INTERNATIONAL LABOUR OFFICE
ADMINISTRATIVE
PRACTICE OF
SOCIAL INSURANCE
GENEVA
1955
STUDIES AND REPORTS
New Series, No. 40
P U B L I S H E D B Y T H E INTERNATIONAL
GENEVA,
LABOUR
OFFICE
SWITZERLAND
Published in the United Kingdom for the INTERNATIONAL LABOUR OFFICE
by Staples Press Limited, London
PRINTED BY IMPRIMERIE GRANCHAMP, ANNEMASSE (HAUTE-SAVOIE)
CONTENTS
Page
INTRODUCTION
1
CHAPTER I. Identiflcation and Registration of Insured Persons
First Registration of Insured Persons
Registration Numbers
Choice of a Numbering System
Duplication and Its Elimination
Identity Documents
Other Aspects of Registration
Re-inscription. Notification of Entering or Leaving
Employment and of Other Changes
General Registration or Re-registration
Self-Employed and Casual Workers
Registration of Dependent Relatives
Supervision of Reporting
Insurance Registers
Basic Identiflcation Registers
5
5
7
9
10
II
13
13
14
15
15
16
17
20
CHAPTER I I . Registration of Employers
Definition of " Employer "
First Registration
Registration Numbers
General Registration or Re-registration
Supervision of Registration
Records relating to Employers
22
22
23
24
27
28
29
CHAPTER I I I . Collection of Contributions
Collection Systems in General
Collection by Means of Periodical Rolls
Design of Forms
Period Covered by the Roll
Method of Reception and Payment
Internal Checking of Contribution Rolls
External Checking of Contribution Rolls
Punctuality in Remitting Rolls : Procedure in Case
of Delay
Relations between Collection and Accounts Services :
Employers' Current Accounts
The Stamp System
Issue, Sale and Affixing of Stamps
Supervision of Employers
Forgery and Fraud and Their Prevention
Handling and Exchange of Stamp Books
32
32
34
34
38
38
39
40
41
44
46
48
51
52
53
IV
CONTENTS
Page
IV. Individual Records of Insured Persons
Types of Individual Record and Transfer Methods . . . .
Direct Transfer
Transfer by Means of Punched Cards
General Remarks on Transfer Procedures
Centralisation or Decentralisation of Individual Records
CHAPTER V. Checking Qualifications for Benefit
Insurance against Short-Term Contingencies
Normal Handling of Applications for Medical Care . .
Special Cases and Considerations
Insurance against Long-Term Contingencies
CHAPTER VI. Statistics
Statistics of Insured Persons
Numbers Entering and Leaving Employment . . . .
Insured Persons in Covered Employment
General Registration
Registration for Family Insurance
Statistics of Employers and of Contributions Collected . .
Statistics of Benefits
Short-Term Insurance
Pension Insurance and Death Benefits
CHAPTER
Relationship between Statistics and Accounting
56
59
60
63
65
66
70
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75
76
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INTRODUCTION
The basic principle of social security is now universally
accepted and fundamental common standards have been
evolved and embodied in the Social Security (Minimum
Standards) Convention, 1952, adopted by the International
Labour Conference at its 35th Session. However, different
administrative methods are applied to give practical effect
to the various national systems. As the Director-General of
the International Labour Office observed in connection with
the adoption of the Convention, the problem in a great many
countries today " is not so much one of determining standards
as of meeting the practical difficulties that arise in their dayto-day application. It is for this purpose that the I.L.O. is
being called upon in increasing measure to render practical and
direct assistance in evolving administrative techniques, in
simplifying procedures and rendering them more easily comprehensible, and in ensuring that schemes have an adequate
actuarial basis. "
Since 1952, then, the I.L.O. has been able to concentrate
a major part of its activities in the field of social security on
administrative aspects, using not only the traditional methods
of investigation and documentation but also procedures of
established efficacy—technical assistance, close collaboration
with the International Social Security Association and the
Inter-American Social Security Conference and discussions
among experts in social security seminars (most of them held
in Latin America), the working documents of which have been
of great value in the preparation of the present study.
The study, which contains a detailed description of the
administrative practice of social insurance, concerns the
classical social contingencies—sickness, maternity, occupational
injury, invalidity, old age and death—and deals successively
with identification and registration of insured persons,
registration of employers, methods of collecting contributions,
individual records of insured persons, checking of the general
2
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
conditions governing grant of benefits, and statistics as a byproduct of good administrative organisation.
There are many possible solutions to the administrative
problems of social insurance and the choice of the best depends
on a variety of factors that may differ from one country to
another. It would not be proper, therefore, to recommend any
one technique at the expense of others ; and this study presents a
series of reasonable solutions accompanied, where appropriate,
by brief critical comments. It is hoped that this approach, in
addition to laying bare every aspect of each problem, may
help the reader to choose the solution best fitted to the case.
For further data and instances of the procedures described
in this study, the reader is referred to the following works,
the first four published by the International Social Security
Association and the last by the Inter-American Social Security
Conference :
(1) Collection of Social Insurance Contributions1,
after referred to as Collection of Contributions ;
here-
(2) Report on Technical Problems Involved in the Administration of Social Security Schemes 2, hereafter referred to as
Technical Problems ;
(3) Manual of Methods of Identification of Insured Persons
and Organisation of Records, Part I : National Monographs 3,
hereafter referred to as National Monographs ;
1
This report, included in the Proceedings, Reports and National
Monographs, Resolutions and Conclusions, Ninth General Meeting of
the I.S.S.A. (Geneva, General Secretariat, I.L.O., 1950), contains
information on eight countries (Austria, Belgium, Czechoslovakia,
Denmark, France, Ireland, Italy, and the Netherlands) on the following subjects : statutory provisions respecting contributions, administrative structure for the collection of contributions, registration
of employers and employees subject to contribution (including the
self-employed and, where relevant, the non-employed), cash liquidation of contribution liability, employer contribution records, contribution reports submitted to the administrative agency, contribution
records, special procedures in the case of certain groups, and audit
and inspection.
2
Report III to the Tenth General Meeting of the I.S.S.A. (Geneva,
General Secretariat, I.L.O., 1951).
8
Geneva, General Secretariat, I.L.O., 1951. Containing information on 15 countries (Austria, Belgium, Brazil, Bulgaria, Chile,
Colombia, Denmark, France, Israel, Italy, Portugal, Switzerland,
United Kingdom, United States, and Venezuela).
INTRODUCTION
3
(4) Ibid., Part II : Registration Forms, Insurance Cards,
etc.1, hereafter referred to as Registration Forms ;
(5) Métodos de percepción de las cotizaciones del seguro
social en las Americas 2, hereafter referred to as Percepción de
cotizaciones.
1
Geneva, General Secretariat, I.L.O., 1951. Containing reproductions of the forms, etc., used in the countries listed in the preceding
footnote (with the exception of Austria, Belgium and Israel).
* Geneva, 1952. Containing information on 14 American countries
(Argentina, Bolivia, Canada, Chile, Colombia, Dominican Republic,
Ecuador, Guatemala, Mexico, Panama, Peru, United States, Uruguay,
and Venezuela). The monographs concerning Canada and the United
States are in English.
CHAPTER I
IDENTIFICATION AND REGISTRATION
OF INSURED PERSONS
FIRST REGISTRATION OF INSURED PERSONS
When a person first takes up an occupation involving compulsory social insurance, his first formal contact with the insuring institution is generally marked by the process of registration. Usually it is the employer or the worker himself who
notifies the institution by entering on a form such particulars
about the worker as will enable him to be completely identified.
Insured persons are usually required to supply the following particulars : surname and other names, including maiden
name in the case of a married woman (in some countries parents'
surnames) ; date and place of birth, sex and civil status ;
number of the civil identification document if such a document is issued by the authorities and is compulsory or in
general use, or that of the " employment book ", if employed
persons are required to hold such a book. Usually the worker
is required to give the employer evidence of the accuracy of
the above data, particularly by showing his identity card or
other official document (birth or baptismal certificate, military
identity book, passport, etc.). Some institutions also require
photographs, and others fingerprints, as additional means of
identification.
In addition to personal particulars details are usually
required regarding job or occupation, date of engagement,
agreed rate and manner of payment.
The form usually asks for the name of the employer or
the title of the firm, and the registration number and address.
The registration form is signed by the employer and generally also by the worker.
Of all the possible particulars, only those necessary to
permit identification and perhaps to provide a basis for the
institution's statistics should be asked for. The internal pro-
6
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
cesses of first registration, including the issue of the insurance
card or booklet, should be completed in the shortest possible
time : failure to act rapidly involves the risk that, before
the formalities are concluded, the insured person may have
left the service of the employer who had him registered and
consequently may not be accessible to the institution for
issue of the insurance card or booklet or for clearing up any
doubtful point ; furthermore, he may have entered the service
of another employer thus providing an opening for the dangerous phenomenon of double registration. Consequently,
in requiring from insured persons some such additional means
of identification as a photograph or fingerprints, the institution
should weigh its necessity or utility against the additional
cost it may involve to the institution or the persons concerned
and against its inconvenience (i.e., whether it will unduly impede
or prolong the registration process and other relevant formalities). In addition, if fingerprints are taken each new insured
person will have to visit the institution's offices or travelling
personnel will have to be sent to employing establishments ;
and specially trained personnel will be needed for the subsequent use of the fingerprints.
For some social insurance institutions difficulties of communication, the sparsity of the population, ignorance of the
objects of social insurance, illiteracy and similar factors convert
the task of identifying insured persons into one of major administrative difficulty such as may seriously affect the practical
application of the scheme. Institutions in this position should
reduce the particulars collected for identification to the indispensable minimum (even if this involves doing without data
of statistical value) ; but they must absolutely insist on provision of these few data and must demand rapid submission of
the completed forms. Furthermore, they will be obliged to
take positive action to spread information about social insurance
and understanding of its meaning and of the administrative
procedures it requires. If a reasonable degree of discipline and
co-operation on the part of employers and insured persons
cannot be obtained, the institution will, for instance, find itself
learning of the existence of a new employee-—presumably an
uninsured person—only through the employer's failure to
indicate the " insurance number " in his statement of contributions ; as the full name of the worker is not a sufficient
REGISTRATION OF INSURED PERSONS
7
indication by itself, such a person is usually registered provisionally as if he were a newcomer to the scheme, in the hope
of subsequent further information, which in many cases fails
to arrive at all. This may lead to double registration, which
affects all the records of the institution, particularly the individual accounts, with the risk that the administration of the
scheme will be turned into a chaotic mass of cards and documents
without any practical value.
