Actuarial Report on Social Insurance

Actuarial Report on Social Insurance Prague 2004 3 CONTENTS INTRODUCTION 11 PART A GENERAL INFORMATION ABOUT THE SOCIAL INSURANCE SYSTEM 13 A.1. Brief system characteristics 13 A.1.1. Pension insurance 13 A.1.2. Sickness insurance 16 A.1.3. Funding 17 A.1.4. Social security organization and implementation 18 A.2. Legislative changes since the beginning of 2002 19 A.2.1. Pension insurance 19 A.2.2. Sickness insurance 24 PART B EVALUATION OF THE BASIC INDICATORS OF SOCIAL INSURANCE DEVELOPMENT 27 B.1. Parameters influencing the development of social insurance 27 B.1.1. Economic development 27 B.1.2. Demographic development 28 B.1.3. Employment development 30 B.2. Social insurance indicators 31 B.2.1 Premiums 31 ` Ministry of Labour and Social Affairs, 2004 ISBN 80-86878-07-4 B.2.2. Pension insurance 38 B.2.2.1. Revenues and expenditure 38 B.2.2.2. Number of pensioners and pensions 40 B.2.2.3. Amount of pensions 51 B.2.2.4. Reduction in pensions on early retirement 59 B.2.2.5. Differentiation of pensions based on the amount of the pension 61 B.2.3. Sickness insurance 63 B.2.4. Fulfillment of international conventions 70 B.2.4.1. Pension insurance 70 4 5 B.2.4.2. Sickness insurance B.2.5. Operating expenditure PART C SOCIAL INSURANCE PROJECTIONS 73 ANNEX 74 I. 77 115 EXAMPLES OF BENEFIT CALCULATIONS 115 (A) Example of Pension Calculation 115 C.1. Projections of parameters influencing social insurance development 77 C.1.1. Economic development 77 C.1.2. Demographic development 78 C.1.3. Developments in the level of economic activity 80 C.2. Pension insurance 81 C.2.1. Projection of Key Indicators 81 C.2.1.1. Developments in the number of contributors and pensioners 81 C.2.1.2. Ratio of the average old-age pension to the average wage 85 C.2.1.3. Developments in revenues and expenditure 87 (B) Examples of sickness insurance benefit calculations 118 1. Sickness benefit 119 2. Family member care benefit 120 3. Maternity benefit (PPM) 121 4. Pregnancy and maternity compensation benefit 122 II. OVERVIEW OF PRINCIPAL MEASURES ADOPTED SINCE 1990 123 A/ Pension system 123 B/ Sickness insurance 125 C/ Premiums 126 C.2.2. Evaluation of developments in key indicators 88 LIST OF TABLES C.2.3. Analysis of the sensitivity of the pension insurance system in relation to possible parametric adjustments 89 C.2.3.1. Financial viability 89 C.2.3.2. Sufficiency of benefits 93 C.2.3.3. Transformation deficit and debt 97 C.2.4. Conclusions 98 C.3. Sickness insurance 101 C.3.1. Long-term projections and evaluations of development 101 Table 1. Table 2. Table 3. Table 4. Table 5. Table 6. Percentage tariffs for premiums applicable as of 2004 (% of the assessment base) 18 Developments in GDP 27 Average nominal wage in the national economy 28 Age structure of the population 28 Fertility, life expectancy 30 Level of economic activity 31 C.3.2. Short-term projections and an analysis of the sensitivity of the financial balance of sickness insurance to changes in key indicators 102 C.3.3. Conclusions 110 PART D CONCLUSIONS STEMMING FROM AN EVALUATION OF THE CURRENT SITUATION AND FROM PROJECTION CONCLUSIONS 113 D.1. Pension insurance 113 D.2. Sickness insurance 114 Table 7. Table 8. Table 9. Table 10. Table 11. Table 12. Table 13. Table 14. Table 15. Table 16. Number and composition of insured persons 32 Average assessment base for premiums 33 Comparison of billing and payments 1999 to 2003 35 Structure of receivables from premium payers (CZK millions) 37 Pension insurance income and expenditure 39 Expenditure on pensions by type of pension (Chapter 313 — Civil Sector) 39 Number of pensions by type of pension (as at 31 December) 41 Average age of pensioners (as at 31 December) 42 Share of the number of pensioners and number of insured persons 42 Number of pensions granted 44 6 7 Table 17. Table 18. Table 19. Table 20. Table 21. Table 22. Table 23. Table 24. Table 25. Table 26. Table 27. Table 28. Table 29. Table 30. Table 31. Table 32. Table 33. Table 34. Table 35. Table 36. Table 37. Table 38. Table 39. Table 40. Table 41. Table 42. Number of newly granted pensions 45 Developments in the age structure of pensioners who were granted a full or partial disability pension in 2000-2001 48 Average retirement age 49 Difference between the retirement age and the actual statutory age limit 50 Number of terminated pensions 51 Average monthly amount of solo pensions (December, CZK per month) 52 Relation of average old-age pension to the average wage 53 Real value of the average old-age pension 54 Average solo old-age pensions by year of award (pensions being paid in December 2003, CZK per month) 55 Average amount of new old-age pensions 57 Reduction limits for the calculation of pensions 57 Relation of a new old-age pension granted in 2004 to the wage, comparing different wage levels 58 Overview of pension increases 59 Reduction in pension on early retirement by one year (%) 59 Disadvantages of early old-age pensions in cases of wage valorization 60 Basic characteristics of the differentiation of existing old-age pensions (solo) based on amount 62 Key characteristics of the differentiation of newly granted old-age pensions (solo) based on amount 63 Sickness insurance revenues and expenditure (Chapter 313 — Civil Sector) 64 Number