefailure was not due to the employer’s negligence, it can still make arecovery provided:1. it has paid the CPF contributions to the Board; and2. it has either forwarded its employee’s written consent to the Board,or obtained the Board’s written permission on the matter.This must be done within six months from the time the contributionsshould have been recovered.Social security systems around the globe 227

SingaporeVoluntary contributions to CPFEmployers can choose to make voluntary contributions to theiremployees’ CPF account in the case of Singapore citizens and SPRemployees working outside Singapore.The maximum amount of voluntary contributions that can be madefor a single person is the difference between the CPF Annual Limit ofS$ 30,600 and the amount of mandatory contributions paid for thecalendar year. No further voluntary contributions can be made if themandatory and voluntary contributions have already reached theprevailing CPF annual limit of S$ 30,600.Social security systems around the globe 228

SingaporeContactsJames ClemencePartnerTel: +65 6236 3948james.clemence@sg.pwc.comGirish NaikDirectorTel: +65 6236 3915girish.vikas.naik@sg.pwc.comSocial security systems around the globe 229

Slovakia General background Covered personsSlovakia has an extensivestatutory social security systembased on solidarity. Socialsecurity law is split into twoseparate areas; public healthinsurance and social insurance.The two areas are regulated bydifferent sets of rules. The socialsecurity system in Slovakiaincludes benefit provisions forold-age disability, death, sickness,maternity, unemployment andindustrial injury, and health.1. Social insurance• employees who have an employment contract with a Slovakemployer, regardless of whether the employee works in Slovakia;• self-employed persons: individuals who work outside the scope ofan employment contract (not gone into in this country profile);• voluntarily insured persons (not gone into in this country profile).2. Health insuranceContributions are compulsory for individuals who:• have their permanent residence in Slovakia;• do not have a permanent residence in Slovakia but are not insuredin another European Economic Area member state or Switzerlandand have an employment contract with a Slovak employer or aforeigner employer that has a Slovak permanent establishment;• do not have permanent residence in Slovakia but are not insured inanother European Economic Area member state or Switzerland andcarry on entrepreneurial activities in Slovakia;• are third-country nationals that are economic employees of a Slovakcompany.Social security systems around the globe 230

SlovakiaContributionsEmployers calculate and pay insurancecontributions for both themselves and theiremployees. For a given calendar month, theyare payable on the relevant payday into theaccount of the insurance company.The amount of contributions to health andsocial insurance (sickness, pension, guarantee,injury, unemployment, and the reserve fund) isa percentage of the assessment base.1. The assessment base for socialinsuranceThe assessment base for an employee is thesame as the tax base (all employment incomesubject to tax is also subject to social insurancepremiums). The maximum assessment base forpaying monthly insurance premiums for oldageinsurance and unemployment insuranceand into the reserve fund is four times theaverage monthly wage in the Slovak economy,effective two years ago (EUR 769 in 2010 and786 in 2011). The maximum assessment basefor paying the monthly insurance premium forsickness and guarantee insurance is 1.5 timesthe average monthly wage in Slovakia twoyears ago. Employers pay injury insurancepremiums out of their employees’ taxableemployment income, with no maximum limit.The Slovak government has amended thesocial insurance rules to consolidate themaximum assessment base as five times theaverage monthly wage for all insurances(EUR 3,930). The increased maxima come intoeffect on 1 January 2013.2. The assessment base for healthinsuranceThe assessment base for health insuranceis similar to that for social insurance. Themaximum assessment base is three timesaverage monthly salary. To calculate themaximum contributions paid during the year,a multiple is used of the average monthlysalary effective in the calendar year two yearsbefore that in which the contributions are paid(EUR 769 in 2010 and EUR 786 in 2011).The government has amended the healthinsurance rules by increasing the maximumassessment base to five times the averagemonthly wage in the Slovak economy,effective two years ago (EUR 786 in 2011).The increased maximum comes into effect on1 January 2013.Social security systems around the globe 231

SlovakiaBenefits1. Health insurance benefitsWith health insurance, an insured person isentitled to full or partial compensation forhealth care provided to prevent and treatsickness or injury.In Slovakia, health care is generally providedfree of charge. However, the majority ofdispensed medicines carry a patient charge,fixed by the government. There are currentlyno obligatory fees for a doctor’s visit or forprescriptions. However, different rules mayapply to private medical practices.2. Social insurance benefitsPensionOld-age pensionUnder the current law, people are entitledto receive an old-age pension based on thenumber of years they were insured.In general, insured qualify for an old-agepension (its proportional part) if they areinsured for at least 15 years (time spentworking and contributing in other EU countriescounts towards the 15-year threshold) andhave reached the pensionable age of 62.The pension insurance period is the periodfor both statutory and voluntary insurance. Italso includes any period when contributionsto pension insurance were not required, suchas when the insured individual was receivingmaternity benefits, benefits while takingcare of a sick family member, sick benefits, orduring military service.Early old-age pensionAn insured individual qualifies for an early oldagepension if he/she has paid old-age pensioncontributions for at least 15 years, is no morethan two years before pensionable age andthe amount of his/her early old-age pensionwould be no less than 1.2 times the subsistencelevel for each adult (the official minimumsubsistence level for the period from 1 July2012 is EUR 194.58 a month). If the insuredcontributes to the second pillar of the pensionsystem (i.e. old-age pension savings), theamount of early pension must be no less than0.6 times the subsistence level for each adult.After the recipient reaches pensionable age, theearly old-age pension is considered a regularold-age pension.Disability pensionDisabled insured persons who do not qualifyfor an early or regular old-age pension areeligible for a disability pension.However, they must have been insured for therequired number of years, which depends onhow old the disabled person is. The method forcomputing the amount of disability pensionis similar to that for computing an old-agepension. However, it depends on how much theclaimant’s ability to work is reduced.Widow or widower’s pensionA widow or widower is entitled to receive apension if their deceased spouse was in receiptof an old-age pension or met the conditions setout in the Social Insurance Act, or if the spousedied of an injury at work or an occupationalillness. The pension is provided for one year(under certain circumstances, the periodcan be longer). It is 60% of the pension thedeceased spouse was entitled to.Social security systems around the globe 232

SlovakiaOrphan’s pensionA dependent child may claim an orphan’spension if his or her deceased parent was inreceipt of a pension at the date of death ormet the pension eligibility conditions, or if theparent died as a result of an accident at work oran occupational illness.The orphan’s pension is 40% of the pension thedeceased parent was entitled to.Sickness insuranceSickness benefitSickness benefit is payable to employeesas compensation for their wages or workremuneration if they are temporarily unableto work as a result of sickness, an accident orhospitalisation.Over the first ten days of temporary inabilityto work, the employer pays compensation asfollows:• for the first, second and third days ofsickness, 25% of the employee’s dailyassessment base;• from the fourth day of sickness, 55% of thedaily assessment base.In a collective agreement, it is possible to agreea higher rate of compensation, up to 80% of theemployee’s assessment base.Starting on the eleventh day, sickness benefitis paid by the Social Insurance Agency insteadof the employer, at 55% of the daily assessmentbase.The daily assessment base is calculated as aquotient of the total assessment bases for thepayment of sickness insurance in the relevantperiod and the number of days in the relevantperiod. In general, the relevant period is thecalendar year preceding that in which theeligibility for sickness benefit arises. Theassessment base thus fixed also applies to allother benefits payable from sickness insurance.The maximum length of temporary inability towork is one calendar year.Nursing benefitNursing benefit is provided to employees whomust take care of:• a sick child or other family member, ifhis/her health condition requires care byanother person; or• a sick child up to the age of ten who is inquarantine or whose care centre has beenclosed by the authorities or whose regularcarer is sick.Support for taking care of a family member isprovided for no more than ten days, but notwhen the employee receives compensationfor temporary inability to work or sickness ormaternity benefits.The amount of this support is 55% of theclaimant’s daily assessment base.Maternity benefitsIn addition to meeting the general eligibilityconditions for sickness benefits specifiedabove, women must be insured for at least 270days over the last two years before childbirthin order to receive maternity benefits.Maternity benefits are provided to women forchildbirth and for taking care of their childfor 28 weeks from the date they are entitled togo on maternity leave. In the case of multiplebirths, or for single female employees takingcare of newborn babies, maternity benefitsextend to 37 weeks. Women usually go onmaternity leave six weeks, but no earlier thaneight weeks, before the expected birth.Maternity benefits are also provided to aninsured individual other than a mother who:• takes care of a child based on a courtdecision;• takes care of a child whose mother hasdied;• takes care of a child, and the motherdoes not receive monetary aid during thematernity period; or• takes care of a child because the mother isunable to do so.Social security systems around the globe 233

SlovakiaThe amount of maternity benefit is 65% of thedaily assessment base for each calendar day.On request, employers must grant insuredemployees parental leave until the child isthree years old. If the child suffers from aprolonged illness, parental leave is providedfor the requested period, usually one month,with maximum leave being until the childreaches six. While taking parental leave, theindividual taking care of the child is entitled toparental benefits (see section ‘Parental benefitsand childcare payment’).Compensatory allowanceIf a female employee performs work thatpregnant women, or women up to the endof the ninth month after childbirth, are notlegally allowed to do, or submits a doctor’sstatement that her work poses a danger forthe pregnancy or maternity, the employermust assign her a different job. If she receivesa lower salary during the re-assignment, sheis eligible for a compensatory allowance fromsickness insurance funds.This compensation is provided for the periodduring which the employee was eligible toreceive a salary from employment. Duringpregnancy, this compensatory allowance isprovided only until she goes on maternityleave. After returning from maternity leave,it can be provided up to the end of the ninthmonth after childbirth.The compensatory allowance is provided forcalendar months at 55% of the differencebetween the monthly assessment bases beforere-assignment.Injury allowancesInjury allowances are provided to employeessuffering injuries at work or occupationalillness.In the case of inability to work due to an injuryat work or an occupational illness, an employeeis eligible for injury compensation in additionto salary compensation for a temporaryinability to work, or in addition to sicknessbenefits:• for the first to the third day, at 55% of thedaily assessment base;• for the fourth day onwards, at 25% of thedaily assessment base.If the employee’s ability to work is reducedby 40% or more due to an injury at work oroccupational illness, he is eligible for an injuryannuity. If the reduction ranges between 10%and 40%, the employee is eligible for one-timecompensation.If it is expected that the employee will beable to return to work, he/she can be offeredrehabilitation or retraining, during whichrehabilitation or retraining allowances arepaid.An employee who suffers from an injury atwork or an occupational illness may claimcompensation for pain and limited socialopportunities, as well as compensation forcosts incurred for medical treatment whichhave not been covered by the mandatoryhealth insurance.If an employee dies as a result of an injuryat work or an occupational illness, specifiedsurvivors will receive a survivor’s injuryannuity and one-time indemnity. The personwho pays the funeral costs may also claimcompensation for this.Guarantee insurance allowanceEmployees can claim guarantee insuranceallowance if their employer becomes insolventand cannot fulfil their rights under the SocialInsurance Act.The guarantee allowance is payable for amaximum of three months from the last 18months of employment preceding the start ofinsolvency.Social security systems around the globe 234