As a rule the employer is required to transmit the entry
form (application for registration) to the insurance institution,
but the insured person has the right to register himself if the
employer fails to do so. There are also schemes—for instance,
those which use the stamp payment system—where the obligation to register falls directly on the insured person. This is
naturally the rule for self-employed persons, and under some
schemes also applies to casual workers and persons with several
employers. 1
Usually it is the duty of the institution's local offices,
if any, to receive the registration forms of new insured persons.
But these same offices may also carry out the actual registration process or transmit the forms to a regional or central office.
What duties are assigned to the regional or local offices in this
connection depends to a large extent on the effective possibility
of rapid communication between them and the central office.
In countries where there are several social insurance
institutions handling separate risks or groups of risks, the
registration of new insured persons may be carried out by one
of these (the sickness and maternity insurance, for instance)
or by a special central office.
REGISTRATION NUMBERS
When the competent service of the institution has received
the request for registration and confirmed that the worker in
question is really a newcomer to the scheme, it first assigns him
a registration number or " insurance number ". This operation has two objects : (a) to distinguish the particular person
for social insurance purposes—there should accordingly be
only one number for each insured person and only one insured
1
See below, p. 15.
8
ADMINISTRATIVE PRACTICE OF SOCIAL
INSURANCE
person to each number ; (b) to facilitate other administrative
operations regarding insured persons, and particularly the
handling of registers and card indexes, typing and the compilation of statistics if any.
The registration number may be a simple serial, following
the chronological order of registrations. If these are done
by local or regional offices, the numbers available are usually
divided into groups and a group allotted to each region in
accordance with the probable number of registrations to be
made there ; another method is to add to the serial number
one or more digits indicating the region, in which case each
region follows a separate chronological enumeration.
This latter method really belongs to a different system,
that of code or part-code registration numbers x : the individual's
number is composed of groups of digits, each group or digit
representing a particular datum that is of importance for
social insurance purposes ; if necessary, a chronological serial
number may be added to distinguish several insured persons
with identical codes. As a general rule, the code number will
express one or more of the following data : year of birth (sometimes the month also) ; place of birth ; sex ; year of first registration (i.e., of first entry into the insurance scheme) ; place of
work at date of registration ; local or regional office which
undertook the registration. There is also an alphabetical coding system under which the arrangement of insured persons
according to their registration numbers automatically produces
a strictly alphabetical arrangement by surnames and given
names—i.e., there is no difference between the numerical and
the alphabetical classification of a given person. However,
this last system involves the risk that, after a period, it will be
impossible to insert new numbers such as would preserve the
exact alphabetical order ; furthermore, it is difficult to keep a
check on the numbers already issued.
The system of combining digits with one or more letters
to form the registration number is also found, but is not
common.
Some institutions assign registration numbers to insured
persons on a chronological basis, but also allot code numbers
for their own internal (statistical) use.
1
See Collection of Contributions, p. 389 ; National Monographs,
p. 210 ; and Percepción de cotizaciones, pp. 295 and 299.
REGISTRATION OF INSURED
Choice of a Numbering
PERSONS
9
System
When an institution intends to establish a system of registration numbers, it must first thoroughly examine all its administrative operations and have regard at the same time to
the two following requirements :
(a) the registration number must be as short and simple
as possible, so that it may be conveniently used by employers
and insured persons and also so as to reduce the internal work
of the institution and diminish the possibility of errors in
operations where the numbers are used ;
(b) nevertheless, it must contain all the elements required
for rapid, accurate identification of insured persons and for the
necessary statistical work.
The purely chronological series is used with good results
in institutions where the number of insured persons is small.
Larger institutions prefer a system of code or part-code numbers, and select—among the various possibilities mentioned
above—the type of code best suited to the particular circumstances of the country or institution and to their statistical
requirements.
Any numbering arrangement adopted must make allowance for the future development of the institution, especially
in schemes whose scope is to be gradually extended, either
geographically or as regards the groups of persons included
or the contingencies covered. The adoption of an unsuitable
system may involve one of the most serious administrative
difficulties that a social insurance institution can encounter—
the necessity for completely changing its system of registration
numbers, with all the consequences in confusion, duplication
and hindrance to basic administrative operations.
In the same way the question whether the allocation of
registration numbers should be carried out by a central office
or left to local or regional offices must be considered with
regard to all its administrative effects : if the latter course is
chosen, provision must first be made for the necessary co-ordination between the local and central offices, and the danger of
duplication must be excluded in advance. There are institutions where numbers are allotted independently in each region
and the insured person obtains a new number when he moves
10
ADMINISTRATIVE PRACTICE OF SOCIAL
INSURANCE
from one region to another ; but this is the exception and it is
generally agreed that there should be a single numbering system and that the registration number, once allotted, should
accompany the insured person throughout his whole life as
such.
However, if the allocation of the registration number is
the task of a central office, the local or regional offices must
be promptly notified of the numbers allotted to the insured
persons for whom they are responsible.
Duplication and Its
Elimination
There are two possible types of duplication : a single
registration number may be allotted to two or several insured
persons ; and, more frequently, an insured person may in course
of time obtain more than one registration number. Such
occurrences may have undesirable effects on the individual
accounts of the insured persons and on the issue of benefits.
Indeed, duplications can be so frequent as to render the statistics
derived from registration figures useless for the financial and
actuarial supervision of the scheme.
The first type of duplication may be avoided, under systems
where code arrangements are not used or where they are very
simple, by printing the registration number in advance on
the principal relevant documents (the insurance card or booklet,
for instance) ; it may also be avoided under any system by
keeping a special control register (book, card-index or looseleaf file) of the numbers issued. Duplications that have already
occurred may be discovered fairly easily by means of a numerical
register or card index.
I t is more difficult to avoid the second type of duplication
(double registration of an individual), particularly when there
is a lack of interest or co-operation on the part of employers
and employed persons. Nevertheless, it is possible to bring
such occurrences within reasonable limits if each notification
of entry of a worker is examined with the aid of a general
alphabetical index or other appropriate central register ; it
may be ascertained in this way whether the notification relates
to a person who has already been registered or really to a newcomer. Such internal operations should be done early enough
to enable additional information to be obtained if necessary
REGISTRATION OF INSURED PERSONS
11
from the employers or insured persons concerned. It will be
especially difficult to avoid duplications or to eliminate those
that have occurred if the allocation of registration numbers
has been entrusted to local or regional offices. Here again,
reference may be made to the importance of efficient, rapid
communication and co-ordination between such offices and the
central office : the latter should have a general register, which
must be kept up to date.
If, despite preventive action, duplication has occurred,
it may generally be discovered and corrected as soon as the
insured person makes his first application for benefit.
IDENTITY DOCUMENTS
Institutions that allot a personal registration number to
each insured person send him—directly or though his employer—
a document that both communicates the allotted number and
attests the registration. Possession of this document enables
the holder to identify himself as an insured person if he should
change his job or place of residence and also serves as principal
evidence of his quality as such whenever he applies for
benefit.
The form and the size of the identity document may vary
from a substantial book to a simple card or disc. The choice
depends on how contributions are collected, whether the scheme
only covers short-term or also long-term risks, whether the
structure of the institution is predominantly centralised or local,
and whether identity documents are issued by other authorities.
The principal data specified in the document, whatever
its form, are usually as follows : full name, place and date
of birth, registration number and date of issue ; if each citizen
holds an official personal document, such as the identity card,
it is highly advisable also to indicate the number of this. There
has been much discussion regarding the advisability, or the
reverse, of including a photograph or fingerprints in order to
prove that the bearer of the document is indeed the person
whose name appears in it. Reference may be made to the
remarks on this subject in the first section of the present chapter ;
it should be remembered also that a photograph is not reliable
beyond a limited period and must therefore be replaced at
regular intervals—with the identity document itself. Some
12
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
institutions adopt a flexible system : they leave space for a
photograph but do not require this to be filled if the insured
person has some other identity document, with photograph,
issued by a competent authority (of course the number of this
latter document will be noted on the social insurance book
or card). If he has no such other official document, the insured
person is required to supply a photograph for insertion in the
social insurance book or card when he makes his first claim for
benefit.
The social insurance identity document may have one of
the following forms :
(a) It may be a simple card, containing nothing but the
basic personal particulars indicated above and carried by the
insured person throughout his life as such. The card should
either be of strong material or be specially protected against
wear and tear ; it should also be of such a size that the insured
person can easily carry it about with him. In order to prevent
damage, some institutions replace the card by a metal disc,
similar to those frequently used in national armed services.
(b) The document may also take the form of a booklet.
In this case, apart from the personal particulars, it should
contain a sufficient number of pages for the worker's consecutive
or simultaneous employers to be able to certify the dates at
which he has entered or left their service : the insurance booklet
thus becomes a kind of employment book and is of undoubted
value for the checking of continued coverage, particularly in
case of long-term insurance. The entries made by the employer
sometimes include an indication of the wages received. The
instructions given to insured persons must stress their obligation to submit the booklet to the employer both immediately
on taking up a new job and also on leaving, so that the appropriate entries may be made. Some institutions also include
pages for recording the benefits the worker has received (sometimes the more substantial benefits or the cash payments only).
Before deciding on the size of the booklet, the institution should
reflect whether each of the possible particulars is really necessary
or useful, whether its regular inscription should be required of
employers or of the institution's own services (having regard
to the additional work this will imply in either case), and finally
whether the inclusion of certain data may make it necessary
REGISTRATION OF INSURED PERSONS
13
to change the booklets frequently, which is undesirable, or
may render them too bulky.
