Social Welfare in Pollona

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In Pollona, government backed social insurance programs are the primary political tools used to aid poor and disabled people. Total spending on "welfare" programs reached $220 Billion in 2015 (9.5% of GDP) for federal, state, and local governments. The national government spent $95 Billion on social welfare payments in 2015, or 25% of the federal budget. This does not include the system of state pensions, which are considered a separate system off of the federal balance sheets (see below).

Most welfare programs are implemented at the state and local level through a series of matched funded grants known as "Transfer Payments". Welfare transfer payments may be allocated to a state or local department by the issuing Ministry if certain conditions are met. These transfer payments help fund three major means tested programs: Supplemental Income Support (DPP), Child Benefit (PnD) and Disability Insurance (IP). A fourth, the "Health and Social Care Grant" funds state premium support schemes. Any additional forms of social insurance are the sole responsibility of local authorities and charitable foundations.

Supplemental Income Support

Supplemental Income Support (Doplňková Podpora Příjmu or DPP), is a program that provides a guaranteed minimum income for a person, their dependents, or their families. Under DPP, any citizen over 25 who is unemployed and seeking work (including those in job training or higher education) is entitled to receive a direct transfer payment from the government, worth approximately $9,240 Kč/yr ($6,000/yr). A typical family of four can expect approximately 18,480 Kč/yr ($12,000/yr) in cash assistance. Payments under the scheme are directly deposited to the recipient(s), who may spend them however they like.

If the recipient becomes employed, these direct payments supplement whatever money a person earns up to a certain threshold. For every $1 a person on DPP earns, their benefit decreases by 40¢. Under this GMI scheme, as a person earns more, they receive less in benefit. In a sense, the scheme is means-tested. However, the welfare support payments decrease by a smaller amount than a person's increases in earned income. Thus, any person receiving DPP is always better off earning more money, encouraging work. In the case of a single recipient in a typical state, DPP phases out when a claimant earns more than 23,100 Kč/yr ($15,000/yr); or for a family of four: 46,200 Kč/yr ($30,000/yr).

Supplemental Income Support was first enacted in 1963 as an experimental pilot to replace unemployment insurance (created in 1912), poor relief (1890), and income credit (1926). Fully enacted in 1978, DPP was phased in across all states. The system was modified in the 1986 Public Assistance Act to allow states to set higher starting thresholds and peg them to the a state's cost of living index.

Proponents claim DPP guarantees every able-bodied citizen a basic standard of living, eliminates the need for larger government assistance programs, and avoids the welfare trap. After 1978 economists began analyzing the effects of DPP. Employment among women (married and unmarried) increased over 10 percentage points by 2000; employment in households headed by single mothers increased by 22 percentage points; almost 40% more students were employed in 2000 than in 1980. Poverty rates declined, but it is harder to attribute to DPP due to Pollona's economic boom in the late 80s and early 90s.

Approximately $110 Billion was spent on Supplemental Income Support in 2015 by federal and state governments.

An example of how the system works is provided in the table below:

SIS Benefit for a Single Recipient
Recipient's Income Gov. Benefit Total Income
$ 0 6.000 $ 6.000
$ 2.000 5.200 $ 7.200
$ 4.000 4.400 $ 8.400
$ 6.000 3.600 $ 9.600
$ 8.000 2.800 $ 10.800
$ 10.000 2.000 $ 12.000
$ 12.000 1.200 $ 13.200
$ 14.000 400 $ 14.400
$ 15.000 0 $ 15.000

Child Benefit

Child Benefit (přídavky na děti or PnD) is a social security payment which is distributed to the parents or guardians of children and young adults living in Pollona. It is a monthly benefit designed to support the cost of raising a child. In the 1950s it was implemented in order to maintain the national fertility rate above the replacement threshold. Originally, PnD payments were based on the real value of 50 liters of milk, and index to the CPI. Given milk price volatility, this formula was scrapped in the 1990s.

Today, the benefit is a flat rate of 150 Kč/month ($97/month) for the first child and 200 Kč ($120/month) for every subsequent child. Benefits are gradually phased for families with incomes over 70,000 Kč ($45,450). Couples who stay married receive monthly bonuses as their children grow older, an award designed to curb single parent families.

Multiple births are treated as special cases. In the event of twins, 150% of the monthly payment is paid for each child. Triplets, or more, are paid the double (200%) rate each. Parents are entitled to the benefits as long as the child in question remains qualified, i.e. until they turn 19 years of age (one year after the age of majority).

Approximately $20 Billion was spent on Child Benefit in 2015.

Disability Insurance

Disability Insurance (Invalidní Pojištění or IP) is a non-contributory benefit which is designed to help people cover the costs of a physical or mental disability. Payments to disabled claimants are categorized in a series of indexed bands, which rate the severity of the disability and then calculate a reimbursement to the claimant. Particular attention is given if the recipient requires help in the activities of daily living (i.e. filling a daily routine), and if they need more constant care or supervision. For mental disabilities, IP helps cover the cost of treating a mental illness, and recipients must demonstrate they are getting proper medical attention. Claimants undergo periodic assessments, usually once every six months.

The following are a series of averages for each band.

  • Low Rate : 90 Kč/wk
  • Medium Rate : 130 Kč/wk
  • High Rate : 200 Kč/wk
  • Day Care Required: 50 Kč/day
  • Day and Night Care Required: 100 Kč/day

An extra 60 Kč/wk is granted for those with terminal illnesses. For families with children suffering a disability or chronic illness, IP can be directly paid as a form of premium support for a private insurer to cover medical bills.

Approximately $50 Billion was spent on Disability Insurance in 2015.

Pensions

Upon birth or naturalization, all citizens are given a National Pension Account (Národní Důchodový Účet), which are state-supported private retirement accounts. Pension funds can be withdrawn from after a person reaches the National Retirement Age. At present, the normal retirement age is 70 for Men and 68.5 for women. Persons with old-age disabilities or medical issues may withdraw from their accounts 7 years in advance.

A citizen's Pension Account is funded through a system of mandatory contributions through "pay as you earn". Approximately 5% of a citizen's monthly salary must be contributed to their Pension Account, though a citizen may, at any time, increase the contributions to their retirement. No person may contribute more than 35,000 Kč ($22,727) to their account in any one year. A citizen can choose from one of 15 potential investment portfolios, which are guaranteed by the government.

Upon retirement, withdraws can be made like an annuity, or in the form of lump sums. All withdraws are tax free. If a person exhausts their Pension Account or if the portfolio loses its value, the government will make a series of annuity payments to the recipient.

National Pension Accounts are coordinated by the Board of Pollonan Trust Funds, a quasi-autonomous governmental department.

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