SlovakiaUnemploymentState social allowances and state social aidParental benefit and childcare paymentIndividuals permanently or temporarilyresident in Slovakia who are not employedor engaged in business activities and takecare of one or more children aged up to threeyears are eligible for monthly parental benefit.The amount of the Parental benefit is notdependent on the number of children cared for.In general, parental benefit is EUR 194.70 amonth until the child reaches age three. Undercertain conditions, the amount is EUR 243.40until the child reaches age two.Childcare payment claimants must haveincome from employment, a business activityor self-employment or must be students.The purpose of the payment is to cover theexpenses parents incur for nurseries or similarinstitutions, or individuals taking care oftheir children, up to a certain limit. It can beclaimed until the child’s third birthday, or toage six if the child suffers from an illness. Bothparent and child must have their permanent ortemporary residence in Slovakia. The amountdepends on the actual expenses covered, but itis not more than EUR 194.70 a month.Parental benefit and childcare paymentsare paid by the local Office of Labour, SocialAffairs and Family, and must be claimed inwriting.An unemployed individual is someone who hassigned on as an unemployed job-seeker andcontributed to the unemployment fund for atleast two years in the three-year period beforesigning on; or who, in the four years beforesigning on, was insured as an employee withan employment contract for a fixed term of atleast two years.Eligibility for unemployment benefit endswhen the claimant signs off as a job-seekeror after six months, whichever is sooner. Thissix-month period is shortened to four monthsin the case of claimants who, in the four yearsbefore signing on, paid contributions under anemployment contract for a fixed term of twoyears or more. Eligibility also ends on the daythe claimant is granted an old-age, early oldageor disability pension.Unemployment benefit is not paid to claimantsin receipt of sickness, maternity or parentalbenefit, or benefit as a carer for a sick familymember.Entitlement to unemployment benefit resumesno earlier than two years after stoppingreceiving it.It is 50% of the daily assessment base for eachcalendar day.In addition to health care and social insurance,the system of social protection in Slovakiaincludes State social allowances and social aidto persons in hardship and to disabled persons.Childbirth payment and parental paymentThe childbirth payment is a State socialallowance in the form of compensation fornecessary costs related to the needs of anewborn baby. Mothers or other eligiblepersons are entitled to the payment only oncefor a given child. It is EUR 151.37. In the case ofmultiple births, it is EUR 227.06 per child.The criteria for the additional payment are thesame as for childbirth payments. It covers theincreased expense due to the birth of a first,second or third child. The amount for eachchild is EUR 678.49.Parental payments are made once a year forthe increased costs of caring for three or morechildren born at the same time, or two pairsof twins born within two years. The amountdepends on the age of the child and rangesfrom EUR 81.99 to EUR 107.55.One of the conditions for being eligible forthese payments is that recipients must havetheir permanent residence in Slovakia.Childbirth and parental payments are paid bythe Ministry of Labour, Social Affairs and theFamily, and must be claimed in writing.The amount may be reviewed by governmentdecree each 1 September.Social security systems around the globe 235

SlovakiaChild allowancesThe parent of a dependent child, a persontaking care of a child in loco parentis, or acarer of an adult dependent child is eligiblefor child allowances. Both the carer and thechild must have their permanent or temporaryresidence in Slovakia.A child is considered dependent until no longerlegally required to attend school, but no laterthan age 25. The amount of child allowanceis EUR 21.03 per child per month, regardlessof the child’s age and the joint income of thecarers.Claimants have to claim child allowances fromtheir local Office of Labour, Social Affairs andthe Family in writing.Social aid allowancesA social aid allowance is provided toindividuals in ‘material need’ to ensure thatthey have basic living conditions. Materialneed means that the individual’s income doesnot reach the statutory subsistence level andthe individual is unable to ensure or increasehis income by his own efforts.The Act defines the subsistence level as theminimum socially acceptable individualincome, below which is considered the povertylevel. From 1 July 2012, the subsistence levelis EUR 194.58 a month for an adult person. Itis EUR 135.74 for other adult family membersand EUR 88.22 for a dependent child. Forjointly assessed persons it is a total of theseamounts. The subsistence level is alwaysreviewed on 1 July each year.The social aid allowances range fromEUR 60.50 for an individual to EUR 212.30 fora couple with more than four children. Theymay be increased each 1 September.Other allowances paid as part of socialaid include special allowances (payableto individuals performing work for thecommunity or attending retraining courses),allowances for health care, housing orprotection, as well as other allowancesprovided to the disabled.Social security systems around the globe 236

SlovakiaCompetent authorities1. Social insuranceThe Ministry of Labour, Social Affairs andFamily is the competent authority for socialinsurance.All persons covered are insured with a SocialInsurance Company.2. Health insuranceThe Ministry of Health is the competentauthority for health insurance.Those covered can choose among three healthinsurance companies: the Dôvera and Unionprivate health insurance companies; and theVšeobecná zdravotná poisťovňa public healthinsurance company.Social security systems around the globe 237

SlovakiaVoluntary social security schemeSocial security rates in Slovakia in 2012 and 2013The Slovak government has amended the Social Insurance Act, consolidating the maximum assessment base at five times the average monthly wage inSlovakia in 2011 (EUR 763) for all insurances. The increased maxima come into effect on 1 January 2013.Employee contributionsEmployer contributionsIn EURRates Maximum base Maximum monthly contribution Rates Maximum base Maximum monthly contributionSickness 20121,153.50 16.141,153.50 16.141.4%1.4%Sickness 2013 3,930.00 55.02 3,930.00 55.02Retirement 20123,076.00 123.043,076.00 430.644%14%Retirement 2013 3,930.00 157.20 3,930.00 550.20Permanent disability 20123,076.00 92.283,076.00 92.283%3%Permanent disability 2013 3,930.00 117.90 3,930.00 117.90Unemployment 20123,076.00 30.763,076.00 30.761%1%Unemployment 2013 3,930.00 39.30 3,930.00 39.30Health insurance 20122,307.00 92,282,307.00 230.704%10%Health insurance 2013 3,930.00 157.20 3,930.00 393.00Guarantee insurance* 20121,153.50 2.88- - - 0.25%Guarantee insurance* 2013 3,930.00 9.82Accident insurance 20120.8% unlimited unlimited- - -Accident insurance 2013 0.8% unlimited unlimitedReserve fund** 21023,076.00 146.11- - - 4.75%Reserve fund** 2013 3,930.00 186.67Total 2012354.50 35.2%949.51 ***13.4% --Total 2013 526.62 35.2% 1,351.91 **** Guarantee insurance represents the employer’s contribution to the fund from which remuneration-related claims against insolvent employers are settled.** The reserve fund is a fund of the Social Insurance Company that it may use to cover the insolvency of other insurance funds (e.g. retirement pension funds).*** Injury insurance will increase the amount accordingly.Social security systems around the globe 238

SlovakiaContactsNatália FialováSenior managerTel: +421 2 59 350 612natalia.fialova@sk.pwc.comZuzana MaronováManagerTel: +421 2 59 350 634zuzana.maronova@sk.pwc.comSocial security systems around the globe 239

Slovenia General background Covered personsSlovene social security comprisesinsurance in the following areas:illness, unemployment, oldage, injury at work, disability,maternity, maintenance ofchildren and benefits to familymembers after the breadwinnerdies, and rights regulated by theSocial Assistance Act. The Stateregulates compulsory health,pension, disability and other social insurances, and ensures their properfunctioning. At the same time, it protects the family, motherhood,fatherhood, children and young people and creates the necessaryconditions for such protection.Social security contributions are paid by employees, insured persons,employers, the Republic of Slovenia, the Pension and DisabilityInsurance Institute of the Republic of Slovenia, the Health InsuranceInstitute of the Republic of Slovenia, the Employment Service ofSlovenia and other taxpayers in accordance with the Pension andDisability Insurance Act, the Health Care and Health Insurance Act,the Parental Protection and Family Benefit Act, and the Labour MarketRegulation Act.The following persons are covered by the Slovene social securitysystem:• employees employed in Slovenia;• Slovenian citizens employed with foreign companies;• self-employed persons;• unemployment benefit recipients;• there is voluntary coverage for certain categories of workers,including unemployed workers not in receipt of unemploymentbenefits, parents raising children, students and persons with priorcoverage.Social security systems around the globe 240

SloveniaContributionsEmployers, employees and self-employed persons pay social security contributions at the following rates:EmployerEmployeePension and disability insurance 8.85% 15.50%Compulsory health insurance 6.56% 6.36%Parental insurance 0.10% 0.10%Unemployment insurance 0.06% 0.14%Accident at work and occupational disease insurance 0.53% /Total 16.10% 22.10%1. Employed personsTaxpayers pay social security contributionson their gross wages and gross wagecompensation for absences from work in linewith the labour legislation. They also paysocial security contributions on other incomefrom employment, including incentivesand benefits and reimbursements of workrelatedexpenses paid in cash, payment notesor in kind. Severance payments paid dueto termination of employment for businessreasons in accordance with the labour law andpremiums paid into voluntary supplementarypension insurance in accordance with thePension and Disability Insurance Act are notsubject to social security contributions.Taxpayers who are in an employmentrelationship with an employer in Slovenia andhave been assigned to work in another countrypay social security contributions on the basis ofa wage for equivalent work in Slovenia.Certain employment income (e.g. severancepayments, solidarity aid, reimbursement ofwork-related expenses) is subject to socialsecurity contributions only in an amountexceeding the level fixed by the government.Social security contributions are due byemployers and employees. Employers paycontributions on top of gross wages andother employment income at the total rateof 16.1% without any cap applying to thegross wages (the basis). Employees pay socialsecurity contributions from gross wages andother employment income at the total rateof 22.1% without any cap applying to thegross wages (the basis). Both employers’ andemployees’ social security contributions are taxdeductible.2. Self-employed personsTaxpayers who do not receive wages pay socialsecurity contributions on the basis determinedby the Pension and Disability Insurance Act.The minimum insurance basis is based on thelevel of achieved profits, as determined by thetax authority. It ranges between the minimumwage and 2.4 times the average salary inSlovenia.The self-employed pay employer andemployee social security contributions at theprescribed rates.Social security systems around the globe 241