(c) In cases where social insurance contributions are
collected by the stamp system 1 the worker's stamp book often
replaces a special identity document. However, since this
book must be periodically changed, some institutions prefer
to issue the insured person with an additional, permanent
identity document, which will in this case be a simple card.
(d) Reference should also be made to the special case of
institutions that use booklets containing detachable coupons,
pre-printed with the insured person's registration number.
When he pays the periodical contributions the employer removes
the corresponding coupons from his employees' insurance books,
marks the period and the amount of the contribution on each,
and makes up his contribution sheet with the whole batch of
coupons detached on each occasion.2
When no special identity document is issued by the social
insurance institution, the civil identity cards or employment
books issued by other authorities are generally used.
The social insurance book or card is usually issued by
the service responsible for allotting the registration numbers.
In the case of a booklet, it is advisable to provide for duplication of the first page, which will contain the personal particulars
and registration number. The copy of this page may be
detached from the book and transmitted to the central office
for its records if registration is done by a local office, and
vice versa.
OTHER ASPECTS OF REGISTRATION
Re-inscription. Notification of Entering or Leaving
Employment and of Other Changes
In the preceding sections stress has been laid chiefly on
the registration of persons entering a social insurance scheme
for the first time. When a worker who is already insured
leaves one employer and (immediately or after a period) enters
the service of another, he is usually reported afresh to the insurance institution. As a rule the institution requires employers
to notify it of the engagement and departure of workers already
1
2
2
See Chapter III.
See National Monographs, p. 70.
14
ADMINISTRATIVE PRACTICE OF SOCIAL
INSURANCE
registered ; these movements are noted in the insured person's
individual record. Such notifications may be made on special
forms, either individual or collective, or on the contribution
rolls if contributions are collected through the employer.
However, if a worker, when entering an employer's service,
cannot submit his social insurance card or booklet, it is advisable to require in any case—even if the worker claims to have
already been registered—that a complete individual notification of entry be made so that the institution can identify the
worker exactly, either as a new insured person or as one who
has already been registered.
It should be noted in passing that some institutions require
employers to notify them similarly of any modification in a
worker's insurable wage, of any periods of sickness or other
absences without pay, and of any change in the permanent
position of the worker which may have a direct bearing on
his insurance.
On the other hand, many institutions which have established
the stamp system for collection of contributions seldom require
the employer to make any notification at all except on engaging
a worker who has no stamp book.
General Registration or Re-registration
Reference has been made hitherto in this chapter to the
ordinary case of individual registration or reporting of insured
persons under an existing scheme. Brief mention must also
be made of the case of general registration of insured persons
prior to initiation of a new scheme or when an existing scheme
is to be extended geographically or to additional classes of
persons, and of the case of re-registration of all insured persons
when a scheme is to be substantially reformed. In the formal
sense there is little difference between these procedures and
those discussed above : the special problem is essentially one
of volume, for it consists in completing in a sufficiently short
time all the administrative tasks connected with registration
—allocation of numbers, issue of insurance cards or booklets,
opening of the appropriate accounts or registers, etc. For
this reason, any such large-scale registration or re-registration
must be prepared in great detail beforehand, and the possibility of applying it by stages should also be examined.
REGISTRATION OF INSURED
PERSONS
15
Self-Employed and Casual Workers
If the social insurance scheme extends—on a compulsory
or voluntary basis—to self-employed workers, the obligations
otherwise incumbent on the employer have to be performed by
the workers themselves, who must notify their entry into the
scheme and any change that may affect their position as insured
persons. Frequently, the trade organisations representing
groups of self-employed workers assume such " employer "
functions as well as those of collecting and transmitting contributions, and the same often applies to groups of casual workers,
such as dockers, who are generally well organised. If this
course is possible, it may make administration of the insurance
scheme considerably easier, since the workers' organisations
are usually concerned to carry out the above-mentioned tasks
punctually and efficiently. In some countries certain groups
of self-employed workers are entitled to the help of the appropriate public service (the road traffic authority in the case of
drivers, for instance).
Apart from the particular difficulty of checking the insurance situation of each self-employed worker and apart—
perhaps—from the advisability of making special contribution
and benefit arrangements for such persons, their registration
and other formalities will be carried out as in the case of employed persons.
Registration of Dependent Relatives
Institutions applying sickness and maternity schemes on a
family basis generally consider it necessary to register also the
members of the insured person's family who are entitled to
benefit. Some institutions record particulars of such family
members simultaneously with those of the insured person, using
the same entry form ; others prefer to register members of the
family by a separate administrative procedure, and accordingly
use a different entry form.
The following are the data generally required in either
case : full name, date of birth, relationship. As a rule documentary proof of relationship and age (the latter determining a
son's or daughter's right to benefit) must be provided in the
form of a marriage certificate or birth or baptismal certificate,
as the case may be. In some countries, if the insured person is
16
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
not legally married, a woman cohabiting with him is treated as
his wife : this gives rise to the problem of proving that the
relationship has existed for some specified minimum period—
a delicate task, since cohabitation is not defined and recognised
by law. Proof will be relatively easy if there are legally
recognised children of the union, but in other cases the institution will be obliged to accept testimony that may be of very
doubtful value. In this regard a welfare service and the local
police or other authority may be of great help, particularly
in small places.
It is not usual to allot special registration numbers to
members of the family : as a rule, all the relevant documents
bear the registration number of the insured person himself.
Some institutions issue a family card or booklet to the group
of relatives who are entitled to benefit. Others include the
names of family members in the insured person's own booklet,
where in many cases data regarding the benefit received are
also entered. 1
Among the institutions that do not apply sickness and
maternity insurance but pay benefit to dependants on the
death of the family breadwinner, some make mandatory provision for the previous registration of such dependants. These
institutions should weigh the real value (including the statistical utility) of registering family members against the doubtful
administrative value of such registration if it is not compulsorily and systematically supplemented by notification of any
change in the composition of the family group (which is usually
difficult to obtain).
Supervision of Reporting
Supervision of compliance by employers with the obligation to report their workers to the insurance institution is
normally carried out by the latter's own inspectors as part of
the general supervision of employers. Laws or regulations
usually provide that fines shall be imposed on employers
who do not comply with these obligations, and that the
employer shall be financially liable for the consequences of
failure to report—i.e., for the cost of any benefit the worker
1
Other aspects of recognition of family members as persons entitled
to benefit are referred to in Chapter V.
REGISTRATION OF INSURED PERSONS
17
or members of his family would have been entitled to if properly
registered by the employer. It may be observed here that the
employer has a similar liability if he reports the worker but does
not pay the contributions in due time or does not pay them
fully : in such cases the laws or regulations usually lay down
that the institution may itself provide the benefits but will
charge them to the employer and may enforce payment through
court action if necessary.
Direct action by the workers themselves or by their organisations provides another efficient means of supervision. In
such cases the institution should proceed with caution so as not
to prejudice the position of the worker making the complaint.
In this connection the importance of an effective publicity
campaign by social insurance institutions cannot be overemphasised, since the best supervision consists in conviction on
the employer's and the employee's part that social insurance
is necessary and carries with it material advantages of a direct
or indirect character.
The regulations governing the whole notification procedure
should be brought to the attention of employers and workers
alike and should contain explicit instructions on how and when
the notification form must be completed, the data it must
contain, the period prescribed for its transmission, the penalties
in case of failure to comply with these rules, the use of the
registration number and of the insurance card or booklet, the
insured person's obligation to submit this to each new employer,
and similar matters.
INSURANCE REGISTERS
The process of notification and registration, and the need
to maintain the identification of every insured person, make
it indispensable to open certain records * and to keep these
up to date. It will be useful first of all to mention some of the
possible types of registers and to state certain principles that
may determine their establishment, and then to describe briefly
the chief records used for the registration and identification
of insured persons. This section will not deal with the basic
card index containing the individual accounts of insured persons ; the form of that type of record depends essentially on
1
See Technical Problems, pp. 16-26.
18
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
the contribution and benefit arrangements and will be examined
separately. 1
When the whole system of records required by an institution for the permanent identification of insured persons is
being planned, regard must of course be had to the general and
particular aims of the institution and to its structure (whether
centralised or decentralised) ; but special attention should also
be given to the following points :
(a) The type of register required will depend on whether
the system provides short-term or long-term benefits, or both.
(b) Any future development of the system to embrace
new geographical areas, categories of persons or contingencies
will affect the registers, which should be established in such a
way that an expansion of this kind will not necessitate total
transformation of existing records at each stage and that development is facilitated.
(c) The registers should allow for the number of insured
persons, the speed of employment turnover, and other characteristics of the environment and the insured population.
(d) Only essential data should be recorded. Duplication should be avoided, but indispensable cross-references
maintained.
Administrative technique has evolved a great variety of
types of record in addition to the usual registers, card indexes
and the like : registers in which the particulars for each insured
person are written on narrow strips of card, which are then
assembled in panels and suspended so that they can be consulted
like the pages of a book ; files consisting of cards attached to
revolving drums ; Kardex or similar types of card files permitting
visual control, like all the foregoing ; punched cards, which
can be sorted, classified and reproduced mechanically ;
" addressograph " plates ; and microfilm recording. The choice
of the most suitable system will depend mainly on the following
factors :
(a) Whether the register is to contain constant and quasiconstant data (a person's marital status, for instance, is a quasiconstant particular) or is also to include variable data. In
i See Chapter IV.
REGISTRATION OF INSURED
PERSONS
19
the latter case account must be taken of the volume of data
that may be expected on a single insured person in the period
to be covered by the card or slip.
(b) The principle by which the information in the register
will be classified (in numerical or alphabetical order, by age
groups, sex, region, economic activity, or order of employers).
(c) The frequency with which new cards will have to be
inserted within a given group. This frequency will be high in
the case of alphabetical classification, whereas under some
numerical classifications insertion will be altogether replaced
by gradual addition to existing groups.
For constant data it may be advisable to use the abovementioned system of strip and panel or some other method
with which the records for a large quantity of insured persons
can be kept in a relatively small space and the particulars of
a given person rapidly found. In the case of cards on which
entries have to be made periodically (dates of taking up and
leaving employment, for instance) the Kardex or other visible
system may be suitable ; these permit the rapid identification
of each card, but their utility may be reduced if additional
cards have to be inserted frequently.
