Social Security Corner-Foundations
Sourced by: Marilyn P. Johnson
Social Security Board
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Marilyn P. Johnson
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Thirty years ago, on February 1, 1978, the St. Christopher and Nevis Social Security Fund was born out of the National Provident Fund (NPF), which was a mandatory national savings scheme. Social security provides a more comprehensive approach to social protection than the NPF and is a right which has been secured for the citizenry of this beloved Country by the architects of the St. Christopher and Nevis Social Security Fund. After thirty years, it is important that we reflect on our beginnings so that we can better appreciate our social security system and meet future challenges without losing sight of our original mandate.
Though it followed on from the NPF, it must be noted that a social security system in the OECS was not an after thought. Since the 1950s, governments in the Caribbean began to develop the social security systems that we know today. Such initiative in the OECS originated in St. Kitts and Nevis , and came out of the need to develop a Sugar Workers’ Pension Scheme. It is not surprising that St. Kitts and Nevis was the first country in the OECS to establish a provident fund in 1968.
The governments in the Caribbean preferred a comprehensive social security system, but the British Government felt that the islands were too small to sustain a social security fund. This view was supported by ILO (The International Labour Organisation) and ISSA (the International Social Security Association). According to Fletcher (1976), the Colonial Office “was responsible for nudging the St. Kitts Government towards the National Provident [Fund] Approach.” National Provident Fund was established by the Government as a first step towards a complete social security system.
According to the Universal Declaration of Human Rights (1948),
“Everyone, as a member of society, has the right to social security…” “Everyone has
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¹ Fletcher, Leonard. “The Provident Fund approach to Social Security in the Eastern Caribbean”. Journal of Social Policy (1976)
the right to….security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”
The International Labour Organisation (ILO) adopted the Social Security (Minimum Standards) Convention (No. 102) in June 1952. The convention lays out the minimum social security requirements regarding coverage, benefits to be provided and the rights of contributors and beneficiaries. It defines social security as: ~~Adz:Right~~
‘...the protection which society provides its members through a series of public measures, against the economic and social distress that otherwise would be caused by the stoppage or reduction of earnings resulting from sickness, maternity, employment injury, unemployment, invalidity, old age and death; the provision of medical care; and the provision of subsidies for families with children.’
Social security organisations in Europe emerged after the Great Depression of the 1930’s, and were based on concerns for the plight of the poor, especially the elderly, belief in the virtue of thrift and contempt for idleness. The inability of a large portion of the work force to seek coverage from private insurance schemes forced the state to intervene and offer protection for the disadvantaged; but these pensions were provided in only extreme cases and at subsistence level. The Beveridge Report of 1942 created the foundation for social insurance in Britain and other European countries, and the aim was to ‘make want under any circumstances unnecessary’ (Beveridge, 1942), while lessening state dependence.
The first system of social insurance was created by the Government of Germany under Chancellor Bismarck between 1883 and 1889.
The St. Kitts and Nevis Social Security, like most social security programmes, in the developing countries was fashioned after the programmes of the European countries. The architects recognised the need for social security to combat the social and economic realities that existed in the islands during the 1950s.
Social security consists of a number of strands, namely: social insurance, social assistance, benefits financed by general revenue, family benefits, provident funds (mandatory public savings), and provisions made by employers and other social services.
Social insurance was the strand emphasised by the pioneers of social security who envisioned the joint contribution of employers and employees in supporting colleagues and mates in the time of need. Its main characteristics are compulsory participation; the accumulation of contributions into a special fund out of which earnings or contribution-related benefits are paid; and the investment of surplus funds not needed to pay current benefits, to generate further income. Most social security programs in the Caribbean with emphasis on this aspect are referred to as national insurance.The non-contributory assistance Pension offered by the St. Kitts and Nevis Social Security is a social assistance programme and seeks to promote the principle of universality as postulated by the Beveridge model, hence the name Social Security rather than “national insurance’.
Ultimately, social insurance funds were to become fully funded, as suggested by Beveridge (1942) who makes it clear that government’s expenditure was to go towards ‘maintaining employment of the labour and other productive resources of the country’, while society actively participates in protecting itself. This was also the intent of President Franklin Roosevelt regarding the social security system introduced in the United States of America in 1939. At its inception, one of the principal aims of social security was that it ‘would be an “insurance” rather than “welfare”.
Social security programmes were economically justified on a number of grounds. The decline in the traditional means of caring for the family, such as the extended family, which left the elderly easy victims for destitution, made some other
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² Beveridge, W. (1942) Social Insurance and Allied Services Report. London, Her Majesty’s Stationery Office.
means of provision necessary. It was also deemed necessary to force myopic individuals to save for their retirement, thus preventing them from becoming a burden to society. Thirdly it created the opportunity for all to contribute to the safety net, so that there are no free riders (the principle of solidarity). It allows the redistribution of income where the rich helps to provide for the lifetime poor, i.e., those who were either unable or unwilling to provide for themselves during working age. Finally, it is based on the idea of risk sharing or the pooling of risk.
The main principles are solidarity (the whole community standing together), universality (for the whole community), and equity (uniform protection for each section of the community). Social security in St. Kitts and Nevis and the world over has saved many workers and their beneficiaries from destitution; and with its mobilisation of resources has contributed to the economic health of many countries.
After thirty years, the social and economic deprivation that existed in St. Kitts and Nevis has been ameliorated, and many tend to behave as if social security is no longer needed. There are still vulnerable groups in the society who need the protection offered by social security. There are those who lack the discipline and/or the means to save and make adequate provision for contingencies. As long as the sick, the infirmed, the aged and the poor are with us, social security remains relevant and necessary.
The foresight and ambition of the architects of our Social Security System should be commended, and we the inheritors should ensure that our social security rights and those of our children and grandchildren are protected.
The social assistance strand aims to provide a ‘safety net’ for those who, by reason of physical infirmity or some other reason(s) fall outside the scope of the main scheme, or whose insurance benefit is inadequate to meet their needs. Social assistance is generally financed from government revenues, and recipients are usually subjected to means testing to determine eligibility.