SloveniaBenefits1. Pension and invalidity insuranceCompulsory pension and invalidity insurancecovers:• the risks of old age;• invalidity;• assistance and attendance allowance;• physical impairment; and• death.Pursuant to the Pension and DisabilityInsurance Act, compulsory pension anddisability insurance in Slovenia guarantees thefollowing rights:The right to pension:• retirement pension;• invalidity pension;• surviving spouse’s pension;• surviving family member’s pension;• partial pension.Rights from disability insurance:• a right to vocational rehabilitation;• a right to compensation for disability;• a right to transfer to another workplace andpart-time work;• a right to other allowances under disabilityinsurance;• a right to reimbursement of travelexpenses.Supplementary rights:• a right to attendance allowance;• a right to disability allowance;• income support to supplement the pension.Other rights:• severance pay;• care allowance;• right to annual supplement.In addition to rights under compulsoryinsurance, pension and disability insurancealso provides for entitlement to a State pension(e.g. for war veterans).The minimum requirements for entitlement toan old-age pension are:For women:AgePension contribution period57 years 4 months 37 years 9 months61 years At least 20 years63 years At least 15 yearsFor men:Age58 years 40 yearsPension contribution period63 years At least 20 years65 years At least 15 yearsSocial security systems around the globe 242

Slovenia2. Health insuranceThe rights deriving from compulsory healthinsurance are specified in the Law on healthcare and health insurance and the regulationson compulsory health insurance, i.e. the actadopted by the assembly of the Institute ofHealth Insurance of Slovenia.Compulsory health insurance comprisesinsurance in the case of illness or injury outsidework, and insurance in the case of injury atwork and occupational diseases. The extentof rights to health care services is defined asa percentage share of the total service costs.This means that compulsory health insurance‘covers’ the majority of health-related risks,but not necessarily all of them or in full. Thebalance is either to be paid by the insuredperson or, alternatively, he/she can take out asupplementary top-up insurance policy.By statute, compulsory insurance covers thefull cost of the following health care services:• general health and other preventiveexaminations of babies, pre-schoolchildren, school children, adolescents andfull-time students, of women in relationto pregnancy, and of other adults, withthe exception of preventive examinations,which by statute are to be charged to theemployer;• prevention, detection and treatment of HIVand communicable diseases, measures toprevent the spread of which are laid downby statute;• compulsory vaccination, immunoprophylaxisand chemo-prophylaxis, inaccordance with the defined programme;The percentage of service prices covered bycompulsory health insurance varies accordingto the regulations. The shares are specified bythe Institute’s assembly, with the consent of thegovernment, and the law sets a lower limit.To the extent defined by statute, compulsoryhealth insurance covers:• the right to health care services: the rightto health care services comprises servicesat the primary health care level, includingdentistry, health care services in certaintypes of social care institutions, specialistoutpatient services, hospital and tertiarylevel services. In addition to medicalservices, the right to health care servicesalso encompasses the right to healthresort treatment, rehabilitation treatment,transport by ambulance and other vehicles,medicaments, technical aids and severalother rights;• treatment and rehabilitation in casesof malignant cancers, muscular andneuromuscular diseases, paraplegia,tetraplegia, cerebral palsy, epilepsy,haemophilia, mental illness, various formsof diabetes, multiple sclerosis and psoriasis;• treatment of occupational diseases orinjuries at work and medical rehabilitation;• health care services related to the donationand transplant of tissues and organs for thebenefit of others;• emergency medical treatment, includingemergency transport;• nursing visits at home, treatment andnursing at home and in nursing homes;• medicaments on prescription, in accordancewith the classification of medicaments,orthopaedic and other remedies related totreatment in cases of persons and healthconditions listed in the act.• the right to financial compensation: undercompulsory health insurance, insured areentitled to financial compensation: lostsalary during temporary absence fromwork; funeral and death allowances;reimbursement of travelling expensesrelated to the implementation of healthcare services.• early detection and prevention of diseases,in accordance with the programme; healthcare services to women concerning familyplanning counselling, contraceptivemeasures, pregnancy and childbirth;Social security systems around the globe 243

Slovenia3. Unemployment insuranceThe unemployment insurance schemeguarantees payment of unemploymentbenefits. The period of entitlement tounemployment benefit is:• 3 months for an insurance period of9 months to 5 years;• 6 months for insurance period of 5 years to15 years;• 9 months for insurance period of 15 yearsto 25 years;• 12 months for insurance period above25 years;• 19 months for insured persons aged over 50and insured for more than 25 years;• 25 months for insured persons aged over 55and insured for more than 25 years.4. Parental protection insuranceParental protection insurance covers:• parental leave (maternity, childcare,paternity and adoption leave);• parental benefits (maternity, childcare,paternity and adoption benefits).for employed persons and self-employedpersons.Persons insured under the parental protectioninsurance scheme are entitled to the followingbenefits.Maternity leaveMaternity leave is intended for preparing forgiving birth and care and protection of thechild immediately after birth. The mother hasthe right to maternity leave but, under certainconditions, this right may also be exercised bythe father or another person.Maternity leave lasts 105 days and must beused in a single block of time in the form ofcomplete absence from work. The level of theallowance is determined using the average payreceived by the (expectant) mother over thepreceding 12 months.Paternal leavePaternal leave is intended for fathers to be ableto share the child‘s care and protection withthe mother during the child’s most vulnerableperiod. This right is not transferable. Paternalleave lasts for 90 days. The father must use hispaternal leave as follows:• at least 15 days in the form of full absencefrom work up until the child is agedsix months. The father receives wagecompensation for these 15 days;• 75 days in the form of complete absencefrom work up until the child is three yearsof age.The father may use paternal leave in a singletime block or in individual days. The level ofpaternity allowance for the 15 days when thechild is born amounts to 100% of the father’saverage pay. He receives no allowance for theremaining 75 days, although his social securitycontributions, amounting to the minimumwage, are paid for the duration of his paternityleave.Leave for care and protection of a childThe right to leave for care and protection of achild may be exercised by both parents and,under legally specified conditions, also otherpersons. Leave for care and protection followsimmediately after maternity leave and isintended for the further care and protectionof the child. The parents agree in writing onhow leave for care and protection will be sued30 days prior to the end of maternity leave. Theagreement may also be changed under certainlegally specified conditions.The level of childcare allowance is determinedon the basis of the average pay which thebeneficiary received in the preceding 12months. However, the allowance may notexceed two-and-a-half times the gross averagepay.Adopter‘s leaveAdopter‘s leave is intended for one orboth adopting parents to be able to devotethemselves fully to a child immediately afteradoption. The right to adopter‘s leave may beused in a single time block with full or partialabsence from work. One or both parents mayuse the leave simultaneously, whereby the totalduration of adopter‘s leave may not last longerthan 150 days (one parent) or 120 days (both).Social security systems around the globe 244

SloveniaRight to part-time workingFamily benefitsLarge family allowanceLarge family allowance is an annual benefitintended for families with three or morechildren younger than 18 or 26 if they arein full-time education and have the status ofpupil, student or apprentice. The allowance fora family with three children currently amountsto EUR 393.46 and for a family with four ormore children it is EUR 479.83.The right to work part-time may be exercisedby one of the parents who is caring for andprotecting a child of up to three years of age.One of the parents who cares for and protectstwo children may exercise the right to parttimeworking until the younger child is six.One of the parents who cares for and protectsa child with a severe motor handicap or amoderately to severely mentally handicappedchild may extend the right until the child is18 years of age. It may be extended on the basisof the opinion of a medical commission.Right to payment of social securitycontributionsThe right to payment of social securitycontributions may be claimed by applicants forpart-time working. The employer guaranteesthe applicant the right to payment accordingto actual working duties, and the Republicof Slovenia guarantees the payment of socialsecurity contributions based on full workingtime.Payment of contributions in the case offour and more childrenA parent who leaves the labour market toprotect and care of four or more childrenis entitled to payment of social securitycontributions based on the minimum wageuntil the youngest child has reached his/hertenth birthday.Family benefits are cash benefits, i.e. parentalallowance, childbirth grant, child benefit, largefamily allowance, special childcare allowanceand partial payment for loss of income.Parental allowanceParental allowance is financial assistance toparents when, after the birth of a child, theyare not entitled to parental benefit under theParental Protection and Family Receipts Act.There is a full right for 365 days from the birthof the child. Currently, the monthly allowanceis EUR 196.75.Childbirth allowanceChildbirth allowance is a single monetarypayment intended for the purchase ofaccessories for a newborn child. Currently, itamounts to EUR 280.75. It is possible to chooseaccessories for the newborn in the form of alayette instead of money.Child allowanceChild allowance is a supplementary benefit formaintenance, care and education of childrenwhen the income per family member does notexceed 99% of the average pay in Slovenia inthe past calendar year or in the previous yearif the child allowance is first claimed in themonths of January, February or March.Allowance for care of a child needingspecial care and protectionThe allowance for care of a child is amonetary allowance for a child that needsspecial care and protection and is intendedto cover the higher living costs that a familyincurs because of caring for and protectingsuch a child. Currently, it amounts to EUR101.05. The allowance for care of a child withseriously disturbed mental development or aserious motor handicap currently amounts toEUR 202.17.Partial payment for lost incomePartial payment for lost income is a monthlypersonal benefit paid to one of the parentswhen he or she terminates employment orbegins to work part-time to care for andprotect a child with seriously disturbed mentaldevelopment or a serious motor handicap. Thelevel of the partial payment for lost income isthe minimum wage.Social security systems around the globe 245

SloveniaCompetent authoritiesVoluntary socialsecurity schemeSocial security contributions are collected by the Slovene tax authorityand are administered by and paid to the following:• parental insurance: social work centres, under the supervision of theMinistry of Labour, Family and Social Affairs;• unemployment insurance contributions: Employment Service ofSlovenia, under the supervision of the Ministry of Labour, Familyand Social Affairs;• pension and disability insurance: Pension and Disability InsuranceInstitute of the Republic of Slovenia, under the supervision of theMinistry of Labour, Family and Social Affairs;• compulsory health insurance and accident at work and occupationaldisease insurance: Health Insurance Institute of the Republic ofSlovenia.Pursuant to ZPIZ-1, individuals in Slovenia who fulfil the prescribedconditions may assign up voluntarily for compulsory pension anddisability insurance. It covers:• the risks of old age;• invalidity;• death.The following may voluntarily be included in the compulsoryunemployment insurance system:• Slovene citizens in an employment relationship with a foreignemployer who cannot obtain unemployment rights on any otherbasis;• persons with a suspended employment contract.Social security systems around the globe 246