Some institutions with small numbers of insured persons
still successfully use a rudimentary system of plain cards kept in
boxes or drawers, with indicator tabs to enable a given card
to be rapidly found.
Punched cards for mechanical sorting may be used for
many different purposes—to form independent indexes, or to
supplement a non-mechanical register ; as a means of producing auxiliary indexes arranged in widely different ways (by
registration numbers, in alphabetical order, by order of employers, by region, etc.) ; as a means of transferring data from one
register to another ; and lastly as a means of obtaining the
principal statistics based on registration and continued identification of insured persons.
If simple cards are used, it will have to be decided how
large they should be, bearing in mind the function they are
to perform in each particular case. They may be small if
only a few simple particulars have to be recorded. In other
cases, if they are too small and have to contain' many particulars, they will have to be replaced frequently or the entries
20
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
will have to be made in very small (and hence less distinct)
writing. If, on the other hand, the cards are too large, the
records will take up too much space and the cards, equipment
and the space itself will be a high item of expense.
Finally, the records must be handled only by trained records
clerks, who will extract any information that may be required
by other services. If a card has to be transmitted to another
service, it should provisionally be replaced by a slip of a different
colour bearing sufficient data to identify the original card.
Basic Identification Registers
The following paragraphs relate in particular to the registers or card indexes by means of which each insured person
can be identified. As a general rule there will be at least two of
these, established in numerical and alphabetical order respectively.
If the registration numbers belong to a chronological series,
or are only partly coded, the numerical register may take the
form of a book or loose-leaf file, each leaf covering a group of
numbers (this same register will have been used, as described
above, for the systematic recording of registration numbers) ;
in other cases the system of individual strips may be used
(provided that the register is to contain only the invariable
particulars of insured persons). Where, on the other hand,
the register is to contain variable data, one of the abovementioned forms of card index must be used. In big institutions it is usual to punch a machine card for each new insured
person ; these cards are kept in numerical order with • the
advantage (already mentioned) that auxiliary indexes and
statistics can be compiled mechanically.
The alphabetical index is indispensable in order to check
whether workers entering the service of an employer have already
been registered or are newcomers to the scheme ; it is also
indispensable whenever for any reason the registration number
of an insured person is not known and must be discovered.
It will have to contain all data required to identify a person
completely, as well as his social insurance registration number.
In doubtful cases reference slips must be inserted : for a married
woman, for instance, one slip will be placed alphabetically
under her maiden name and another under her married name.
REGISTRATION OF INSURED
PERSONS
21
In cases where the institution follows the movements of
each worker, noting the dates of starting and stopping work,
the respective employers' numbers and sometimes particulars
of the job also, these entries will be made on cards arranged
either in numerical or in alphabetical order. The latter procedure will be followed if the institution considers that such
information is necessary or useful, not only for supervisory and
statistical purposes but also as an aid to correct identification
of the insured person.
If an institution has a decentralised structure, it will
often be for the local offices to open and maintain the various
registers. As a rule, these local offices will send either duplicates of the cards, or lists of entries, departures and other
changes, to the central office so that the general registers may
be kept up to date. However, there are also instances of
the inverse procedure, by which the central office undertakes
the whole procedure of registration and recording, and transmits the necessary duplicate cards to the local offices.
In any case, there must be perfect co-ordination and
arrangements for rapid two-way communication. The same
need arises, as stated above, when there are in a given country
several institutions applying various branches of social insurance
and one of these undertakes all the work connected with identification.
Lastly, a few rare institutions do not register the insured
persons at all and keep no records of the kind described. These
include institutions providing employment injury compensation
by the classical method of employers' insurance.
CHAPTER II
REGISTRATION OF EMPLOYERS
An insured person does not usually have any direct contact
with the insurance institution until he makes a claim for benefit.
It is through the employer that the whole scheme is administered : he has to notify the institution when a worker
enters or leaves his services and to make a periodical remittance of contributions—both his own and those of his employees.
There is thus compulsory, permanent contact between the insurance institution and employers and their mutual relations
must be duly regulated ; hence all employers affected by the
scheme must be registered at the institution, and a record
relating to each of them must be kept.
Needless to say identification of employers does not give
rise to such difficulties as identification of the insured persons.
Most employers are clearly identified individuals or firms that
require a special permit from a competent authority in order
to be able to carry on their business at all. Furthermore,
many of the details regarding their registration are similar
to those described in Chapter I and the corresponding part of
the present chapter can therefore be shorter ; but some repetitions are unavoidable if a complete picture is to be given of
every aspect of employers' registration.
D E F I N I T I O N OF " E M P L O Y E R "
When laying down the obligation of employers to register
under a given social insurance scheme, the relevant law or
regulations must exactly define what is meant by an employer
for this purpose. Difficulties of application arise, however, in
certain special cases, with regard to contractors, sub-contractors, etc., whose situation is intermediate between that of
employer and employee. A person in such a category will
be regarded as an employer or as an employed person, for the
purpose of all social insurance obligations, according to his
REGISTRATION OF EMPLOYERS
23
degree of independence and to the financial risk inherent in
his activity. In some instances the legislation has regard also
to numerical criteria such as the number of workers under a
contractor's or sub-contractor's orders, or—in the particular
case of smallholders under agricultural workers' insurance—
the extent of the land worked. In at least one case, under
the insurance scheme covering agricultural workers, the obligations of an employer must be assumed by the landowner as
such, whether or not he has farm servants or labourers working for him. There are often special rules to govern building
jobs : in some cases the construction firm, and in others the
owner of the site or building, is regarded as the employer.
Although it is not possible to lay down a universal criterion by which the employer is or should be defined in the above
circumstances, two general rules may nevertheless be distinguished : in every case it must be for the insurance institution
to decide whether a given person shall or shall not be regarded
as an employer ; and, where the contractor or sub-contractor
has been declared to be the employer, the principal employer
must be jointly responsible.
FIRST REGISTRATION
A special form must be filled in by an employer registering
for the first time under an existing scheme, showing the employer's full name or the title of the undertaking, the status of
the firm under company law, the type of activity in which it
is engaged, the date at which it began to operate, the name or
names of the person or persons legally representing or responsible for it, the relevant addresses, any branches or agencies
it may have (or, conversely, particulars of the central company
if the " employer " is itself a branch or agency), and often the
number of persons employed. If the insurance institution
provides insurance against occupational risks on the basis of
rates varying with the risk rating, the form will also include
additional questions calculated to determine the risk class in
which an employer will be required to contribute ; this task
will be easier to perform if the institution has a full official
list of all the branches of industry to which each class of risk
applies, for the employer will then merely have to indicate
the appropriate branch or class.
24
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
The registration of a new employer is usually made to coincide with that of his personnel : either he is required to attach
to his registration form a detailed nominal roll (or individual
registration cards) of his employees, or the latter are registered
—at the latest—when the employer's first contribution roll
reaches the institution.
Registration is usually carried out by the employer himself
at the appropriate administrative office of the institution.
Sometimes, however, a " request for registration " has first
to be made ; in this case an inspector is sent to register the
employer, so that the process may be conducted in a proper and
uniform manner and the employer may be given information
on his general obligations towards the insurance institution
and on how to carry them out.
The process of registration, and the consequent opening
of principal and auxiliary registers, may be carried out by the
central office (to which all the registration forms will then be
sent) or by a local office. The choice of method will depend
on the degree of independence of the branches, the difficulty
of finding trained personnel for all offices, the precise object of
the employers' register and similar factors. It should be noted,
however, that all contacts with employers, including the collection of contributions, may without inconsistency be maintained through local or branch offices, even where insured
persons are registered and their records kept by the central
office of the insurance institution.
Each employer's registration must be supplemented by
notification to the institution of any important change in this
regard—alteration in name or address of firm, amalgamation,
or change, suspension, resumption or termination of activity.
REGISTRATION NUMBERS
Usually a registration number is assigned to each employer,
and he is obliged to use it in all documents relating to social
insurance. This is not so much a means of identification as
it is a means of facilitating certain operations, particularly
the work connected with registers and indexes of employers,
punched cards, the mention of the employer on insured persons'
records, and the compilation of statistics.
A distinction must be made between two principal methods
REGISTRATION OF EMPLOYERS
25
of numbering : a simple method by which each employer is
allotted a serial number in chronological order of registration ;
and a more complicated method, by which each employer's
number contains a code element. The code registration number may be used for one or both of the following purposes
among others : to indicate a geographical classification, the
code element referring in a pre-arranged way to the province
or other territorial unit or to the local office of the area in which
the establishment is situated ; and to indicate an occupational
classification, a second code element referring to the type of
industry or occupation in which the employer is engaged.
Apart from the above, the employer's number will also contain
a serial element (a separate series for each type of activity and
district or locality). Once a system of geographical code
numbers has been evolved to suit the social insurance institution in question the task of allotting the employer's registration numbers can be left to the local offices without fear of
duplication. Institutions that use no direct coding, usually
divide the numbers available for registration into groups and
allot a group to each territorial unit or local office : even this, of
course, constitutes a type of geographical code system.
As regards code numbers allotted by type of activity the
international standard classification adopted by the Economic
and Social Council of the United Nations at its Seventh Session
on 27 August 1948 1, and also included in the Social Security
(Minimum Standards) Convention, 1952, has been introduced
nearly everywhere.
Some institutions that do not issue coded registration
numbers nevertheless employ numerical codes for their internal
purposes, statistical or other. However, this half-measure
may lead to duplication of work and provide additional sources
of error.
Reference should be made here to a problem which, though
not directly related to the method of numbering, arises particularly under a system of code classification by geographical
areas and industries or occupations. This is the problem of
appropriately defining the " establishment " for the purpose
1
As regards its application in detail see Statistical Office oí the
United Nations : International
Standard Industrial
Classification of
All Economic Activities, Statistical Reports, Series M, No. 4 (Lake
Success, 1949).
26
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
of registration and to serve as a basis for all recording of information on employers.
