Assessing the Benefits Reform in Slovenia Using a Microsimulation ...

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The increased amounts of child benefit for children (under 18) included in upper secondaryeducation are supposed to (at least partly) compensate for the abolition of the state scholarship formost upper secondary students. Currently, all upper secondary and tertiary students might be entitledto a state scholarship. On the contrary, only students (higher secondary and tertiary) aged 18 years ormore might be eligible for a state scholarship under the new legislation. This means that the majorityof upper secondary students will not receive any scholarship. Besides, the reform introduces a fewmore important changes: a) the family income used for the income test will be net family incomewith received child benefits included; b) family income will be compared to the average net wageinstead of the minimum wage; c) the income threshold will be raised significantly; d) the monthlyamount of the scholarship will be increased; and e) scholarship amounts will not differ according toeducation levels (upper secondary and tertiary students) as evident from Tables 5 and 6.Table 5: Monthly amounts of state scholarship – current legislationGross family income per family memberas a percentage of the minimum wageStudents in upper secondaryeducationBasicscholarshipIncomesupplementStudents in tertiary educationBasicscholarshipIncomesupplementTo 25% 38.33 54.31 57.50 54.31More than 25% to 40% 38.33 43.66 57.50 43.66More than 40% to 50% 38.33 31.95 57.50 31.95More than 50% to 60% 38.33 21.30 57.50 21.30More than 60% to 65% 38.33 0 57.50 0Source: Ministry of Labour, Family and Social Affairs, http://www.mddsz.gov.si/.Table 6: Monthly amounts of state scholarship – new legislationNet family income per family member asa percentage of the average net wageBasic scholarship with income supplementStudents in upper secondaryeducationStudents in tertiary educationTo 30% 190 190More than 30% to 36% 160 160More than 36% to 42% 130 130More than 42% to 53% 100 100More than 53 to 64% 70 70Source: The Exercise of Rights to Public Funds Act, 2010.The Financial Social Assistance Act defines a new basis for ensuring social security for the mostvulnerable population groups: a) family income which is the basis for the income test will includechild benefits received and state scholarships; b) the lowest amount of financial social assistance willbe increased; and c) an activity supplement will be granted to beneficiaries of financial socialassistance working or taking part in activities or programmes aimed at employment.8
Currently, the people entitled to cash social assistance do not have any income or receive incomebelow the family minimum income. In the case of no income, the entitled persons receive the fullstated amount; otherwise, they are entitled to receive the difference between their own income andthe family minimum income. The minimum income for a family is obtained by multiplying the basicamount of minimum income (currently EUR 229.52) by the weighted number of family members.Table 7 shows the amounts of minimum income and weights in the current and forthcoming system.Table 7:Weights for the social assistance calculation according to the current and new legislationCurrent Newlegislation legislationBasic minimum income EUR 229.52 EUR 288.81Weights:First adult in the family 1 1Activity supplement for the first adult in the family working full time 0 0.56Activity supplement for the first adult working part time 0 0.28Adults aged 18 to 26 years living with their parents and registered asunemployed at the Employment Service of Slovenia0.7 1Single persons permanently incapacitated for gainful employment or olderthan 63 years (women) or 65 years (men) living at the same address as other 1 0.7persons who are not their family membersAdults in institutional care 0 1All other adults in the family 0.7 0.5Activity supplement for all other adults in the family working full time 0 0.28Activity supplement for all other adults in the family working part time 0 0.14The oldest child in the family not included in upper secondary education 0.3 0.7All other children in the family not included in upper secondary education 0.3 0.6The oldest child in the family included in upper secondary education 0.3 0.89All other children in the family included in upper secondary education 0.3 0.79Sources: Ministry of Labour, Family and Social Affairs, http://www.mddsz.gov.si/, The Financial SocialAssistance Act, 2010.The same Act abolishes the state pension 6 and governs minimum pension support which will becompletely transformed. Minimum pension support is currently granted to pensioners with lowincomes and an incomplete contribution period, provided they fulfil a set of conditions, such as: a)their pension is lower than a certain threshold (81.6% of the lowest pension base, i.e. EUR 449.75 in2011); b) the family in which the pensioner lives does not have other income sources which wouldallow a minimum standard of living; and c) the family has negligible property. The benefit amountdepends on the contribution period, pension and number of family members (in the case of a survivorpension). Under the new legislation minimum pension support will be granted to all peoplepermanently incapacitated for gainful employment or older than 63 years (women) or 65 years6 The state pension will be replaced by social assistance and minimum pension support.9
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