SloveniaContactsÁkos BurjánDirectorTel: +386 1 583 6058akos.burjan@si.pwc.comMira GoršičManagerTel: +386 1 583 6056mira.gorsic@si.pwc.comSocial security systems around the globe 247

South-Africa General background Covered personsSouth Africa has no Statesponsoredsocial securityother than the UnemploymentInsurance Fund (‘UIF’) and theCompensation for OccupationalInjuries and Diseases (‘COID’)and, as a result, South Africa isnot party to any social securitytreaties.In respect of health care benefits,sickness benefits, family benefits,personal accident cover and retirement, these are all typically coveredby private policies in South Africa. They are usually privately funded,by either the employee or employer or both, and costs are generallybased on the employee’s cost to the company and the extent of cover inrelation to the employee.With a few specific exceptions (e.g. in the case of UIF, state employeesand expatriate employees required to repatriate at the end of theircontracts), most employers would be required to register for and payboth UIF and COID and, consequently, most employees would becovered.As regards the private cover referred to above, this would differ fromemployer to employer as there is no statutory obligation to providethese benefits to employees and the provisions of such benefits wouldbe governed by employer’s individual employment practices as well asspecific agreements with employees.Social security systems around the globe 248

South-AfricaContributions1. UIFThe UIF has been established in order toprovide short-term relief to workers when theybecome unemployed or are unable to workbecause of illness, maternity or adoption leaveand also to provide relief to the dependantsof a deceased contributor in terms of theUnemployment Insurance Act (‘UI Act’). It ismanaged by the Compensation Commissionerunder the auspices of the Department ofLabour. It provides five types of benefits:• unemployment benefits;• illness benefits;• maternity benefits;• adoption benefits; and• dependants’ benefits.A 1% contribution, based on the remunerationpaid to the employee, must be made eachmonth by both the employer and the employeefor UIF cover. The amount of remunerationupon which the contribution is currentlybased is capped R 178,464 per annum. Thiseffectively means that the maximum amountthat an employee and employer can each makein respect of UIF contributions is R 148.72 amonth.However, with regard to foreign inboundassignees to South Africa who are present on awork permit which requires them to repatriateat the end of their assignment, both theyand their employers are exempt from payingUIF contributions and, consequently, are notentitled to claim any UIF benefits.2. COIDCOID allows for compensation to be paidto employees who, as a result of their workactivities, are partially or totally disabled orcontract an occupational disease. Employersare responsible for paying a rate determinedwith reference to the industry that they arein, which is applied to the earnings paid toemployees. The contribution rate can varybetween 0.11% (banking and insurance) and8.26% (tunnelling, rock drilling and blasting).The amount is paid annually, also to theDepartment of Labour.Social security systems around the globe 249

South-AfricaBenefitsCompetent authorities1. UIFMaximum benefits apply after four years of contribution.Unemployment benefits apply for eight months at a rate of 38% of themonthly salary up to a maximum monthly salary of R 14,872. Maternitybenefits apply for 17 weeks, and illness benefit applies for 238 days ina four year period. Benefits are calculated as a percentage of monthlysalary subject to a monthly cap.UIF AND COIDThe competent authority for both UIF and COID is the Department ofLabour (www.labour.gov.za) through the Unemployment InsuranceCommissioner in the case of UIF and the Compensation Commissionerin the case of COID.2. COIDCompensation is based on the earnings of the employee at the time ofthe accident and the extent of the injury or disease and could includea percentage of salary for a limited period, reasonable medical costs,funeral costs, a monthly pension for surviving family, and transport toreceive medical attention.Social security systems around the globe 250

South-AfricaContactsAlan SeccombePartnerTel: +27 11 797 4110alan.seccombe@za.pwc.comJames WhitakerPartnerTel: +27 21 529 2638james.whitaker@za.pwc.comSocial security systems around the globe 251

St-LuciaGeneral backgroundThe St. Lucian National Insurance schemeis a system whereby employees contribute apercentage of their earnings matched by anequal amount by the employer, and receivebenefits when they are unable to earn incomethrough illness, maternity, or employmentinjury. The payroll deductions are not put intoa special account for the individual worker;instead they are used to pay benefits to thosecurrently collecting benefits.Benefits under the NIC Act comprise:• sickness benefit;• invalidity benefit;• maternity benefit, comprising maternitygrant and allowance;• hospitalisation and medical treatment;• survivors benefit including: widow’sallowance, widower’s allowance, widow’spension, widower’s pension, survivor’sgrant;• retirement benefit including: retirementgrant, retirement pension;• funeral grant;• employment injury benefit includingdisablement benefit and medical expenses.Social security systems around the globe 252

St-LuciaCovered personsSubject to the NIC Act, these are persons who:• are between the ages of 16 and 60;• are engaged in insurable employment;• are registered in the prescribed mannerunder the Act;• have fulfilled such conditions as may beprescribed as to be domiciled or residencein Saint Lucia; or• are in employment outside Saint Luciaunder such conditions as are prescribed;and• were members of the National ProvidentFund, established under the repealedNational Provident Fund Act, 1970, and areinsured persons under the NIC Act.These persons are considered insured inrespect of the several contingencies in relationto which benefits are provided under the Act,and remain so insured until they satisfy theconditions for retirement. This includes boththe self employed and salaried workers of SaintLucia, for whom the NIC is the only form ofsocial security authority.The Minister responsible for the NIC maymake regulations to provide for the treatingfollowing categories to be treated as insurableemployment:• any category of employment which,though not employment under a contractof service, is subject to such conditions asto make it similar to employment under acontract of service;• any employment outside Saint Lucia incontinuation of any insurable employment;• employment outside Saint Lucia of a persondomiciled or having a place of residencein Saint Lucia, being employment as amember of the diplomatic or consularservice of Saint. Lucia or as a domesticworker employed by a member of suchservice.Social security systems around the globe 253

St-LuciaContributionsContributions are a half-and-half endeavourbetween the employer and employee, wherethe employee’s contribution is 5% of his/her gross wages/salaries and the other 5%is provided by the employer. As of January2001, deductions have been made on allamounts up to and including the first $ 5,000per month. Gross wages include overtimepay, cost of living allowance, commission/profit on sales, payment on account of night/shift work, service charge, holiday pay, andtravel allowances in excess of $ 500 a month.Christmas bonuses, annual production,severance payments and terminal gratuitiesare not considered as wages and will notattract deductions; neither will payment madein lieu of leave.Employees and their employers are exemptfrom liability for paying contributions for anycontribution period in which no work is doneby the employee and the employee and forwhich receives no wages or any period duringwhich an employee is in full-time unpaidapprenticeship.Contributions paid under the Act by employeesand employers are allowable deductions underthe Income Tax Act.Social security systems around the globe 254

St-LuciaBenefitsand eligibility requirements1. SicknessSickness benefits are of a short-term natureonly. However, qualifying claimants canreceive benefit for a maximum of 26 weeks ofcontinuous illness. Benefits are paid at the rateof 65% of average insurable earnings, based onthe last four months’ earnings prior to takingsick leave; however no benefit is paid for thefirst three days of absence.In order to qualify, claimants must beunable to work due to illness, be in insurableemployment at the time that the illness occurs,have contributed for at least six months,including at least two months in the last fourmonths before the month of illness; and theymust have a medical certificate of their illnessfrom a registered medical practitioner.2. InvalidityIn order to qualify for invalidity benefits,claimants must be under pensionable age,must not be in receipt of sickness benefit,must be an invalid other than as a result of anemployment injury and have paid at least 60months of contributions to the NIC, of which36 consecutive months immediately precedingthe month of invalidity. Where a person hascontributed for more than 60 months but lessthan 120 months, the rate of invalidity pensionis 35% of average pensionable earnings.Where a person has made over 120 months ofcontributions, the rate of invalidity pension is40% of the average pensionable earnings in thebest three years of the last ten, plus 0.1% foreach month of contributions in excess of 120.3. MaternityMaternity benefits consist of both short-termand long-term benefits, once the woman meetsthe eligibility requirements. The NIC paysa maternity grant of $ 600 whether or not asalary is paid (and the pregnancy has lasted28 weeks). The NIC also pays out a monthlyallowance calculated at 65% of the relevantaverage insurable earnings, which is paid forthree months if full wages/salaries are not paidto the woman or her (common law) spouse. Inorder to qualify, the woman or her (commonlaw) husband must: have made contributionsfor at least seven of the last ten months priorto the month of expected confinement; becertified as pregnant by a doctor/registeredmidwife; and provide proof of the marriage orcommon law arrangement if claiming on thehusband’s contributions.4. Survivor’s benefitFor the spouse/dependant of a deceased toreceive benefits, the deceased must have beena contributor to the NIC and must have been inreceipt of, or eligible to receive, other longtermpensions (retirement/ invalidity). Wherethere are no dependants besides the spouse,the benefits consist of 75% of the deceased’smonthly retirement/invalidity pension (paid tothe spouse).Where there are dependants, 50% of thedeceased’s retirement/invalidity grant ispayable to the spouse, and 50% is payable tothe dependent children or dependent agedparents.Social security systems around the globe 255

St-Lucia5. Retirement benefits6. Funeral grant7. Employment injuryIn order to qualify for retirement benefits,claimants must have attained the age of 64 andhave contributed to the NIC for a minimumof 180 months. Benefits consist of a monthlypension, which is paid when the insuredhas satisfied the necessary requirements,or a lump-sum grant, which is paid wherethe insured does not satisfy the minimumcontribution requirements. A modified pensionis available should a contributor decide toretire before pensionable age but after age 60.Old age pension is calculated at 40% of theinsured person’s average pensionable earningsin the best five years of contributions, plus0.1% for each month in excess of 180. Anyperson who has worked less than 180 monthsqualifies for an old-age grant.The grant is payable to dependants on thedeath of an insured who has paid at least sixmonths’ contributions in the last 12 monthsprior to death and the contributions areequivalent to the amount of the funeral grant,and provided proof of death (death certificate,invoice from a funeral home) is presented bythe dependant. The funeral grant is $ 1,750 fora spouse, and reduces for children dependingon their age, ranging from $ 150 for childrenunder 2 to $ 1,500 for children aged 11 andolder.In order to qualify for employment injurybenefits, the employee must: have sustainedinjury during the course and as a result ofemployment; have been authorised to performthe task he/she was doing at the time of theinjury; have a medical certificate verifying thathe/she is unable to work due to a disease ordisablement; and not be in receipt of full wagesduring the recovery period. The benefits arecalculated at 65% of the employee’s insurableearnings in the month of the injury, and arepaid weekly for a maximum of 52 weeks.Medical expenses associated with the injuryare also refundable up to a limit of $ 20,000.There are provisions to pay a disablementgrant or a pension if there is permanentincapacity from the injury.Social security systems around the globe 256