Usually the " employer " or the " undertaking " is identical
with the " establishment " to which social insurance administration and statistics relate : but quite often an undertaking
owned by an individual or a company possesses several establishments—factories, warehouses, etc.—in different places or
belonging to different types of activity. It will usually be
best to allot a different registration number to each establishment ; different personal accounts and other records will
also be opened (though of course cross-references will be inserted
in the appropriate places), and it will be necessary to require
separate preparation of the contribution rolls. There are
several reasons for this : sickness and maternity insurance is
applied on a local basis, and separate rolls for each locality
must therefore be available ; furthermore, it is necessary to note
the number of establishments and of insured persons belonging
to each occupation in each area, both for general statistical
purposes and for particular statistical inquiries relating to
the incidence of diseases, accidents, invalidity, etc.
The above, however, does not hold good in all cases. If,
for example, a mine has a power station attached for its own
purposes and a trucking and general transport department
exclusively serving the mine, all these together will be regarded
as being attached to a principal activity and will constitute
a single " establishment " ; its registration number will therefore be that appropriate to the principal activity, namely
mining.
In order to ensure that the same number is not allotted
to two employers and that no number is omitted from the series,
it is usual to keep a special register ; if, in addition to serial
numbers, code numbers are used, a separate part must be
opened for each area and type of activity classified. The
last serial number allotted will indicate the number of employers
registered (in the area or type of activity if there is a code
element).
Although the winding up of some establishments may
leave registration numbers " free ", for quite obvious reasons
it will be inadvisable to allot these numbers to other employers.
Once the employer's number has been fixed, the institu-
REGISTRATION OF EMPLOYERS
27
tion will inform him by special notice, which will also provide
the employer with evidence that he is duly registered.
It may also be pointed out that, for the reasons already
stated, a change in the system of employers' registration numbers, will not give rise to such difficulty as a general change in
the corresponding system for insured persons. As a safeguard,
however, the old numbers should be maintained in the registers
along with the new ones, as a means of referring to all previous
records of the employers in question.
GENERAL REGISTRATION OR RE-REGISTRATION
The general registration of employers (when a social insurance scheme is first introduced in a country or a given area or is
first applied to a certain class of employer) or general reregistration (when a substantial reform of the scheme or of its
administrative organisation makes this necessary or advisable)
will differ little in a formal sense from the individual registration described in the preceding section. General registration
is usually effected by means of a census taken by the officials
(inspectors) of the insurance institution or—if its own services
are not yet fully organised—with the aid of officials of the
Ministry of Labour or other appropriate authority. However,
the fact that an employer has not been covered by this census
does not as a rule release him from the obligation to register
with the competent body.
Although general registration of employers may be combined with general registration of their employees, it need not
be in all cases. If employers are being registered before effective introduction of the insurance scheme for their employees,
simultaneous registration of the latter is not necessary. Even
where this is not the case, however, administrative reasons
(for example, the difficulty of carrying out the two registration
processes at the same time) may make it advisable to postpone the registration of insured persons until that of the
employers is complete, or to restrict it to the submission of
nominal rolls by each establishment ; such rolls, with a few
appropriate data, may enable actuarial estimates to be made
regarding the future insurance scheme (or an existing scheme
that is to be reformed).
28
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
SUPERVISION OF REGISTRATION
The aim of supervision is to ascertain that every person
having one or more insurable employees is effectively registered
and that the registration has been made in due form and by the
required date. Under most schemes this supervision is
exercised by the institution's own corps of inspectors.
Greater use could probably be made of the services of
other public authorities for checking the registration of employers. Most countries have special inspection services (generally under the Ministry of Labour) for supervision of compliance
with labour legislation in general and, since the work of these
services relates to or includes the very employers who are
covered by social insurance, closer collaboration would be to
the advantage of both institutions. Furthermore, valuable
supervisory facilities might be provided by the authorities
responsible for the collection of certain taxes, or for registration of land or of irrigation rights (in the case of agricultural
workers' insurance), or for the issue of permits or licences to
persons wishing to open workshops, businesses, construction
undertakings, etc. The social insurance institute might arrange
for these authorities to notify it periodically of all new entries
or issues of licences. In some countries, indeed, the stage has
been reached at which the competent authority will not issue
a licence to engage in commercial or industrial activity, a
permit to undertake a transfer, amalgamation or liquidation,
or a certificate of compliance with fiscal obligations, etc., unless
the applicant submits evidence of registration with the social
insurance institution or proof that he is not in arrears with his
payments of contributions, as the case may be.
To make such co-operation easier it is advisable for the
institutions concerned to agree to use identical or similar registers, indexes, coding systems, statistical procedures, etc.
Other methods of external supervision that may be mentioned are : the systematic examination of official announcements
regarding the opening, amalgamation and liquidation of businesses of any kind ; and complaints made by workers, either
directly or through their trade organisations.
As in the case of insured persons, the rules governing the
registration of employers should include a definition and a
delimitation of the classes of persons required to register as
REGISTRATION OF EMPLOYERS
29
employers, the manner in which and the period during which
they must so register, and the penalties and liabilities of employers in case of non-compliance.
RECORDS RELATING TO EMPLOYERS X
Two main types of records relating to employers are used—
(a) Indexes of employers, containing only the constant
data indispensable for identifying each employer, can be
arranged in alphabetical or numerical order, by type of activity, addresses, etc. The various indexes required in a given
institution may be standardised. Indeed, if punched cards
are used, it is easy to produce as many indexes as are desired,
since the cards can be arranged in the appropriate order by a
mechanical operation. Of the possible classifications an alphabetical index is indispensable for the purpose of finding an
employer whose registration number is not known.
(b) An employers' basic register, containing the insurance
record of each employer, is used in almost all institutions.
In some cases this basic register is not intended to be more
than a record of contributions for supervisory purposes, and
only the principal data regarding each effective payment
are noted (e.g., date of remittance, period to which it
applies, number of workers contributing and total contributions or insurable wages). In other institutions, the basic
register is also used for accountancy, the contributions due
being posted as debits and contributions paid as credits. The
basic register usually allows additional spaces for the recording
of special administrative data regarding the employer in question (penalties imposed, orders complied with, etc.). 2
Institutions with a decentralised structure usually have
the employers' basic register appropriately broken down by
localities or regions, particularly if the local or regional offices
are also the collecting agents. In such cases there is often also
an auxiliary central register. Conversely, if the basic records
are at the centre, an auxiliary register of the employers in the
area should be kept at the local or regional office for supervisory
1
a
For further details see the section dealing with records in Chapter I.
For further details regarding the use of the basic register in the
collection of contributions see Chapter III.
3
30
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
purposes. Let it be said once more that good co-ordination
and mutual communication between the local or regional and
central registers are indispensable.
The basic register is almost always numerically arranged.
Here again, the advantages of the coding system described
above are evident, since arrangement of the registration numbers in the register automatically produces a subdivision by
areas or by types of activity or both. In particular, geographical
arrangement may facilitate co-ordination between the local or
regional and the central register.
Both the basic register and any auxiliary indexes must
be constantly " pruned " by removal of the cards representing
establishments that have ceased to exist or have suspended
operations (though it may be appropriate to keep these cards
in the active register for a time, in case there is any new development, distinguishing them by some special mark).
In institutions equipped with tabulating machines, an
employers' register composed of punched cards may do very
useful service for small effort and low cost. Such registers
may be either " static " or " dynamic ". In the former case
a card will be included to record all the constant particulars
regarding each employer registered (with an additional card
for the address, if desired). In this way it is possible to establish
not only general lists of active employers, but lists of all those
operating in specified areas or types of activity. Frequently,
addressograph plates are similarly used to print the addresses
on notices and circulars for employers.
The mechanical register can perform greater service if
it is " dynamic ". Here, too, there is one punched card for
each employer, but in addition to the constant particulars
serving to identify him, it will also contain the chief data, which
are generally variable, regarding his last payment of contributions, the period to which it applied, the number of workers
insured and the amount of insurable wages. The card will
thus always show the last known situation of the employer in
relation to the scheme. The " dynamic " master register is
kept up to date by punching a new " summary " card for each
remittance of contributions—which is usually done in any case—
and substituting this for the previous master card (after certain supervisory and statistical operations have been performed
REGISTRATION OF EMPLOYERS
31
on the basis of the newly punched cards). Use of a " dynamic "
register makes it possible to supplement the data appearing in
a " static " index with information regarding the number of
workers, their wages and the corresponding average wages
for any class or sub-class of employers ; it also enables lists of
employers in arrears to be mechanically prepared, giving all
the data required for checking the collection of contributions. 1
1
For further details see Chapters III and VI.
CHAPTER III
COLLECTION OP CONTRIBUTIONS
COLLECTION SYSTEMS IN GENERAL
As a general rule only the insurance institution and employers play a direct part in the contributions : the latter
alone are responsible for the full payment, in due time, of their
own contributions and those of their employees.
Of the different methods of collecting contributions, two
principal types stand out : the payroll system and the stamp
system. Other existing methods are derived from either of the
above or from a combination of the two.
In the normal payroll system the employer is required to
remit to the insurance institution, for each " collection period ",
a complete list of the persons who have been employed by him
during the said period, showing their insurable wages, the
respective contributions, and in some cases the number of hours
worked.
Sometimes, however, contributions are calculated by the
insurance institution itself. Using the notices of entry and
departure of workers and of changes in wage rates (which the
employers are required to submit) it determines the contribution
to be paid in respect of each person for the period in question
and informs the employer of the total amount due. This is
in fact a variant of the payroll system, the difference being that
the task of handling the payroll figures is performed by the
insurance institution, which often uses mechanical methods
(punched cards) for compiling the necessary data. Under
another variant of the payroll system the employer does not
remit a complete list of his personnel, but only the names of
those who were engaged or left, or whose insurable wages were
modified, during the collection period. Total insurable wages
and total contributions due for each period can thus be ascertained by applying the net increases or decreases to the totals
for the preceding period. This system supposes a relatively
' • * /
COLLECTION OF CONTRIBUTIONS
33
stable labour force and fixed rates of insurable wages. Furthermore, it appears indispensable to require that employers shall
remit complete lists of their workers, with the insurable wages
of each, at regular intervals (once every year, for instance)
so that a check may be made and errors and omissions cannot
accumulate. Individual wage and contribution rolls may also
be kept by the employer for each of his workers for a year or
six months, after which they are sent to the social insurance
institution ; as a rule the contributions are paid at shorter
intervals (monthly, for instance) without indication of details.