of sickness insured persons (thousands) 65 Expenditure on sickness insurance benefits 66 Key sickness insurance indicators 66 Highest daily assessment base and daily benefit 68 Reduction limits and average wage in the national economy 69 Fulfillment of ILO conventions on old-age pensions as at 1 January 2004 71 Fulfillment of ILO conventions for disability pensions as at 1 January 2004 72 Fulfillment of ILO conventions for survivor pensions as at 1 January 2004 72 Table 43. Table 44. Table 45. Table 46. Table 47. Table 48. Table 49. Table 50. Table 51. Table 52. Table 53. Table 54. Table 55. Table 56. Table 57. Table 58. Table 59. Table 60. Table 61. Table 62. Table 63. Table 64. Table 65. Fulfillment of ILO conventions for sickness benefits as at 1 January 2004 73 Fulfillment of ILO conventions for maternity benefit as at 1 January 2004 74 Operating expenditure 74 Average nominal wages and prices 77 Forecast developments in GDP 78 Basic characteristics of future demographic development 78 Structure of the population by sex and age group 79 Forecast developments in the rate of economic activity (age group: 20-70 years) 80 Forecast developments in the rate of economic activity (age group: 55-70 years) 81 Influence of the age limit on the amount of IPD and PSp 91 Influence of the method of pension valorization at the amount of IPD and PSp 91 Influence of adjustments to the pension equation parameters (Equation C.2) on the amount of IPD and PSp 92 Possible reform scenarios 93 Influence of the yield rate in partial capitalization on the amount of IPD and PSp 93 Influence of the shift in the age limit on the compensation ratio (%) 95 Influence of the shift in the age limit on the total pension paid, as a multiple of the last annual income 95 Influence of the method of valorization on the overall pension paid out, as a multiple of the final annual income 96 Influence of adjustments to the pension equation parameters (Equation C.2) on the compensation ratio (%) 96 Influence of adjustments to the pension equation parameters (Equation C.2) on the overall pension paid out, as multiples of the last annual income 97 Amount of the transformation debt with conversion to a fund system (% of GDP) 98 Influence of the sickness rate on employers’ balances 103 Principal changes in the setting of sickness insurance benefits 104 Estimate of sickness insurance revenues and expenditure 110 8 9 LIST OF GRAPHS Graph 24. Impact of the existence of a strong generation in a stable population on expenditure and on the level of pensions 99 Graph 1. Graph 2. Graph 3. Graph 4. Graph 5. Graph 6. Graph 7. Graph 8. Graph 9. Graph 10. Graph 11. Graph 12. Graph 13. Graph 14. Graph 15. Graph 16. Graph 17. Graph 18. Graph 19. Graph 20. Graph 21. Graph 22. Graph 23. Age index and the economic burden index 29 Developments in the share of payments and billing (including penalties, fines, and additional premiums) 35 Developments in arrears 37 Structure of receivables from premium payers as a percentage of total receivables (situation as at 31 December) 37 Number of newly granted old-age pensions 46 Ratio of the average old-age pension to the average wage 53 Real value of the average old-age pension (expressed as a percentage of the 1989 value) 54 Average solo old-age pensions by year of award (all old-age pensions paid out in December 2003) 56 Relation of a new old-age pension granted in 2004 to the wage, comparing different wage levels 58 Basic characteristics of the differentiation of existing old-age pensions (solo) based on amount (total) 61 Key sickness insurance indicators 67 Average daily sickness benefit, average daily wage, and their share 68 Amount of sickness benefit over 30 days in 2003 and the share thereof in relation to the gross and net wage for various wage amounts 69 Share of the amount of sickness benefit in relation to the net wage as of 1999 for various wage amounts 70 Criteria for the Fulfillment of conventions on the minimum level of pensions 73 Structure of the population by age group 80 Number of contributors (thousands of persons) 82 Number of pensioners (thousands of persons) 83 Number of old-age pensioners (thousands of persons) 83 Dependence rate 84 Dependence rate — old-age pensions 84 The influence of valorization on the ratio of the average old-age pension to the average wage 87 Revenues from premiums and expenditure on pensions (as a % of GDP) 88 Graph 25. Graph 26. Graph 27. Graph 28. Graph 29. Graph 30. Graph 31. Impact of the existence of a weak generation in a stable population on expenditure and the level of pensions 99 The ratio of the amount of the benefit for the first 30 calendar days of sick leave to the net wage for various amounts of wages 105 Difference in the amount of the wage replacement and sickness benefit and the amount of the current sickness benefit for 30 days of sickness 106 Share of the proposed amount of maternity benefit and current PPM for 28 weeks of work incapacity in relation to net wage 107 Difference in the amount of maternity benefit and PPM for 28 weeks of work incapacity 107 Share of the amount of nursing benefit and PO‰R over nine days of work capacity in relation to the net wage 109 Difference in the amount of nursing benefit and PO‰R over nine days of work incapacity 109 ... - tailieumienphi.vn