St-LuciaCompetent authoritiesContributions are to be submitted to the National Insurance office withthe C3 form provided for that purpose, by employers or self-employedpersons, by the seventh of each subsequent month. Employees donot receive credit for the contributions made on their behalf unlessemployers complete and submit the C3 form monthly.Social security systems around the globe 257

St-LuciaVoluntary social security schemeIndividuals who are not otherwise required tocontribute can make voluntary contributionsto the NIC, however the amount of benefitsreceived is directly related to the levelof contributions paid. In the case of selfemployed/voluntarycontributors, it is 10%of an agreed stipulated amount. A selfemployedperson is entitled to all benefitsexcept employment injury benefit at the samerate as other insured persons and, in order toqualify for any short-term benefit, must havepaid contributions for 12 consecutive monthsimmediately preceding the date of the claim,in addition to satisfying any other qualifyingconditions for that particular benefit.1. Persons abroadIndividuals are disqualified from receiving anybenefit for any period during which they areabsent from Saint Lucia, with the exceptions ofthe following:• short-term benefits or employment injurybenefits, during such period as the Directorof the NIC may allow, having regard to theparticular circumstances of the case;• retirement benefit, survivor’s benefit ordeath benefit;• invalidity benefit, for such period as theDirector may allow, having regard to theparticular circumstances of the case.2. Non-nationalsAs far as non-nationals are concerned,deductions are due and payable once wages/salaries are paid. The National Insurance Act(No. 18 of 2000, sec. 28, Third Schedule)indicates the following exemptions:• employees whether belonging to this stateor not, whose written terms of service orengagement, wherever executed, providethat they are subject to service for anyperiod of not less than one year outside ofthe state;• persons who, in their official capacity, areaccorded diplomatic status and similartypes of status arising from the grant ofimmunities and privileges;• any employee not regarded as belonging toSaint Lucia (as defined under section 18 ofthe Saint Lucia Constitution Order 1967),who is employed in Saint Lucia for a periodnot exceeding two years at one time;• paragraphs 2 and 3 do not apply to anyemployee unless his/her employer hassatisfied the Director that he/she is liableto contribute to, or is prospectively entitledto benefit from the social security schemeof any country other than Saint Lucia orany benefit scheme by virtue of his/heremployment on terms that would providehim/her with benefits not substantiallyless favourable than those to which he/shewould have been entitled under the Act.Social security systems around the globe 258

St-LuciaContactsRichard PeterkinPartnerTel: +1 758 456 2626richard.peterkin@lc.pwc.comMalaika TheobaldsDirectorTel: +1 758 456 2603malaika.theobalds@lc.pwc.comJessica PeterkinAudit supervisorTel: +1 758 456 2638jessica.peterkin@lc.pwc.comSocial security systems around the globe 259

Switzerland General background Covered personsSwitzerland has a close-knitnetwork of different typesof social insurance offeringindividuals working or livingin Switzerland and their familymembers broad protection againstrisks with financial consequenceswhich could not be coveredwithout insurance.The Swiss social security system is divided into five areas:• old-age, survivors’ and invalidity insurance (three-pillar system);• protection against the consequences of sickness and accidents;• income compensation allowances in cases of military service andmaternity;• unemployment insurance;• family allowances.These insurances offer protection in the form of pensions,unemployment benefit, compensation allowances and familyallowances, as well as paying costs incurred through illness andaccidents.Benefits are generally financed by contributions levied on income. Withrespect to Swiss health insurance, each insured pays a premium.Generally, anyone gainfully employed in Switzerland is subject tothe Swiss social security system. The same applies to anyone living inSwitzerland and not gainfully employed.Social security systems around the globe 260

SwitzerlandContributions1. Salaried personsSocial security contributions are due byboth employees and employers. Employeecontributions are deducted from gross pay,whilst employer contributions are paid ontop of gross pay. Contributions are due ontotal gross salary (in cash or kind); somecontributions are on capped, others onuncapped, income.Please find in the following an overview of the contributions due by employees and employers:Insurance range, lawContributionsOld-age pension (AHV) Employee/employer, each: 4.2% (uncapped)Disability benefits (IV) Employee/employer, each: 0.7% (uncapped)Compensation for temporaryloss of income (EO)Unemploymentinsurance and insolvencycompensation (ALV)Employee/employer, each:0.25 % (uncapped income)Employee/employer, each: 1.1% for a salary up to CHF 126,000 p.a.; part of thesalary between CHF 126,000 p.a. and 315,000 p.a.: employee/employer each 0.5%Occupational benefit plan(BV)Accident insurance (UV)Family allowances (FZ)Administration feeDepending on occupational benefit plan regulations (schemes insuring more thanthe legal minimum are possible)Premiums depending on economic sector, risk level of company and insurancecontract; income compulsorily insured up to CHF 126,000 p.a.Please note that the employee has additional contribution liabilities for non-accidentinsurance; however, the employer may assume responsibility for paying thesecontributionsEmployer (depending on applicable cantonal law)1.2% – 4.8% (uncapped income)Employer: depends on the compensation office: up to 3% of the amount of the AHV/IV/EO contributions (uncapped income)Social security systems around the globe 261

Switzerland2. Self-employed personsSocial security contributions for self-employedpersons are calculated on the basis of theearned income and on the equity capitalinvested in the individual’s business. For amain self-employed activity, contributionsare 9.7% of income. However, at present,2% interest on the equity capital investedin the business is deducted from income forthe purpose of calculating contributions.Additionally, administrative fees are due.Affiliation to an occupational benefit schemeand accident insurance are voluntary for selfemployedpersons.Please find in the following an overview of the contributions due by the self-employed:Insurance range, lawOld-age pension (AHV)Disability benefits (IV)Compensation for temporaryloss of income (EO)Unemploymentinsurance and insolvencycompensation (ALV)Occupational benefit plan(BV)Accident insurance (UV)Family allowances (FZ) -Contributions7.8% (uncapped income)1.4% (uncapped income)0.5 % (uncapped income)-voluntaryvoluntaryAdministration feeDepends on the compensation office: up to 5% of the amount of AHV/IV/EOcontributions (uncapped income)Social security systems around the globe 262

SwitzerlandBenefits1. Ordinary old-age pensions (AHV)The AHV scheme provides cover for retiredindividuals and surviving dependants.The AHV scheme is the main pillar of socialinsurance in Switzerland. It aims to replace,at least partially, the reduction in, or loss of,income due to retirement or death.The main benefits paid out under the AHVscheme include retirement and survivingdependants’ pensions and helplessnessallowances. Benefits are adjusted in line withinflation and salary increases.Benefits are:• Old-age pension: individuals who reachretirement age are entitled to an old-agepension. The retirement age in Switzerlandis currently 64 for women and 65 formen. The monthly full old-age pensionvaries from a minimum of CHF 1,160 toa maximum of CHF 2,320. The total fullold-age pension paid to a married coupleor both members of a civil partnership maynot exceed 150% of the total maximum fullold-age pension, or CHF 3,480.Old age pensions are calculated on averageannual income and years of contribution.If a claimant has not contributed for afull period, a reduction of roughly 1/44will be made for each missing year ofcontributions.Under certain conditions, it is possible todraw an old-age pension before reachingthe statutory retirement age or to postponedrawing it.• Helplessness allowance depending on thedegree of helplessness• Children’s pension• Widows’/widowers’ pension• Orphans’ pension2. Invalidity insurance (IV)Invalidity insurance (IV) is aimed atpreventing, reducing or eliminating invalidityby the provision of rehabilitation measures.IV also ensures that the basic needs of thosesuffering from a disability are covered by theprovision of rehabilitation measures and cashbenefits.Benefits are:• early intervention measures;• rehabilitation measures;• ordinary full invalidity pensions if thedegree of invalidity is at least 70%, whichranges from a minimum of CHF 1,160 to amaximum of CHF 2,320 a month;• helplessness allowance depending on thedegree of helplessness.3. Income compensation in the eventof military service or maternity(EO)These insurances compensate for the loss ofincome due to military service or maternity.Allowance in the event of maternity:granted to women who are gainfully employed,who suffer from employment incapacity orwho are unemployed and receive daily benefitsfrom a social or private insurance fund. Theallowance corresponds to 80% of the averageearned income prior to entitlement. Themaximum allowance is CHF 196 a day.Entitlement to maternity allowance begins onthe day of confinement and ends 98 days later(14 weeks). It ends earlier if the mother returnsto gainful employment, regardless of thenumber of working hours, or if she dies.Allowances in the event of military service:granted to individuals serving in the Swissarmy, in the Red Cross and carrying out acivilian service or a civil defence service (basicallowance of 80% of average income prior tomilitary service; daily maximum: CHF 196;other allowances such as child, childcare andbusiness allowances).Social security systems around the globe 263

