Economic Security - CS ASC380 PDF

Chapter I Definition of Economic Security ·...

Chapter I Definition of Economic Security · individual A state of mind or sense of wellbeing that an is relatively that and wants both certain he or she can satisfy basic needs , present and the future. Factors in attaining economic security · · Continuous Income A person must have some reasonable expectation that their income will continue so that both present and future basic wants and needs can be satisfied. · Real Income Refers to and services that purchased goods can be with money income. Money Income Above Poverty · Economic security requires the receipt of money income that is above the poverty subsistence level of living or. Standard of others Living Enjoyed by · As the standard of living enjoyed by others changes over time the , concept of economic security will also change. Definition of Economic Insecurity The state of mind that individual not or sense of well-being an is certain that he/she can satisfy basic wants and needs , both present and the future. Causes of Economic Insecurity · Premature death of the family head · Natural disasters The deat of a family head with unfulfilled financial obligations will cause · Children born outside economic insecurity to be present in the family. marriage · Old Age Substandard wage · When older workers retire they will lose their earned Unemployment · , income Poor · health Significant cause of economic insecurity due to high medical bills and loss of income · Inflation If prices rise at faster rate than income real income declines, consumer a money , and economic security is threatened. · Personal Factors · Divorce : Many divorce women experience decline in income after the divorce Alcohol and Addiction : Substance abuse leads to health problems that could lead to loss of income. Drug · · Gambling Pathological gamblers : often experience debt , insomnia , depression and stress-related illnesses. , Domestic Violence self-esteem Many victim of domestic violence struggle with making · : low , it difficult maintainin employment. individuals's financial Bankruptcy Bankruptcy : not only disrupts stability but also the people · , that are close to them.  Nature of Economic Insecurity · Loss of Income A worker may lose their experienceerosion in real income time · income or over due to money wages fails to keep up with inflation. Regardless of the cause economic insecurity is present when the income is lost. - , - Unless the worker has sufficient replacement income , basic wants and needs cannot be satisfied. Spending for goods and services above the poverty line be difficult due may to loss of incom e. · Additional Expenses - A result from additional that exceed the worker's expenses ability to pay. For example catastrophic medical bills · , In addition to the loss of earned income it will be financially burdensome for the - , payment of medical bills. Furthermore , assume that an uninsured motorist is at fault and injures a pedestrian. The court of law awards RM30000 worth of damages to pedestrian and if the motorist is unable to pay , a lien could be placed on their income and financial assets. · Insufficient Income - El is also present if person is employed but earns insufficient income. E annud income RM 14k, a g -. That total less than the amount needes to satisfy basic necessities. level 201 is income during the year is Poverty - , The viewpoint that some people because they refuse to work is not entirely · are poor correct. · Many poor workers are employed but their incomes are insufficient to satisfy their basic wants and needs. Uncertainty of Income · - Present ifemployed workers uncertain of the future continuation are of their income. · The fear of unemployment threatens the feeling of economic security may. For example during a recession a company may issue press release stating that · , , a will be laid-off. some employees If workers believe that their jobs present due to of will be lost , El is uncertainty · future income. · Social Security Definition programs established by law that insure individuals against the loss or interruption of their earned income , and for certain expenditure from birth death. arising marriage , or Categories Employment related programs · · Universal programs Means-tested programs · Chapter 2 · Definition of Social Insurance Device for pooling of risks by transfering it to an organization, usually government. · Objectives of Social Insurance · Provide basic economic security to the population - Prevent Poverty Provide stability to the economy - · Preserve economic values · Characteristic of Social Insurance Compulsory Program Emphasis social adequacy rather than - · on With few exceptions Social , insurance program is compulsory. individual equity Minimum floor of income Benefits loosely related to earnings - - Provides only a minimum floor of income for benefits. to benefits with - Right no mean test Benefits are paid as a matter of right without a formal demonstration of need. · Benefits prescribed by law Benefits are not based on legal contract and can be change by the law · Similarities : Social Insurance and Private Insurance Based risk transfer and pooling of losses - on Have provisions that relate to coverage benefits and financing · , , Require mathematical calculations to determine benefits amount and · to estimate future lost costs. - Require payment of contributions and premiums sufficient to meet the estimated costs of the programs. - Provide specific benefits without a formal means test Benefit society whole in providing economic security · as a Major Difference between SI and PE · Social insurance Private Insurance Compulsory Voluntary Depends individuals desire and Minimum floor of income protection on ability to pay social individual equity Emphasis on adequacy Emphasis on Contractual Statutory right right Government monopoly Competition difficult to predict predict Pets more costs more to easy ~  · Definition of Social Assistance Government Programs that provide a minimum level of income support to individuals and households living in poverty. In a form of direct cash transfers or through variety of in-kinds benefits. of Social Assistance (same as SF) Objectives · · Provide basic economic security to the population Prevent poverty - · Provide stability to the economy Preseve important economic values - · Characteristics of SA - Cash and non-cash benefits are provided to low-income individuals and families financial resources falls below a set standard of needs. · Wellfare must pass applicants a mean test , showing their income and assets are below a defined need standard. - Benefits are funded by general government revenue , not dedicated taxes Cash benefits often unpredictable and people usually dont rely them for · are on , economic security. · Reasons for SA Substantial medical bills that social ineligible for benefits from insurance other - are or public programs - Provides supplemental income Some people cannot work and attain minimum standard of living - a · Public assistance reflects society's philosophy toward the poor and unfortunate. · St and Sl Comparison · Means test : SI don't require a means test while SA does. method SI is funded by taxes Financing · : St is funded by general government revenue Benefit Amount Predictability : SI benefits predictable compared to SA. · are more · Participation : SI has more participants compared to St. while Stigma : SI benefits stigma SA does. · carry no Chapter 3 Government Pension Scheme Objectives · To aknowledge and appreciate the service rendered to the · government personnel As bondage for personnel to retain their service with the government · a · Provide support to dependents of personnel who passed away during service or after retirement · Develop compensation scheme for personnel retiring or passing away due to work related injuries. · Pension Benefits · Gratuity (lump sum payment · Medical Coverage 7 5 %·. months of reckonable service last drawn salary Federal pensioners , eligible family members · Pension (monthly and children under 18 years Yo months of rectionable last drawn salary old under service. if still studying 21 years old · or St.. or children who suffer disability 60 % of the last drawn salary (max) are eligible for this benefit after 30 for pension years · Cash Award in Lieu of Leave (GCR) Cash award given to pensionable workers who did not have the opportunity to utilize all of their leaves due to of their services exigency /30· [last drawn salary + fixed allowances] · no · of leave S t. Max of 150 days · Pension Payment Option · Scheme A A method of paying the monthly pensions by crediting directly into the bank account of pensioners · Scheme B Requires going to bank every month to get the pension payment. EPF · What is EPF ? - Social Security Institution Provides retirement benefits for members through management of their savings - in an efficient and reliable manner. · Also provides a convenient framework to employers to meet their statutory and moral obligations to their employees. - Members : Private and government sector employees. · Contribution Rate For employees wages 3000 , employee's ; 11 % monthly salary - employer ; 13 % -