Finally, there is also a very rare system already mentioned
in Chapter 11, under which rolls are made up of individual
coupons detached from the insurance books of the employees
concerned.
In addition to the normal stamp system, without a register
or other internal method of supervising the employers, a system
sometimes used involves a combination of the stamp system
with periodical submission of summarised payrolls or direct
registration of total data on the occasion of each purchase
of stamps. (This is the system usually employed by Latin
American institutions that use stamps as a means of paying
contributions.) In this case the institution keeps a direct
check on the stamps bought by the employer during each
period and can thus supervise the actual collection of the
contributions.
The advisability of applying a given system of collection2
depends mainly on the characteristics of the insured population
and the nature of the scheme to be applied (the level of education and sense of responsibility of employers and insured
persons, the way in which wages are usually paid, the degree
of employment stability, the risks covered and the system of
calculating cash benefits). Accordingly, it is possible to find
the payroll system applied by one institution and the stamp
system by another in the same country—and even to the same
persons if they are covered against several risks by different
institutions. Again, a given institution may apply the payroll
system to some of its insured persons and the stamp system to
1
2
See above, p. 13, paragraph (d).
Remarks on the advantages and disadvantages of the payroll
and stamp systems will be found in Collection of Contributions,
pp. 326-332.
V
34
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
others, according to the character of each group : for instance, it
may prefer the former for the majority of employed persons, and
the latter for special groups (voluntarily insured persons, selfemployed persons, domestic employees, homeworkers, casual
workers, etc.).
Contributions are nearly always related to the wage or
salary and are usually a specific percentage either of actual
wages or of a conventional rate taken to represent a wage
class, which thus has a flat rate of contribution. The stamp
system is almost always based on such a classification into
wage classes, but these are also sometimes used by institutions which have the payroll system of collection. There is
also the case where a single rate of contribution applies to all
insured persons irrespective of their rate of pay.
Another special method is that by which, for the purposes
of social insurance contributions and benefits, conventional
basic wages are specified for the whole of certain classes of
employed persons. This is particularly useful when the remuneration is not related to a period of time and is consequently
exposed to frequent variations (as in the case of piece-rate
workers, homeworkers, etc.). However, the method may also
be applied to homogeneous classes of workers with similar
fixed wages (e.g., domestic workers). All the administrative
operations connected with the collection of contributions, their
supervision, the individual accounts of insured persons and the
grant of benefits will be greatly simplified if conventional
wages (which must be periodically revised) are fixed.
The term " insurable wage ", when used in this study, is
intended to cover all the forms just mentioned, including the
wage-class rate and the uniform conventional wage where
these apply.
COLLECTION BY MEANS OF PERIODICAL ROLLS
1
Design of Forms
Institutions that apply the payroll system require employers to use special forms for the purpose. These are distributed free of charge or on payment of a small sum to cover
1
For general remarks on the payroll system see Collection of
Contributions, pp. 326-332.
COLLECTION OF CONTRIBUTIONS
35
their cost and limit unnecessary requests. As a rule, large
undertakings are permitted to have their own forms printed,
but they are always required to follow an official model.
The typical form contains : (a) particulars of the employer,
including his registration number and address, and an indication of the period covered ; (b) the names of the workers with
all individual data required for the purpose of reporting contributions ; and (c) a summary of the contributions, the employer's
signature and any necessary remarks. This last section often
provides a space for an indication of the number of workers
contributing, and sometimes additional spaces for the use of
the various internal services (reception, checking, recording,
etc.).
Usually the minimum data required in respect of each
insured person are as follows : registration number ; full name ;
time worked during the period, expressed in months, weeks,
days or even hours if the operation of the scheme so requires ;
and the insurable wage. If the contribution is a direct proportion of the insurable wage, there is no need to specify each insured
person's contribution also. Consequently, for purposes of
collection and also for the individual accounts of insured persons,
it is enough to indicate the insurable wage of each person, to
total these and then to apply the appropriate percentage in
order to obtain the total contributions. As a rule it will
suffice to note the over-all total (the sum of those of all the
employees and of the employer). If, on the other hand, the
system provides for wage classes, it will almost always be
necessary to indicate, for each insured person, both his wage
class and the contribution corresponding to it and to the time
worked (usually expressed in weeks).
A remark may be made here regarding the " time worked "
during the collection period. If the institution is one whose
insured persons are all employees with fixed monthly salaries,
there is no major problem and fractions of the period will
seldom have to figure in the roll. To avoid such fractions
it is often provided that an employee shall not be required to
pay any contribution for the month in which he enters employment, while being required to pay a full contribution for the
month in which he leaves his employment.
The situation is more complicated if the insured persons
include workers employed by the day or at piece or job rates,
36
ADMINISTRATIVE PRACTICE OF SOCIAL
INSURANCE
as is the case with most general social insurance schemes.
Some institutions use rolls with a column in which the days
and hours worked may be noted, each eight hours being regarded
for instance, as equivalent to a working day. Other institutions simply require indication of the number of calendar days
on which the insured person was actually working, irrespective of the number of hours. Many institutions cannot
effectively use this information (which is often incompletely or
inaccurately given) and are obliged in practice to treat as a
month of insurance every month in the course of which the
insured person paid any contribution, even for a single day
only. In the face of this difficulty some institutions that use
the wage-class method require full payment of the contribution
throughout any contribution period in the course of which the
insured person was employed at all, irrespective of the number of
days, on condition that his wage class did not change and that
he is not reported as leaving the service of an employer during
such period.
Apart from the principal columns mentioned above, certain
payroll forms have auxiliary columns in which workers appearing for the first time and workers who have left during the collection period can be marked with an X. If the employer cannot
indicate departure on the roll for the last period during which
a given person contributed, this person's name and registration number must be repeated on the next roll, where there
will be a blank against his name in the columns for time worked,
wages and contribution and an X in the column indicating
departure. It is also useful to have a column for " remarks ",
where such particulars as periods of sickness, holidays or
absence without pay may be noted.
In planning a contribution roll, it should be remembered
that the data it will contain are evidence of the insured person's
right to claim benefit and will also be used to calculate the
amount of benefit. In other words, a roll is one of the essential
sources of information on which the grant of benefits is based (it
is the only source in systems where no individual accounts for
insured persons are kept), and it must be so planned that the
data it contains can easily be referred to directly or transferred
to the individual records.
In some countries the contribution rolls are also used for
purposes unconnected with social insurance. For instance, a
COLLECTION OF CONTRIBUTIONS
37
direct copy of the roll sometimes serves for income tax purposes ;
in other cases it is used to calculate the special charges or
contributions for certain social services ; and in others again
a copy of the roll is sent to the statistical department of the
Ministry of Labour or to the department that supervises employers' establishments. Such use of the roll for purposes not
related to its direct object will always require inclusion of additional columns and (failing appropriate administrative arrangements) will involve undesirable delay in the transmission and
utilisation of the rolls. On the other hand, it may be of considerable value for the supervision of employers, provided there is
co-operation between the various institutions concerned. However, quite apart from the requirements of outside services, the
insurance institution itself often overloads the form with
additional columns or spaces : these are generally intended
for statistical data, which have to be repeated by the employer
for every contribution period and are often not used a t all.
It
should be borne in mind that the roll is part of the procedure of
collecting contributions and that the task of filling it in correctly, even if only few data are required, represents a considerable volume of work for the employer.
Some Latin American institutions, which in addition to
their normal insurance functions grant loans on mortgage or
other loans to their members, use the contribution roll also
for the collection of payments on such loans. Although this
practice may be useful in some cases it is advisable to keep
such collection separate from that of social insurance contributions, and to request settlement of loan payments either individually or by means of special forms. This is especially
true since the supervision and accounting procedures for loans
and the payments thereon will be different from those appropriate to the collection of insurance contributions.
Most institutions require that the names of the workers
on the roll shall appear in strictly alphabetical order. Nevertheless, large undertakings are permitted to divide their personnel into departments or other divisions and to establish
an alphabetical order within each such division.
The number of copies of the roll required generally varies
between two and four. In nearly every case a copy is destined
for retransmission to the employer for his records and as a
model for the next occasion. In centrally administered sick-
38
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
ness and maternity insurance schemes it may be necessary or
advisable to reserve one copy of the roll for the central office
and another for the office or agency responsible for local application of the system.
Period Covered by the Roll
Rolls are most often based on the month. If longer
periods are covered (two months, three months, six months
or even a year) the institutions usually require payment of
contributions at shorter intervals (monthly for instance), but
details need not be submitted with each payment.
Where the wage-class system is applied, the basic period
of contribution is usually the week, and several " contribution
weeks " make up one " collection period ". If this is roughly
a month, as is most usual, each roll will apply to either four or
five weeks—for instance, the weeks falling between the last
Saturday of the preceding month and the last Saturday of the
current month.
Method of Reception and Payment
x
Some institutions have their own services for receiving
rolls and collecting payments : in these cases the methods of
payment and supervision are particularly important. Other
institutions have the collection undertaken by postal cheque or
through official banking services. In one country the incometax collection offices also collect social insurance contributions.
Furthermore, there is the special case in which receipt of both
rolls and contributions is entrusted to a paid collector who
periodically visits each undertaking in his district.
In some countries, where several social insurance institutions operate and cover different risks, one of these, or a special
central office, often collects the contributions for them all.
It may reasonably be asked whether an insurance institution should accept a contribution roll unless it receives the
corresponding sums at the same time or has already received
them. Many institutions (the majority in Latin America)
give a negative answer to this question not only because of
the administrative difficulties and the additional work involved
1
See Percepción de cotizaciones, Chapter V I I .