Switzerland4. Unemployment (ALV)Unemployment insurance provides benefitsin the event of loss of employment, reducedworking hours, lack of employment dueto weather conditions and insolvency ofthe employer. This insurance also pays forreintegration measures.Compensation for temporary loss of incomedue to unemployment: unemploymentbenefits represent 70% of insured salary(capped at CHF 126,000) and are paid out asa daily allowance. This can increase to 80%for individuals who have an obligation tocare for children under the age of 25, or whoreceive a daily allowance of less than CHF140, or who claim an IV pension due to atleast 40% disability. According to age, periodsof insurance and maintenance obligationstowards a child or children, certain cases willattract between 90 and 640 daily allowances.A person is entitled to unemploymentbenefits if he or she was employed andpaying compulsory contributions for atleast 12 months during the two-year periodimmediately prior to registering with theunemployment office. Besides that, applicantsmust provide proof of valid loss of employment,be available for and capable of work, andsatisfy all supervision-related conditions.In addition to unemployment benefit,unemployment insurance also provides thefollowing benefits:• an allowance for participating in activelabour market programmes;• reduced working hours allowance;• bad weather allowance; and• an allowance in the event of employerinsolvency.5. Occupational benefit scheme (BV)The objective of the BVG is to supplement AHVand IV benefits in order to ensure that peoplecan basically maintain their accustomedstandard of living.Employees are subject to compulsory insurancein accordance with the BVG if they• have an employment contract;• are subject to AHV/IV insurance;• are 17 or older, have an annual income thatexceeds the BVG entry threshold;• have not yet reached retirement age.The law only sets out the minimum statutorybenefits. Provident institutions may lay downbenefits exceeding the statutory minimumin their own regulations. In particular, theymay ensure a salary lower than the minimumamount or higher than the maximum definedby law; however, the maximum amount ofinsured salary is CHF 835,200 a year.Anyone who is subject to an occupationalbenefit plan may claim: old-age pension (uponreaching the statutory retirement age, i.e. 64for women and 65 for men); invalidity pension;child’s pension; capital benefits.6. Family allowances (FAMZ)Family allowances compensate for the costsincurred from raising a family and are part ofthe social security system.Eligible for family allowances are salariedemployees and low-income individuals who arenot in gainful employment. Depending on thecanton, the self-employed may also be eligiblefor family allowances. Special rules apply toagricultural workersThe following categories of children giveentitlement to family allowances: childrenof married or unmarried parents; adoptedchildren; children of a spouse; foster children;brothers, sisters and grandchildren of theentitled person, if he/she predominantlysupports them.Benefits:• child allowance: at least CHF 200 permonth per child;• vocational training allowance: at least CHF250 per month per child. By law, cantonsmay provide higher allowances;• birth/adoption allowance: according tocantonal law.Social security systems around the globe 264

SwitzerlandAge limit:• child allowance: 16 years; 20 yearsfor children unable to engage in paidemployment;8. Daily sickness allowancesInsurance provides the following benefits:• general benefits in case of sickness,maternity, accident (not covered byaccident insurance), congenital diseases(not covered by the invalidity insurancescheme) and legal abortion;• vocational training allowance: 25 years.7. Accident insurance (UV)Compulsory accident insurance covers thefinancial consequences of accidents at work,accidents outside of work and occupationaldiseases. The benefits compensate for injuryand incapacity for work as the result of anaccident or an occupational disease.Anyone who is employed in Switzerland iscovered by accident insurance (according tothe UVG).Benefits are:• Cash benefits (daily cash benefits, invaliditypensions, integrity allowance, survivors’pensions and helplessness allowances). Theinsured salary for calculating daily cashbenefits and pensions is capped at CHF126,000 p.a.• Non-cash benefits (such as medical care,auxiliary equipment and reimbursement ofcosts).Loss of income in cases of incapacity for workdue to sickness is not covered by social securityinsurance. Employers can take out voluntarydaily sickness allowance cover for the risk thatan employee is sick for a longer period of timewhilst still entitled to salary.9. Health insurance (KV)Health insurance gives everyone living inSwitzerland access to adequate health care inthe event of sickness, and in case of accident ifthey are not covered by accident insurance.Health insurance is compulsory for everyoneliving in Switzerland. Anyone who is inSwitzerland for longer than three months musttake out health insurance cover within a periodof three months. Insurance companies mustalso be informed by parents of the birth of theirchildren within three months; parents andchildren are insured separately.As a general rule, employers do not arrangehealth insurance cover. Anyone required totake out health insurance cover must arrangeit themselves. Everyone has a free choice ofhealth insurance provider. A full list of healthinsurers can be found on the website of theSwiss Federal Office of Public Health (FOPH):www.priminfo.ch. The premiums depend onthe chosen insurance coverage, age, place ofresidence, etc.• prevention measures;• benefits specific to maternity;• dental care (however, benefits are veryrestricted).A portion of treatment costs is paid by theinsured. This consists of:• a standard deductible of CHF 300 a year;children and adolescents up to 18 years ofage do not pay a standard deductible;• a retention fee of 10 percent of theremaining invoiced amount up to amaximum of CHF 700 a year (CHF 350 forchildren and adolescents).Under certain conditions, a higher level ofamenities may be covered on a voluntary basis.Social security systems around the globe 265

SwitzerlandCompetent authoritiesVoluntary socialsecurity scheme1. Salaried personsState Swiss social security: cantonal compensation fund or, ifapplicable, trade union compensation fund.Occupational benefit scheme and accident insurance: chosen provider.2. Self-employed personsState Swiss social security: cantonal compensation fund or, ifapplicable, trade union compensation fund.Occupational benefit scheme and accident insurance: chosen provider.1. Voluntary continuance of compulsory social securityschemeUnder certain conditions (inter alia the individual has to have fiveconsecutive years of Swiss social security coverage immediatelyprior to departure), employee and employer may agree to voluntarilycontinue compulsory Swiss social security coverage if the employeeis assigned to work abroad by his/her Swiss employer. However, thisdoes not release them from any obligation to pay contributions to thecompulsory insurance in their country of employment. Applicationsmust be submitted to the competent compensation office within sixmonths of the end of the compulsory social security obligations.2. Voluntary social security schemeUnder certain conditions (inter alia the individual has to have fiveconsecutive years of Swiss social security coverage immediately priorto departure), Swiss or EU/EFTA nationals with residence outsideSwitzerland or the EU/EFTA may join the voluntary insurance scheme.Requests must be sent in to the Swiss compensation Office (SCO) inGeneva within one year of leaving the compulsory insurance scheme.Social security systems around the globe 266

SwitzerlandContactsAdrian JonesDirectorTel: +41 (0)58 792 4013adrian.jones@ch.pwc.comVéronique Schaller WiesliSenior managerTel: +41 (0)58 792 5036veronique.schaller-wiesli@ch.pwc.comSocial security systems around the globe 267

TurkeyTurkeyGeneral backgroundCovered personsThe Turkish statutory social security system is divided into threeschemes:• scheme for salaried persons (individuals who are linked to theiremployer by an employment agreement);• scheme for self-employed persons (individuals who performtheir professional activities outside the scope of an employmentagreement or appointed office); and• scheme for civil servants (individuals who are subject to publicservice status) – not gone into in this country profile.Turkey has an extensive statutory social security system based onsolidarity.The Turkish social security scheme is triggered upon the occurrence ofthree events:• wage loss (e.g. unemployment, retirement, incapacity for work):replacement income;• social charges (e.g. sickness): income supplements;• no earned income (outside the claimant’s control): assistanceallowances.Social security systems around the globe 268

TurkeyContributionsSocial security contributions are payable asa percentage of gross salary by individualemployees and employers.1. Salaried personsSocial security contributions are due by boththe employee and the employer. Employees’contributions are deducted from their grosssalary, whilst employer contributions are paidon top of the gross remuneration.Currently, salaried persons pay 15% andemployers pay 21.5-27% (depending on thedegree of hazard in the workplace) up to amaximum earnings level of TRY 6,113.40a month for salaried persons between1 July 2012 and 31 December 2012.Salaried persons’ contributions are deductiblewhen determining taxable income.2. Self-employed personsThe social security contributions for selfemployedpersons are calculated between theapplicable social security base and ceiling.Self-employed persons pay 33.5-39%(depending on the degree of hazard in theworkplace) up to a maximum earnings level ofTRY 6,113.40 a month between 30 July 2012and 31 December 2012. No unemploymentinsurance contribution is paid for selfemployedpersons.Social security systems around the globe 269

TurkeyBenefits1. Health care (general healthinsurance)Health care covers both preventive andcurative care required for maintaining andrestoring a person’s health (e.g. ordinarymedical care, dental care, hospital care). Allmedical treatment that is dispensed and thatcan be (partly or completely) reimbursed islisted in a ‘nomenclature of medical treatment’.A number of conditions and criteria have to bemet in order to have access to health care (e.g.a minimum 30-day contribution period appliesto the scheme for both salaried and selfemployedpersons, but the self-employed mustalso have had no outstanding contributionliability to a social security institution for morethan 60 days).There are exemptions from these conditions(e.g. children under 18, work accidents andoccupational diseases).2. Sickness benefitsWhen a person falls ill, in addition tohealthcare, he or she will be entitled to benefitscovering income loss.Salaried persons entitled to sickness benefitsmust meet certain conditions (e.g. a minimumcoverage period of 90 days and payment ofsufficient social security contributions).Patients are entitled to two-thirds oftheir normal gross salary when treated asoutpatients, capped at TRY 135.85 (in theperiod between 30 July 2012 and 31 December2012), and half of their daily earnings forinpatient treatment, capped at TRY 101.90(for the period between 30 July 2012 and31 December 2012) a day from the 3rd dayonwards, which is paid by the Turkish SocialSecurity Institution without any deduction.The Institution does not pay any benefits forthe first two days.3. Accidents at workAll salaried and self-employed personsare covered against accidents at work andaccidents on the way to and from work. Anaccident at work is an accident that happens toa person during and by virtue of performanceof an employment contract and that causesinjury. Accidents on the way to and from workare accidents that occur on the normal routethe person uses to travel from the threshold ofhis/her residence to work and vice versa.A victim of an accident at work is entitled toreimbursement for the costs of hospital care,physiotherapy, medical, surgical, dental andpharmaceutical care as well as orthopaedicequipment. Care costs are reimbursedaccording to the applicable sickness insurancetariffs and the insurance institution has to paythe patient fee.Victims are entitled to two-thirds of theirnormal gross salary for outpatient treatment,capped at TRY 135.85 (in the period between30 July 2012 and 31 December 2012), and halfof their daily earnings for inpatient treatment,capped at TRY 101.90 (in the period between30 July 2012 and 31 December 2012) a day for,which are paid by the Turkish Social SecurityInstitution without any deduction.Victims are also entitled to permanentincapacity income if their occupational earningpower is deemed by the authorities to havebeen reduced by 10% according to reportson the illness or disability caused by a workaccident or occupational disease.Social security systems around the globe 270

