Read the fine print

By Elvin Bailey

Sometimes we ask them in return, what happens to all that money that they have paid for vehicle insurance and house insurance – to whom does that go when they do not claim?  And then we lay out the Social Security truth to them and they stare at us in disbelief.  So let me, let us at Social Security explain the law once again, and share some real life situations to illustrate the concept.

Social Security insures wages, not people, not cars, not property, not assets, not life.  Only wages. You pay deductions from your wages (bolstered by that from your employer if you are not self employed) and when and if those wages cease, we replace a reasonable portion of it, sometimes for an unseasonably long time.  We cover the risk of your loss of wages for sickness, disability, invalidity, pregnancy.  That is our primary obligation. We go further and cover loss of wages to your household upon your death (at no extra premium) for your spouse, dependent children and dependent parents, even if those children and parents are not part of your household. We also help with your funeral costs.  Death is not necessarily the end of our relationship with an insured person.

But there are conditions, and you the insured person would do well to familiarize yourself with the fine print.

Your spouse of 3 or more years becomes eligible for at least 25% of the deceased’s pension - if the surviving spouse is a Social Security pensioner - of whatever the pension the deceased insured person would have been entitled to, if that living spouse is over 45 years old and provided he/she does not re-marry or re-cohabit.  No gender discrimination here either.  If the spouse is younger than 45 years old, the pension is paid for one year; and the person is free to re-marry afterwards. The pension payment becomes 50% of the pension of the deceased, if the survivor is not himself/herself a Social Security Age Pensioner. 

The children (biological and legally adopted) are eligible for a pension until they attain age 16 and up to 18 if they are still in a school in the Federation.  The dependent parent(s) – singly or as a unit – become eligible for a pension for life if they can prove their dependency on the deceased insured and have no pension of their own.  If the spouse is younger than 45 years old, the spousal payment and the parental payment only lasts for one year.  Furthermore long lasting common-law relationships are eligible also.

I once heard a story of a debtor who repaid his debt by placing a cheque in the casket of the deceased to whom he owed the money, and waited for it to be cashed. Ponder that, and as you do, let us explore two cases to make our point.

Six years ago he died, aged 58, and left a spouse and two adult children. At the time of his death, he had between 750 and 800 contributions and, based on his salary, Social Security had collected $27,000 from and on his behalf.  There were no dependent parents, and the children were adults, already out of school.  According to the pension formula, he was eligible for a 40% replacement of the average annual wage of his best three years of the last fifteen years of his life i.e. from age 43 (since he died at age 58).  He didn’t live long enough, nor was he infirmed or disabled to collect a pension, and we saw no evidence of any other benefit being claimed by him.

For his funeral, his survivors received the $2,500.00 funeral grant. Then the wife claimed her widow’s pension. It amounted to about $450 per month.  For the period ending December 2009, the widow had already collected more than $30,800.  That is to say, she had collected all of his and his employer’s contributions, plus another $3,000 and she is still collecting!

Take the other case.  She was a 50 year old bachelorette when she died, childless in 2006.  A career woman, she had worked all of her life and had amassed almost 30 years of non-stop contributions.  Close to $50,000 came to the Fund because of her. She took nothing out during her lifetime. Her parent(s) have so far been comforted with $6,565.00, including the standard funeral grant.  It is unlikely that her parents would benefit anywhere near what their daughter contributed.  Her life was the sacrifice that allows the first case presented to be possible.

So the answer to the perennial question is that the money is pooled so that persons can be paid who are eligible to be paid for as long as they need to be paid. In that way we are all our brother’s keepers.  The law does not allow us to determine our beneficiaries, they are already predetermined by lineage, sometimes in combination with age.

All of us seem to have this concern about the after-life, but I pray that it is not you who early death happens to.   May God continue to bless us all with long life, and may we take comfort from the adage that they who God love die young.