COLLECTION OF CONTRIBUTIONS
39
if the contributions are not remitted with the roll but also
because the roll is the basic document proving that the employer
has complied with his obligations towards the insurance institution and because they believe that, by demanding payment of
contributions at the same time as submission of the rolls, they
may avoid dangerous additional delay on the employer's part.
Internal Checking of Contribution Rolls
The data entered on the contribution rolls should be
checked in the insurance institution. This internal checking
includes—
(a) A check on the data relating to the employer (registration number, title of firm, address) and to the insured person. If this check is not carried out in due time, serious difficulty and complication may arise in transferring the data to
the employers' and insured persons' accounts and consequently
in the grant of benefit.
(b) A check on the amounts specified (whether the
contributions remitted correspond mathematically to the
wages stated). Where the roll contains columns for wages
and for contributions a comparison between the two totals
will show whether the contributions have been correctly calculated in each instance (apart from the improbable case that
several mistakes may have cancelled out). If there is a discrepancy between the totals, the individual contributions will
have to be checked. This work may be avoided if the roll
only contains a wage column and a total contribution figure,
in which case it will be sufficient to ensure that the two totals
are correct.
(c) A check to ensure, for instance, that the wages stated
are in accordance with any minimum wage scheme, agreed
wage rates, rates usual in the industry or occupation concerned *,
the amounts stated in the preceding roll, etc.
Part of this work (a check of the particulars identifying
the employer, of the total contributions and wages, and of the
proportion of the one to the other) will be done on receipt of
the rolls. But most of it must be left to a later stage of the pro1
See below, p. 41.
40
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
cedure ; the whole process must therefore be completed within
the shortest possible time, so that corrections may be requested
and obtained from the employers before it is too late.
The internal checks required and the manner in which
they must be carried out will depend also on the system of
personal accounts ; part of the checking may be combined
with the process of transferring the data from the roll to the
personal account. It will be useful in all cases to compare
the new roll first of all with the preceding one or with the data
transferred from this to the personal account (and already
checked). It is particularly important to check the registration number of each insured person in order to avoid transferring data to the wrong personal accounts.
A valuable means of operating an internal check is provided
by sickness certificates 1, with which it is possible to ascertain
whether a given worker has been correctly reported for registration by his employer and whether the wage stated (with the
worker's knowledge) is the same as the insurable wage figuring
in the contribution roll.
External Checking of Contribution Rolls
External checking should be governed by the principle
that it must not repeat checks carried out by other services
and must not impose an undue burden on employers. It
may result from the discovery of discrepancies and anomalies by
internal checking services, or from denunciation by the insured
person ; or it may be part of a system of periodical inspection 2
applied to all employing establishments. Its object is to
ascertain whether each employee required by law to be
covered by a given social insurance scheme really appears in
the employer's roll and whether the contributions paid really
correspond to the full insurable wages. A third matter for
checking is the employer's punctuality in remitting the rolls.
In order to be able to check collection operations, an inspector
must have an extensive knowledge of accounts and auditing
and also of the laws and regulations governing the social insurance scheme and its administration. The institutions, there1
See below, pp. 72-73.
National systems of inspection of employing establishments
in the Americas are described in Percepción de colizaciones, Chapter VIII.
2
COLLECTION OF CONTRIBUTIONS
41
fore, usually either choose their inspectors from among their
own employees having long experience or else require candidates
for such posts to hold appropriate certificates. Many institutions arrange periodical training courses for new inspectors
and more advanced courses for those already employed.
An inspector is the social insurance official in most direct
and permanent contact with employers and insured persons
whom he is expected to help in connection with the procedural
or other problems of social insurance. Hence the impression
he creates in the exercise of his duties and in his dealings with
the public will have a direct effect on the institution he represents.
The source of information on which external checking is
based is nearly always the wage register or payroll that employers
are obliged to complete and to retain in most countries. However, it should also be ascertained whether the wages figuring
in the register or on the payroll have been effectively paid or
whether there are false entries or omissions in these basic
documents. To be able to carry out such a check the inspector
must have a general knowledge of the usual wages or minimum
rates in the various occupations ; and he must also ascertain
whether the reported figures for total personnel and total
wages are consistent with the character of the undertaking and
the volume of its business. This is one of the reasons why
some institutions employ inspectors who are specialised in
individual industries (building, public works, mining, etc.),
although most require their inspectors to deal with undertakings
carrying on any type of activity.
Where each area is divided into districts under the control of
a single inspector, it is a common practice to provide for periodical rotation of inspectors, so as to prevent their establishing
unduly close relationships with individual employers.
Punctuality in Remitting Rolls : Procedure in Case of Delay
The social insurance laws or regulations always specify a
period (most commonly ten days, two weeks or one month from
the end of the collection period) within which the employer
must remit the roll and the money appertaining to it. A check
on compliance with this rule is valuable not only to the insurance institution but also to employers, since excessive delay
42
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
and a sudden call to pay arrears of contributions may involve
them in serious and in some cases insoluble financial difficulty.
In most institutions supervision of the conduct of employers
in this respect is based on entries in the employers' register 1,
which will show the date of the last payment made by the
employer, the relevant contribution period and the total insurable wages (or total contribution paid) ; from these data it
will be easy to work out the approximate amount of contributions probably in arrears. Some institutions successfully use,
for the basic register, a " visual control " card index system
with adjustable tags showing the last contribution period for
which each employer has made payment. 2
Since large institutions usually carry out the inspection
and checking of employers by districts or areas (although
the work is always co-ordinated and supervised by the central
office), it is important to ensure that the district or local offices
are provided at least with auxiliary registers of employers.
An efficient means of checking, by which all operations
can be entirely mechanised, is the " dynamic " master register
of employers made up of punched cards. 3 With this register
lists of employers in arrears can be compiled by district with
details regarding the period of arrears, the probable number of
insured persons affected and the probable amount of contributions owed by each employer.
Employers in arrears are notified either by letter or
by the inspector or other competent official of the institution. The employer is generally given a short period within
which to pay the contributions he owes, together with the
appropriate interest and surcharge. If he has not paid by
the end of the prescribed period, the institution may have
recourse to judicial action.
A well balanced system of sanctions (interest, surcharge
and penalties) may be of decisive value in reducing arrears
to a minimum. Evidently the employer in arrears must be
required to pay to the institution at least the highest permissible
interest on debts ; in addition (unless the delay has been previously authorised by the institution for good reason) it is
necessary to require payment of a surcharge so that failure
1
2
3
See above, p. 29.
See Percepción de cotizaciones, p. 29.
See above, p. 30, and ibid., p. 30.
COLLECTION OF CONTRIBUTIONS
43
to remit contributions may not be used as a means of obtaining
a cheap loan. However, this surcharge should be kept within
reasonable limits, so as not to ruin employers who, for some
reason, have honestly been unable to pay their contribution
for a considerable period. Payment of the surcharge should
be automatically due without the need for any special administrative or judicial action.
An employer's failure to pay contributions in due time
may also be a criminal offence for which a penalty should be
imposed : this will be the case if the failure is regarded as improper retention of sums deducted from the workers' wages for
social insurance purposes, i.e., as appropriation of another
person's property. Arrears of contributions are considered
in this light, and a severe special penalty is accordingly imposed,
if the employer has deducted the worker's contribution from
wages without registering him with the insurance institution
or without entering the amount so deducted in the contribution
roll ; the same applies in case of excessive delay in payment
without due cause and despite express warning by the institution.
The following question is also connected with the above :
can and should an institution allow benefit if the contributions
actually paid do not give the insured person a formal right
to it (or to the full amount claimed), solely as a result of the
employer's delay or omission ? The view appears to predominate that the institution should in any case grant the full
benefit and may then recover from the employer not only the
contributions in arrears but also the value of the benefit—
through the courts if necessary.
A specially delicate problem arises if the State itself is
in arrears, either in its capacity as employer or as the third
contributor under a tripartite system. It is practically impossible to proceed against a public authority by ordinary legal
action. However, an attempt must be made to ensure that
the State complies with certain minimum requirements, which
might be as follows : (a) it should agree to pay reasonable
interest on any arrears ; (b) the personal contribution of public
servants covered by a social insurance scheme should be deducted
regularly from their wages and paid directly into a special
account held at the disposal of the insurance institution ;
(c) any special taxes or other revenue to be used for social
insurance purposes should be paid into a separate account ;
44
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
(d) budgetary allocations (including those of independent
public corporations) should include provision for the contributions due by the authority as employer or in any other capacity
and—if necessary—for any sums owed by it in respect of previous periods.
Relations between Collection and Accounts Services :
Employers' Current Accounts 1
A theoretically perfect system would be as follows : employers are required to notify the institution of all workers
entering and leaving their service and of any changes in insurable wages. On this basis, the institution ascertains the exact
amount due from each employer at the end of each month or
other collection period, and debits the amount to him in the
main employers' register (which in fact becomes a series of
current accounts) ; on receiving the roll from the employer,
it credits the amount to him, and any balance in the employers'
favour or the reverse will accordingly appear.
This is the procedure effectively followed in some institutions where the membership and the members' insurable wages
are relatively stable, either because the members are salaried
personnel with fixed monthly pay or because application of a
wage-class or other system of conventional basic wages secures
a high degree of stability in this regard. But in most institutions where the contribution is based on the wages actually
received for the collection period (up to a certain maximum
in some cases) the procedure described above cannot be applied
in practice. This is due to the constant variations in the insurable wage of a given worker, which depends not only on the
agreed basic rate of pay per hour, day, month, etc., but also
on the time worked during the period ; indeed, it cannot always
be related to any time unit at all, for it is often based on piece
or job rates. In such cases the accounting operations connected
with the collection of contributions usually relate only to the
rolls actually received by the mstitution. As these may arrive
after the corresponding money or there may often be differences
between the totals stated in the rolls and the amounts actually
remitted, the procedure usually adopted is as follows : the
employer is debited with the amount stated in the roll and
1
See also pp. 29-30 above.
COLLECTION OF CONTRIBUTIONS
45
credited with the amount actually received ; any difference is
thus clearly recorded to his credit or debit, and any interest,
surcharge or other sums payable by him can readily be entered
in his account.