Turkey4. Occupational disease5. Maternity benefits6. UnemploymentThere is a list of diseases acknowledged asoccupational diseases.If a person falls victim to an occupationaldisease included in the list occurs and worksin a sector in which he or she is exposed toa risk that can cause that disease, it will beacknowledged as an occupational disease if thevictim submits a hospital report proving theexistence of the occupational disease.For unlisted occupational diseases, the victimhas to prove that he/she was exposed to a riskand the causal link between the disease andthe exposure.Victims are entitled to two-thirds of theirnormal gross salary for outpatient treatment,capped at TRY 135.85 (in the period between30 July 2012 and 31 December 2012) and halfof their daily earnings for inpatient treatment,capped at TRY 101.90 (in the period between30 July 2012 and 31 December 2012) a day,which are paid by the Turkish Social SecurityInstitution without any deduction.Victims are also entitled to permanentincapacity income if their occupational earningpower is deemed by the authorities to havebeen reduced by 10% according to reportson the illness or disability caused by a workaccident or occupational disease.Pregnant women are entitled to maternityleave of 16 weeks and an allowance during thatleave.Two periods can be distinguished:• the prenatal rest period: eight weeks beforethe estimated date of birth and, in thecase of multiple births, ten weeks beforethe estimated date of birth (five weeks areoptional and may be transferred to theperiod after childbirth);• the postnatal rest period: eight weeks aftergiving birth.During maternity leave, salaried women areentitled to an incapacity for work allowanceequal to two-thirds of their normal grosssalary for outpatient treatment, cappedat TRY 135.85 (in the period between30 July 2012 and 31 December 2012) and halfof their daily earnings for inpatient treatment,capped at TRY 101.90 (in the period between30 July 2012 and 31 December 2012) a day,which are paid by the Turkish Social SecurityInstitution without any deduction.Replacement income may be claimed inthe case of involuntary loss of salariedemployment.To be eligible for unemployment benefit,certain conditions have to be met (e.g. theclaimant may not receive any salary orperform work, unemployment must be outof the claimant’s control, the claimant mustbe available for the labour market, fit forwork). However, there are exceptions to theseconditions.Furthermore, the claimant must comply withcertain formalities (e.g. applying to the İŞ-KURagency, declaring that he/she is ready to work,must have worked as an insured person for atleast 600 days in the last three years, workedcontinuously and paid premiums for the last120 days prior to leaving his/her job).The daily unemployment benefit is 40% ofthe claimant’s previous daily gross wage,calculated taking his/her earnings over the lastfour months as a basis.Unemployment benefits are paid tounemployed workers on a monthly basis at theend of each month. Unemployment insurancebenefits may also not exceed 80% of the grossminimum wage.Social security systems around the globe 271

Turkey7. Disability8. Survivors’ benefits9. RetirementEligible workers who have lost 60% or moreof their working power or their occupationalearning power due to a work accident oroccupational disease are entitled to disabilitybenefits, provided that certain conditions aremet (e.g. number of days of paid premiums,length of period, disability status/rate).Disability benefit is calculated according tothe number of premium-paid days that eligibleworkers have worked. For workers for whichthis number is less than 9,000, the benefit iscalculated as of 9,000 days, while for thosewho have tallied up 9,000 days or more, thebenefit is calculated according to the actualnumber of premium-paid days. For workers,however, the 9,000 figure is reduced to 7,200.Persons who have lost their partner are entitledto survivors’ benefits. Children who have lostone or both of their parents are also entitled tosurvivors’ benefits.A number of conditions and criteria have tobe met in order to claim survivors’ benefits(e.g. a minimum of 1,800 days of disability,retirement (old-age) and survivors’ premiumsshould have been paid; salaried persons musthave had insurance status for at least five years(this does not apply to other, self-employedworkers); and a total of 900 days of disability,retirement and survivors’ premiums should bepaid).The total benefit payable is capped at theamount of pension of the deceased. Ifnecessary, proportional reductions willbe made to the pensions of claimants inapplication of this limit.Retirement pension is a benefit that eligibleworkers are entitled to based on theirinsurance coverage period, the number ofpremium-paid days, their age, and the datewhen they started paying into the scheme.The normal retirement age in Turkey is 58for women and 60 for men (although it willgradually increase to reach 65 for women andmen in 2036). A civil servant or self-employedperson currently has to work 9,000 days anda salaried person 7,200 days in order to beentitled to a full pension.The current amount of retirement pensionvaries since the calculation is very complex andshould be done according to an individual’sinsurance status and history (e.g. insuranceperiod, age and number of premium-paiddays, insurance start date, earnings subject tocontribution).Social security systems around the globe 272

TurkeyCompetent authoritiesContributions paid by employers andemployees are collected by the Turkish SocialSecurity Institution for both salaried personsand self-employed persons.Social security systems around the globe 273

TurkeyVoluntary social security schemeVoluntary coverage is possible for part of theTurkish social security system.This coverage aims to enable individualswho are no longer covered under the regular(compulsory) social security scheme inTurkey to continue contributing to long-terminsurance types such as disability, retirementand death (including pension) as well asgeneral health insurance.A number of conditions and criteria have tobe met in order to gain access to the voluntarysocial security scheme (e.g. minimum age 18,resident in Turkey).The monthly premium base for this schemeis determined according to the applicablesocial security basis and the cap. The relevantpremium rate is 32%. Contributions are paidmonthly.Social security rates in Turkey, 2012For salaried personsInsurance categories Employee Employer TOTAL GovernmentLong term(disability, old age, survivorship)Short term(work accidents, occupationaldiseases, sickness, maternity)9% 11% 20% Contributes ¼ of total,collected annually– 1-6.5% 1-6.5% –General health insurance 5% 7.5% 12.5% –Unemployment 1% 2% 3% 1%Total 15% 21.5 - 27% 36.5 - 42%For self-employed personsInsurance categories Employer TOTAL GovernmentLong term(disability, old age, survivorship)Short term(work accidents, occupationaldiseases, sickness, maternity)20% Contributes ¼ of total, collectedannually1% - 6.5% –General health insurance 12.5% –Total 33.5% - 39%Social security systems around the globe 274

TurkeyContactsBilgütay YaşarPartnerTel: +90 212 326 60 94bilgutay.yasar@tr.pwc.comEkin AltıntaşSenior managerTel: +90 212 326 64 61ekin.altintas@tr.pwc.comCelal ÖzcanSenior consultantTel: +90 212 326 64 61celal.ozcan@tr.pwc.comSocial security systems around the globe 275

United Kingdom General background Covered personsThe United Kingdom has anextensive social security schemewhich includes provision0f benefits connected withpayment of National InsuranceContributions (NIC), benefitsconnected with residence in theUK and other non-contributorybenefits.Persons who pay NIC will gain entitlement to contributory benefits.Entitlement to non-contributory benefits including NHS healthcare andchild benefits is gained through residence in the UK.Social security systems around the globe 276

United KingdomContributionsEmployees and employers are subject to Class 1NIC.National Insurance contributions are generallypayable by employees who are (ordinarily)resident in the UK, or present in the UK due toemployment by a UK or foreign entity. In suchcases, National Insurance contributions areusually also due for employers (UK or foreignemployer).Company directors and board members areconsidered as employees for social securitypurposes.Employee contributions amount to 0% on thefirst £ 7,605 of annual salary, 12% between£ 7,605 and £ 42,475, and 2% (uncapped) oncash remuneration above the latter threshold.Employer contributions are levied abovethe first £ 7,488 of annual salary at 13.8%(uncapped), and on benefits in kind (2012/13).Some reductions may apply.Self-employed individuals are subject toClass 2 and Class 4 NIC.The UK has a social security scheme for selfemployedpersons, whereby contributionsare levied twofold – a flat rate of £ 2.65 perweek and a profit-related element levied onannual UK taxable profits, at 9% of profitsbetween £ 7,605 and £ 42,475, and 2% ofprofits (uncapped) above this latter threshold(2012/13).Compulsory contributions give access to: statepension, sickness and disability insurance,unemployment (not for self-employed persons),and bereavement allowance. State health careand family benefits are typically based onresidence and individual circumstances.Employee contributions are not deductible indetermining taxable income.For employees assigned to the UK, anexemption from social security may begranted, provided certain conditions are met.Social security systems around the globe 277

United KingdomBenefits1. RetirementState retirement pension in the UK is made upof two parts – a basic State retirement pensionand an additional State retirement pension.Basic State retirement pension entitlementis derived from the number of years that theindividual has paid, or been credited with,a qualifying number of National Insurancecontributions. The number of qualifying yearsthat contributions are required to receivethe maximum basic State retirement pensionis 30. A reduced-rate basic State retirementpension will be paid where individuals havepaid National Insurance contributions for aminimum period of one year.The maximum amount of basic Stateretirement pension payable in the 2012/13 taxyear is £ 107.45 a week.An additional State retirement pension canbe paid when an individual has paid Class 1National Insurance contributions. The amountpaid is based on the individual’s earnings andthe number of years they have worked and paidClass 1 NIC. Up to 5 April 2012, individualscould opt out of participating in the additionalpension scheme by entering into alternativepension provision schemes, such as employerfundedpension schemes.There is no fixed amount of additional pensionpayable.The current State retirement age in the UKis 65, although it is proposed that this willincrease to 66 for both men and women byOctober 2020 and thereafter ultimately to 68.2. Survivors’ benefitsThere are three benefits available to a man orwoman whose spouse or same-sex civil partnerhas died. Entitlement is dependent on thedeceased spouse or civil partner having madeNIC payments prior to death.Bereavement paymentThis is a single lump sum payment paid towidows, widowers and surviving civil partnerswho are under State retirement pension age,or over State retirement pension age if theirlate spouse or civil partner was not entitled to aState retirement pension based on his/her ownNational Insurance contributions record. Thelump sum payable is £ 2,000.Widowed Parent’s Allowance (WPA)WPA is payable upon the death of a spouse orcivil partner where the survivor is claimingchild benefit for at least one child and thedeceased spouse or civil partner was theirparent, or the claimant is a woman who isexpecting her late husband’s baby. The amountpayable is based on the deceased spouse/civilpartner’s NIC record. The maximum amountpayable is £ 105.95 a week.Payment of WPA usually ends when childbenefit payments end or the surviving spouseor civil partner remarries. It is not payablebeyond State retirement pension age.Bereavement allowanceBereavement allowance is payable on the deathof a spouse or civil partner who is over 45 andunder State retirement pension age, unless he/she is entitled to widowed parent’s allowance.Bereavement allowance is payable for a periodof 52 weeks. The amount payable depends onthe deceased spouse/civil partner’s NIC recordand the surviving spouse/civil partner’s age.An individual aged 45 may receive £ 31.79 aweek, rising in incremental stages to £ 105.45 aweek for someone aged 55 or over.3. Health careState health care in the UK is provided free ofcharge through the National Health Service.Provision of free health care is not dependenton the payment of National Insurancecontributions. Free general practitioner(GP) and hospital services are available toindividuals and their families who live andhave settled in the UK.Any individual in the UK can receive freehealth care at a hospital accident andemergency department or at a walk-in medicalcentre.Social security systems around the globe 278

