AISS, 22.03.2009 | Noticias

Christopher Daykin, former Chief Government Actuary (UK)

“The financial crisis will lead to increased insecurity, inequality, unemployment and the spread of informal employment,” warned Christopher Daykin, Chair of the Pensions, Benefits and Social Security Section of the International Actuarial Association, and former Chief Government Actuary of the United Kingdom (1989-2007), who gave a wide-ranging presentation on the causes and consequences of the financial crisis and the potential impact on social security systems.  

A varied impact on social protection systems

The  crisis could have a “severe impact” on certain types of pension schemes, raising  concerns about their sustainability in some cases, Mr. Daykin said. This situation reinforces the need for a long-term perspective on investment based on broad diversification and risk management, and confirms the importance of a minimum basic pension in national social security systems that limits individuals' exposure to the market, he emphasized.

He identified scenarios of how the recession might affect social security schemes, with, for example, reduced contribution income resulting from falling levels of employment and demands for reduced or deferred contributions by employers.  

However, he anticipated that this situation would lead to a reinforced positive public perception of social security systems, and of the need for effective government guarantees for social protection.    

The ensuing debate indicated that the impact of the global and economic crisis varies among countries of the region and that measures to help alleviate potential problems have, in many cases, not yet been instituted.

The seminar, which ended on 14 March in Divonne-les-Bains, France, was the latest in a series of high-level seminars for Chief Executive Officers (CEOs) and senior management organized by the ISSA, and was the first aimed specifically at member organizations from Central and Eastern Europe and the Commonwealth of Independent States. The Seminar involved social security leaders and managers from Albania, Armenia, Azerbaijan, Bulgaria, Hungary, Moldova, the Russian Federation and the Republic of Kyrgyzstan.

Social security as an economic investment

Earlier in the meeting, Blaise Matthey, Director General of the Fédération des enterprises romandes, a Swiss employers’ organization that manages an occupational insurance fund, urged participants to present the case for social security as a necessary long-term investment for employers, despite the economic pressure.    

“Employers need to be convinced that a broad system of social security is an investment, and, when combined with a flexible labour market, is an essential condition for competitiveness,” Mr. Matthey said. He emphasized the growing role of scientific studies and the use of media in influencing social security policy in many countries.    

The moderator of the meeting, Yuri Lublin, former First Deputy Minister of Labour and Social Development of the Russian Federation, and a member of the National Association of Employers and Industrialists’ Working Group on Pension Reform, encouraged participants to remain positive about the development of social protection in the region. The benefits of recent reforms, including the introduction of multi-pillar pension systems, should be preserved, and a long-term approach should be taken during the financial crisis, Mr. Lublin argued.    

Influencing social policy-making

In a region where policy reforms and the associated institutional and legislative changes have accelerated over the past decade, social security institutions find themselves confronted with multiple challenges. According to the ISSA organizers, addressing these challenges effectively requires an understanding of the global and national context for policy development as well as knowledge of “good practice” solutions and the active involvement of their institutions in the policy-making process.

Setting the context of the seminar, the ISSA Secretary General Hans-Horst Konkolewsky said that, in the context of the current global financial crisis, “social cohesion and social justice are of more importance than ever,” and pointed to ways in which social security institutions and managers could act.    

“First, social security institutions should lead the way by promoting reforms to improve social security systems; Secondly, during a reform process, social security institutions should play a major role in shaping policies. Thirdly, in order to meet the first two objectives, the leadership of CEOs of social security institutions is vital,” he stated.    

Analysing political processes

Country case studies were made by Evalina Koldashi, Director General of the Social Insurance Institute, Albania and Jordan Hristoskov, Governor of the National Social Security Institute, Bulgaria, who outlined how their institutions participate in social policy decision-making processes.

The participants also examined the real-life experience of policy-making in Switzerland from various perspectives: that of an institution managing mandatory second-pillar pensions (the Inter-enterprise Occupational Insurance Fund); that of the social security policy setting, supervising and monitoring organization (the Federal Social Insurance Office in Bern); and that at the highest political level (the Committee for Social Security and Public Health) during a study visit to the Swiss Parliament in Bern.