Financial sustainability of social security systems








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The CIESS recognizes, as a crucial issue, the in the short, medium and long term financial support of such institutions as provide social security benefits, and therefore offers an activity focused on analysing the financing of these Systems as well as their usefulness in accordance with the characteristics of the benefits to be delivered.


Just as Carmelo Mesa-Lago wrote in his document: “Pension reforms in Latin America and their impact on the principles of social security” -by which defines the taxonomy currently used when talking about pensions and which are of the The most difficult to finance social security benefits – these can be categorized according to various characteristics, such as who administers them or the financial system that aims to give them financial sustainability.

In the latter, financing systems are considered to be of only two types: distribution or capitalization, taking them as synonyms of defined benefit or solidarity and defined contribution or individual accounts.

However, following the specialized literature on the subject, it is conceded that both the distribution system and the pay-as-you-go system have more than one aspect, resulting in a range of five variants of financing systems: pure distribution, distribution of capital of coverage, general average premium, scaled average premium and individual capitalization; which can coexist and give financial sustainability to the institutions related to social security in the short, medium and long term, which can be corroborated through the elaboration and analysis of annual operating results, as well as an actuarial balance.

Main objective

Analyse and evaluate the basic systems of financing benefits for security and its various aspects, as well as recognize its practical usefulness in accordance with the type of benefits to be financed.

Identify the types of benefits offered for social security: short and long term.

Make the short-term and long-term benefit cost curve for social security.

Distinguish the practical utility of the systems of distribution and capital accumulation.

Evaluate the functioning of the financing systems over time, according to the annual result of the operation and the Actuarial Balance Theory.

Classification of social security benefits

Benefit cost curves

Short-term benefits

Long-term benefits

Benefits of occupational risk insurance

Delivery systems

Capital accumulation systems

Annual operating results

Actuarial Balance Theory

Teaching Methodology

The activity will be carried out through lectures and theory-practice classes.


A diagnostic evaluation and an examination at the end of the course will be applied to measure the impact of the training.

Works Cited

Financing social protection / Cichon, Michael; Scholz, Wolfgang; Van de Meerendonk, Arthur; Hagemejer, Krzystof; Bertranou, Fabio; Plamondon, Pierre. -- Switzerland: International Labour Office (ILO): International Social Security Association (ISSA), 2004. 663 p. (Quantitative methods in social protection series).

Modelling in health care finance: a compendium of quantitative techniques for health care financing / Michael Cichon; William Newbrander, Hiroshi Yamabana. -- Switzerland: International Labour Office: International Social Security Association (ISSA), 1999. 376 p. (Quantitative methods in social protection series).

Social budgeting / Wolfgang Scholz; Michael Cichon and Krzysztof Hagemejer. -- Switzerland: ILO: ISSA, 2000. 328 p. (Quantitative methods in social protection series).

Técnicas actuariales de la seguridad social; Regímenes de las pensiones de invalidez, de vejez y de sobrevivientes / Peter Thullen. -- España: Ministerio de Trabajo y Seguridad Social (MTyPS), 1995. 532 p. (Colección Informes OIT 43).

Enrolee Profile

Officials or managers of social security institutions and those in academia, who are interested in the subject.