Hyderabad, 27-28 July 2016
BRICS
Second
Employment
Working
Group
Meeting
Social Security
Agreements
Social Security – Key Features
• Long history of social security regulation on basis of legislation
• Legislations at federal and state level – cover one or more
aspects of social security
• Different programmes for different segments of population
• Standard model cannot be adopted.
• Different schemes cover one or more of ILO’s 9 social security
parameters : Medical care, sickness, unemployment, old-age,
employment injury; family; maternity; invalidity & survivor’s
benefit
Diversity of Social Security Schemes
• EPFO – one of the organizations providing social security benefits to
workers
• Schemes of Public Sector Enterprises and Autonomous bodies
• Pension schemes of State Governments
• Government pension schemes for rural areas
• Healthcare & Provident fund/pension programs for labour force
• Social security schemes for specific sets of industries
• Privately managed schemes supplement Govt schemes
• Increasing coverage of informal unorganised sectors
• New schemes being launched
Coverage Social Security Schemes
Schemes Number of subscribers
Schemes under EPFO 40 million
(158.4 million accounts)
Employees State Insurance Corporation 20 million
Pension & PF for Govt Servants 4.0 million (approx.)
State Railway Provident Fund 950,000
National Pension System 9.25 million – Aug 2015
Rural Social Security Schemes 30.15 million
Atal Pension Yojana 2.75 million
Total 225.55 million
Schemes under EPFO
• Employees’ Provident Fund (EPF)
Defined contribution scheme.
Individual account based lump sum payment with interest on
retirement (58 years).
• Employees’ Pension Scheme
Monthly pension payments: Old age retirement, survivor, disability;
children and orphan.
• Employees’ Deposit Linked Insurance Scheme Survivor gets
insurance benefit, up to Rs. 6,00,000/- if member dies while
employed.
BRICS
Old Age & Survivor Schemes – Broad Comparison
Criteria Brazil Russian
Federation
India China South Africa
Coverage
Salaried, rural,
voluntary
Employed citizens,
self employed
Employed workers
Employees, self
employed
Employees
Funds
(Employee)
8% salaried
20% voluntary
None for employed;
fixed amount for
self employed
12% of wages
8% for employees;
12% for self
employed
1% of earnings
Funds (Employer)
20% of payroll
22% of payroll
12% of wages
20% of payroll
1% of earnings
Funds
(Government)
Taxes for
administrative cost;
total
for social
assistance
Total cost of social
pensions
1.16% of wages
Subsidies as
needed; full for
non
- contributory
pension
Funds social
assistance schemes
Qualifying
Criteria for
benefits
Age and 180
months of
contribution
Age and 5 years of
contribution
Age and 10 years
of contribution
Age and 15 years
of contribution
Age and means
testing
Social Security Benefits to International Workers (IWs)
To protect the interest of International Workers India has signed
bilateral Social Security Agreements (SSA) with 19 countries
Agreement operationalised with 16 countries
An SSA generally provides for “detachment”, “totalisation”
and “portability
• Detachment -IWs are exempted from making contribution in
the host country
• Totalisation - The service rendered abroad to be counted for
benefits
• Portability - Benefits can be availed in either country
Indian International Worker
Indian
working
abroad in a
SSA
country
Posted with COC
(Not required to
contribute abroad)
Domestic
worker
Posted without COC
Contribute to social security
system of SSA country
International
Worker
Contribution in
India and on return
International Worker (Foreign
National)
Coming from SSA
country
With COC- NO
(Excluded employee)
Without COC- YES
Coming from Non SSA
country
Every one
Social Security Agreements with India
Belgium
01.09.2009
Germany
01.10.2009
Switzerland
29.01.2011
Denmark
01.05.2011
Luxembourg
01.06.2011
France
01.07.2011
South Korea
01.11.2011
Netherlands
01.12.2011
Hungary
01.04.2013
Finland
01.08.2014
Sweden
01.08.2014
Czech Republic
01.09.2014
Norway
01.03.2015
Austria
01.07.2015
Canada
01.08.2015
Australia
01.01.2016
Japan
16.11.2012
Portugal
04.03.2013
Quebec
26.11.2013
There is Common Ground…
• India signed SSAs with 19 countries
• BRICS nations have individually signed SSAs with other nations
• Trade relations between BRICS nations have been increasing over
the years
• Major Industries and Enterprises from respective nations are
making investments
• With trade and investments there is increasing flow of nationals
who go for work for their companies to the other nations
• The companies often make dual contributions in the absence of
detachments provisions that affect the competitiveness
Indian Nationals Employed in BRICS
• Contribute to the respective social security regimes in each countries
• Average stay range from 3 to 5 years and they are not entitled to get any benefit
from the other countries’ social security systems
• Eligibility for social security benefits place restrictions on the entitlements
• Large part of contribution neither refunded nor utilized
• Loose entire social security contributions unless they complete the respective
mandatory contributions which are limited by their stay and visa regulations
• In the absence of SSA the individuals are not able to totalize the social security
benefits
• Neither are the individuals able to port their benefits to the country of choice in
the absence of SSA
BRICS Nationals Working in India
• BRICS nationals working in India & their employers, contribute 12%
of salaries to Indian social security system or Provident Fund.
• Employers contribute 8.33% towards pension and 3.67% towards
Provident Fund.
• Total contribution: 24% of salary to Provident fund.
• Large part of contributions refundable to BRICS nationals from their
Provident Fund on completing 58 yrs age.
• Receive pension benefit if they worked in India for at least 10 years
or have benefits of totalization
Rationale for Totalisation
• Large contributions by Indian nationals and their employers
• Adds to Indian companies’ overall cost of doing business, without any
corresponding benefit
• BRICS nationals will be eligible for refund of provident fund and
pension accumulations at time of repatriation
• Period of service in India and BRICS will be added together to
determine eligibility for social security benefits under social security
system, in both BRICS and India
• Reduce cost of international assignments and correspondingly cost of
doing business for both BRICS and Indian companies.
Conclusions
• Increasing coverage of social security schemes
• Increasing literacy of workforce & awareness of
schemes
• Leveraging IT to reach out to greater mass of people
• SSAs will benefit all workers moving across borders.
• The Working Group on Employment adopts a resolution to
take the necessary steps to ensure that Social Security
Agreements are entered into between the member
countries of BRICS
• Specifies a time frame for the concerned Ministries,
Departments and institutions in the respective member
countries to carry out negotiations and conclude the Social
Security Agreements
Moving Forward from here ….
Thank You