United Kingdom4. Family benefits5. Sickness benefits7. Maternity and paternity benefitsThere are two types of family-related benefitsin the UK – child benefit and child tax credits.Child benefit is dependent on being ordinarilyresident in the UK. It does not depend on thepayment of National Insurance contributionsand is currently non-means tested. Childbenefit payments will, however, be reducedfrom January 2013 where one parent earns inexcess of £ 50,000 per annum, with paymentsceasing where one parent earns in excess of£ 60,000 per annum. Child benefit is paid ata rate of £ 20.30 a week for the first child and£ 13.40 a week for each additional child.Child tax credit is made up of two elements:a child element and a family element. Childtax credit is payable by HM Revenue &Customs and the amount payable is based onfactors such as the number of children in thehousehold, whether they are disabled or not,the household income, and whether the familyare incurring childcare costs. The amount ofchild tax credit payable will reduce to nil asearnings increase.Individuals can receive statutory sick pay (SSP)from their employer if they are sick for fourdays or more in a row (including weekendsand bank holidays) and their average weeklyearnings are at or above the lower earningslimit for NIC purposes (£ 107 a week for the2012/13 tax year). SSP is payable at a rate of£ 85.85 a week (2012/13 tax year) and is paidby the employer for 28 weeks.Individuals not entitled to SSP, or that havereceived SSP for 28 weeks from their employer,may be eligible to claim employment andsupport allowance (ESA). The amount of ESAvaries from £ 56.25 to £ 105.05 a week.6. DisabilityIndividuals who cannot work because of adisability may be eligible to receive ESA. Adoctor or health care professional is requiredto make a medical assessment over a 13‐weekperiod on whether the claimant is fit forwork. During the 13-week assessment phase,claimants receive £ 71 a week. After thisperiod, claimants required to seek work receive£ 99.15 per week. Those not required to workreceive £ 105.05 a week.Statutory Maternity Pay (SMP)SMP is payable by an employer to pregnantwomen who meet certain qualifyingconditions. It is payable for a period of39 weeks. The individual receives 90% ofher average weekly earnings for six weeks,followed by £ 135.45 a week payable for33 weeks.Maternity Allowance (MA)Maternity allowance is paid to women whodo not qualify for SMP but who satisfy otherconditions. The maximum amount of MApayable is the lower of 90% of the claimant’sgross average earnings and £ 135.45 a week.It is payable for a 39-week period.Statutory Paternity PayThe partner of an individual who is expectinga baby may receive Statutory Paternity Pay,which can be ordinary (OSPP) or additional(ASPP) in nature. OSPP is payable for amaximum two-week period. The maximumamount payable is £ 135.45 a week.ASPP is payable when the mother hasreturned to work before the end of the39‐week maternity pay period. ASPP ispayable for two to 26 weeks at a maximumrate of £ 135.45 a week.Social security systems around the globe 279

United Kingdom8. UnemploymentUnemployed individuals in the UK may beeligible to receive job seekers’ allowance (JSA),which can be either contributions-based orincome-based.Contributions-Based JSA (CBJSA)To be eligible to receive CBJSA, an individualmust have paid sufficient NIC in the last twotax years before the claim. CBJSA is paid forup to 182 days at a rate of £ 71 a week forindividuals aged 25 or over. Individuals agedbetween 17 and 24 receive £ 56.25 a week.Income-Based JSA (IBJSA)Individuals who do not qualify for CBJSA orwhose entitlement to CBJSA has ended maybe eligible to receive IBJSA. This is a meanstestedbenefit, which can only be paid if theindividual has savings of less than £ 16,000and his/her partner does not work for morethan 24 hours a week. IBJSA is paid at a rateof £ 71 a week for individuals aged 25 or over.Individuals aged between 17 and 24 receive£ 56.25 per week.9. Benefits cap and universal creditFrom April 2013, a monetary cap on theamount of benefit an individual can claim willbe introduced. The capped amounts are asfollows:• £ 500 a week for couples;• £ 500 a week for single parents whosechildren live with them;• £ 350 a week for single adults who do nothave children, or whose children do not livewith them.In addition to the benefits cap, a new singlepayment called ‘universal credit’ will belaunched in 2013 for individuals claimingbenefit who are on low income or who arelooking for work. The benefits affected by thenew payment include child tax credits, incomerelatedemployment and support allowanceand income-related jobseeker’s allowance,as well as other types of non-contributorybenefits.Social security systems around the globe 280

United KingdomCompetent authoritiesVoluntary socialsecurity schemeHM Revenue & Customs is responsible for the collection and recordingof contributions. It also administers payments of child benefit, child taxcredits, and other tax credits. The Department for Work and Pensions(DWP) is responsible for the administration and payment of most otherbenefits. The NHS is responsible for the delivery of health care.Individuals under certain conditions can register to pay Class 2 or Class3 NIC on a voluntary basis.In certain circumstances it is possible to pay National Insurancecontributions on a voluntary basis. Voluntary NIC can only be paidwhen payment of compulsory NIC is not possible. In order for voluntaryNIC to be payable, an individual must have paid compulsory NIC inthe UK for a three-year period or have been resident in the UK for acontinuous three-year period before applying to pay voluntary NIC.Payment of voluntary NIC will maintain an individual’s entitlementto basic retirement pension and bereavement benefits. In somecircumstances, it will also maintain entitlement to maternity benefitsand Employment & Support Allowance.Social security systems around the globe 281

United KingdomContactsLaura HuttonSenior managerTel: +44 (0) 20 7804 9427laura.hutton@uk.pwc.comGeorge MilmineManagerTel: +44 (0) 20 7212 3435george.d.milmine@uk.pwc.comSocial security systems around the globe 282

USAUSAGeneral backgroundCovered personsUS social security and Medicare contributions are imposed via a tax onthe wages of workers and their employers. Self-employed individualspay both portions. The taxes paid are not put into a special account forthe individual worker; instead they are used to pay benefits to thosecurrently collecting benefits. The taxes are collectively known as eitherself-employment tax (for self-employed individuals, or ‘SE tax’) or ‘FICA’(for employees, which stands for the Federal Insurance ContributionsAct, which brought them into being). They fund four kinds of benefits:• retirement;• disability;• survivors;• hospital insurance (Medicare).FICA taxes are imposed on:• wages related to the performance of services in the USA; and• wages paid to a US citizen or resident for an ‘American employer’or a foreign affiliate of an American employer if an election ismade under section 3121(l) of the Internal Revenue Code (asection 3121(l) agreement is an irrevocable election by a US entityto continue to cover all US-citizen and -resident employees of aparticular foreign affiliate for FICA purposes).SE tax is imposed on a self-employed US citizen’s or resident’s ‘netearnings from self-employment’, regardless of where the services areperformed.Certain exceptions to ‘wages’ or ‘net earnings from self-employment’apply to employees of foreign governments and internationalorganisations, non-resident aliens temporarily present in the UnitedStates under student or trainee visas, and those covered under a foreignsystem under a totalisation agreement, among others.Social security systems around the globe 283

USAContributions1. OASDI (Old Age, Survivors andDisability)Employees6.2% (temporarily reduced to 4.2% for2011 and 2012) of covered earnings. Themaximum annual earnings used to calculatecontributions are $ 110,100 (adjustedannually).Self-employed12.4% of self-employment income (temporarilyreduced to 10.4% for 2011 and 2012). Themaximum annual earnings used to calculatecontributions are $ 110,100 (adjustedannually).Employers6.2% of covered payroll. The maximum annualearnings used to calculate contributions are$ 110,100 (adjusted annually).2. MedicareEmployees1.45% of covered earnings. There areno maximum earnings used to calculatecontributions.Employers1.45% of covered earnings. There areno maximum earnings used to calculatecontributions.Self-employed2.9% of self-employment income. There areno maximum earnings used to calculatecontributions.Contributions are payable on ALL elementsof an individual’s compensation package,including non-cash amounts. Hypothetical taxreduces this compensation/contribution base,as do medical/dental insurance contributionsunder most companies’ plans. Qualifiedretirement plan contributions, which reduce anindividual’s wages for income tax purposes, donot reduce FICA wages.FICA contributions are not deductible forfederal income tax purposes, but are permittedas a deduction on certain state returns.Although the employer’s matching contributionis not taxable to the individual, the employee’scontribution is (i.e. it is not excluded from theindividual’s income). Likewise, no deductionis generally permitted for contributions toforeign social security systems. Foreign socialsecurity taxes which are considered ‘income’taxes may be considered creditable foreignincome taxes provided they are not paid inrelation to wages that are covered under atotalisation agreement.Social security systems around the globe 284

USABenefits eligibilityThe individual must have at least 40 quartersof coverage to qualify for old-age pensionbenefits, with certain exceptions and specialrules under totalisation agreements for thosewho have at least six quarters of coverage andat least 40 quarters when considering coverageunder the US system and those of totalisationagreement countries. Benefits are payable atage 66 (rising to age 67 by 2027), although areduced pension can be paid from age 62 andthe pension may be deferred to no later thanage 70. Pensions are payable abroad to noncitizensunder totalisation agreements and tothose residing in other specified countries.Survivor benefits may be payable providedthat the deceased was a pensioner or had aquarter of coverage for each year from age 21up to the year before the year of death. Eligiblesurvivors include widow(er)s (or a survivingdivorced spouse, provided that the marriagelasted at least ten years), orphans younger thanage 18 (aged 18 to 19 if attending elementaryor secondary school full time, no limit ifdisabled before age 22), and dependent parentsaged 62 or older provided that they were atleast 50% dependent on the deceased.Disability benefits are available to those whohave had at least one quarter of coverage foreach year since age 21 through to the date theindividual is considered ‘disabled’, and musthave 20 quarters of coverage in the ten-yearperiod before disability began. Disabilitybegins when the individual is assessed asincapable of substantial gainful activity as theresult of a physical or mental impairment thatis expected to last at least a year or result indeath.Medicare benefits are available to those aged65 and older who are eligible for pensionbenefits. Certain others may qualify as well,including those who have been receivingdisability benefits for longer than two years.Individuals who do not meet eligibilityrequirements are not entitled to any refund ofcontributions made to FICA.Social security systems around the globe 285

USAVoluntary social security schemeIndividuals who are not otherwise required to contribute cannot makevoluntary contributions to US FICA or SE tax.Social security systems around the globe 286

USAContactsClarissa ColeDirectorTel: +1 213 217 3164clarissa.cole@us.pwc.comDerek NashManaging directorTel: +1 202 414 1702derek.m.nash@us.pwc.comSocial security systems around the globe 287

All of the information in this document, unless otherwise stated, was last updated on 1 November 2012. All new changes in legislation will be included in an new, updated version.This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information containedin this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the informationcontained in this publication and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyoneelse acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.© 2013 PwC. All rights reserved.PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 180,000 people who are committed todelivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.comPwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.