Another satisfactory procedure consists in keeping the
employers' basic register as a mere historical record in the
manner already described 1 and maintaining an auxiliary
current account for each employer in which any difference
actually arising in the collection of contributions appears as
a debit or credit. In other words, if the total figure stated
in the roll coincides with the amount received—which is normally the case—no entry at all need be made in this account
(whereas under the method previously described a credit
and a debit entry are made in respect of each roll). A current
account is only opened for a given employer if. and when a
discrepancy arises : consequently, the register of such accounts
need not include all active employers.
The three methods, despite their diversity, have a common
feature : some type of current account is kept, which also provides the only efficient means of checking on the actual payment
(or refund) of any discrepancies that may arise. Evidently
the two latter methods, under which contributions corresponding to rolls that do not arrive in due time are not entered at all,
leave a large blank on the assets side of the institution's accounts.
To make good this weakness to some extent, the approximate
amount of contributions in arrears can be periodically estimated,
if only as administrative information without value for accounting purposes. Such estimation is particularly easy if the institution uses the " dynamic " system of master punched cards
described in Chapter II. 2
The order in which the rolls are handled and finally analysed differs from one institution to another. It will depend,
in particular, on the degree of complexity of the rolls, on whether
their analysis includes reference to minimum wages or wage
rates in general, on the system of accountancy introduced
(perhaps the most important factor of all) and on internal
administrative considerations. If the analysis is carried out
at once, the amounts can be directly credited to the respective
1
2
4
See above, p. 29.
See above, p. 30.
46
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
receipts accounts—the employers' contribution account and the
personal contribution accounts of the employees ; these may
all be subdivided according to risks covered, in accordance
with the statutory structure of the scheme. Appropriate
amounts can also be entered in the interest, surcharge, fines and
similar accounts as necessary.
If such a rapid analysis is not possible, either of the two
following courses may be followed : the whole amount received
is credited to a transitional account (" receipts from employers
for allocation " or similar title), so that a transfer may be made
to the respective receipts accounts as soon as the appropriate
distribution is known ; or the ledger has only a single, over-all
" contributions received " account, the collection branch of
the institution being responsible for distribution by means of
auxiliary accounts with a view to preparing the periodical
balance sheets.
It is not the object of the present study to go into greater
detail regarding such a specialised aspect of insurance administration, particularly in view of the great diversity of existing accountancy systems. However, the above observations
will have shown the importance of planning and adopting an
appropriate accountancy system when the collection service
of an institution is being organised. Particular attention
should also be paid to the auxiliary accountancy systems of
the local or regional administrative offices, their co-ordination
with the central accounts of the institution and their inspection and control.
T H E STAMP SYSTEM
1
In the first section of the present chapter, a distinction
is made between the normal or " pure " stamp system for the
collection of contributions, and mixed systems consisting of
a combination of stamps and periodical summarised contribution rolls. The former reflects a tendency to regard the insurance stamp as valuable in itself, like a postage stamp. When
stamps are sold, the selling office need not know the employer
or the contribution period to which each stamp relates, and the
insurance institution can have no direct control over the rela1
For a description of this system see Collection of Contributions,
p. 324.
COLLECTION OF CONTRIBUTIONS
47
tion between the volume of stamps sold and the amount of
contributions really due.
The mixed system reflects a different view, namely that
the stamp is merely a receipt for a contribution paid. It
is found in its extreme form in a certain European sickness
insurance scheme, where the persons concerned insure individually, without acting through an employer ; each insured person
pays his contribution directly to the appropriate " sickness
club " or to a collecting agent, and as receipt for each payment
an official or agent of the club affixes a stamp to the insured
person's card and at the same time cancels the stamp. 1 Under
the more usual arrangement, where the employer is responsible
for payment of contributions, he may submit, with each purchase of stamps, a request or " purchase roll " indicating the
period to which the contributions will apply and their total
amount (and often also the number of insured workers in each
wage class) ; this will make it easier for the insurance institution to keep a systematic check over punctuality in the periodical payment of contributions and over their total volume
(as under the payroll system).
A given stamp system does not always exactly follow either
of the above two tendencies, but it will be useful to remember
the different views that can be taken of the stamp in order to
grasp more clearly their administrative consequences.
One basic feature of any stamp system is the stamp card
or book, also called insurance card or book, which each insured
person obtains from the institution so that the stamps may be
affixed to it in due order.
The stamps affixed to the book show how long the insured
person has been contributing and what his insurable wage has
been during the period : it thus indicates the character and
extent of the holder's rights under the scheme and will serve
as direct evidence in case of claim for benefit. It is wise to
bear in mind this latter function of the stamp book, in addition
to its immediate use as a means of collecting contributions and
enabling the institution to keep a direct over-all check on
their collection by the offices selling the stamps.
When a worker first takes insurable employment the
institution issues him with a stamp book on the basis of the
1
See Collection of Contributions, p. 373.
48
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
notice of entry that the employer (or the insured person
himself) is required to remit. The book contains the necessary particulars of the insured person, including his registration number, and has marked spaces in which to affix the
stamps.
Although the stamp system may be applied equally well
to voluntarily insured persons, self-employed persons, casual
workers, and similar categories, in order to simplify explanation the following remarks will be restricted to the case of
employees with a single employer only.
Issue, Sale and Affixing of Stamps
Social insurance stamps are usually of a size, shape and
design similar to those of postage stamps. The majority of
the institutions using the stamp system divide insurable wages
for this purpose into classes (there are usually not less than
four and not more than eight of these) and allot a fixed amount
as the employer's contribution and another as the worker's
contribution for all persons within a given class.
The contributions relate to a specified period, nearly
always the week, but institutions whose insured persons are
all salaried employees paid by the month will naturally take
the month as their time unit for contribution purposes. As
has already been mentioned in connection with the payroll
system the institutions as a rule accept contributions for whole
periods only ; some, for example, provide that a complete
week's contribution must be paid for each week in which the
insured person has worked at all, if only for a single day.
There is, however, one institution which issues weekly
stamps composed of six detachable strips, each corresponding to
one of the six working days in the week.1
It is advisable to establish conventional basic wage rates
for certain groups of insured persons (self-employed persons,
dockers, domestic employees, agricultural workers, etc.), so
that there is only one type of stamp for each group.
The value of a stamp usually corresponds to the sum of
the employer's and of the insured person's contributions for the
period. This value, or the insurable wage for the wage class,
1
See Percepción de cotizaciones, p. 231.
COLLECTION OF CONTRIBUTIONS
49
or both these figures, are printed on the stamps. An issue of
social insurance stamps then includes as many denominations
as there are wage classes.
The situation is somewhat more complicated in the case
of an institution providing cover against employment injury,
where the contribution varies with the class of risk. The number of different stamp denominations will then be the product
of the number of risk classes and the number of wage classes.
If the same institution also applies other types of social insurance with contributions varying according to wage classes only,
it will nearly always be possible to include the denominations
applying to all the branches of insurance in a single series of
stamps, which must have sufficient denominations to cover all
classes of risk for all wage classes in the most complex of the
schemes in question. This will avoid the need—which is most
disagreeable both for the institution and for the employer—
to issue two different series of stamps, one for employment
injury insurance and another for the remaining contingencies.
A similar situation arises when several insurance institutions,
each providing cover against a different risk, operate among
the same insured population. If each institution issues its
own stamps there is the risk that, at the end of each contribution period, employers will affix stamps corresponding to shortterm insurance, deliberately omitting to affix those for long-term
insurance ; this comes about because the regularity of payment
of contributions for short-term insurance (sickness, for example)
can be checked much more frequently, i.e., every time the insured
person claims benefit, while failure to pay contributions for
long-term schemes may result in considerable accumulations
of arrears, which will not be discovered until the risk matures
and a claim is made. In these cases also, it may be useful
to issue a single series of stamps for all the insurance institutions together ; these will be sold by a single network of offices,
which will distribute the receipts among the participating
institutions. The denominations of the stamps will represent
the total contributions due under all the schemes and it is
therefore desirable that the wage classes adopted by the various
institutions should be the same or should be so inter-related
that the most complex of them comprises the others ; in this
way there will be as many denominations of stamps as there are
wage classes in the most complex system.
50
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
The sale x of the stamps is sometimes undertaken by
offices of the insurance institution itself, sometimes through
other agencies (the post office, banks, etc.), and sometimes
by special authorised agents. In the latter cases the insurance institution usually pays a reasonable commission on the
value of the stamps sold ; in some instances the selling agency
charges this commission directly to the person buying the
stamps, which amounts to increasing the contribution.
It is possible either to allow anyone to purchase stamps up
to the amount he desires, or to restrict sales to persons who
show that they are employers authorised to purchase them.
The former method is naturally used only under the " pure "
stamp system. Under the mixed system the purchase of stamps
in fact depends on submission by the employer of an application or " purchase roll ", as already explained ; a copy of this
document, signed by the collecting agent, serves the employer
as a receipt for the whole contribution paid. Stamps may be
purchased and affixed weekly or (as is often the practice under
the mixed system) by the month or roughly equivalent period
of weeks.
Having acquired the stamps the employer affixes them
to his employees' books and cancels them. Cancellation usually
consists in writing or otherwise marking on the stamp, in
indelible ink, the date and sometimes also the signature or
registration number of the employer. Furthermore, the employer is in some cases permitted to perforate the stamps
before they are affixed to the books, using a special design to
protect himself against theft or improper use of the stamps he
has purchased.
In some countries employers use special machines that
print the stamps directly on to the stamp books and resemble
those used to frank mail. Naturally the use of such machines,
and the stamp designs, require authorisation in each case by
the insurance institution. Sometimes, too, stamps are issued
for the use of big undertakings in denominations that are
multiples of the ordinary denominations, so that they can be
used to cover longer periods (two, four, eight or even 13 weeks).
There are also institutions which authorise, on special request,
the direct payment of contributions in cash without the need
1
For simplicity the word " sale " will be used even where the stamps
are merely receipts for the cash payment of contributions.
COLLECTION OF CONTRIBUTIONS
51
to purchase and affix stamps : settlement is made annually
or semi-annually, and during the year or half-year in question
the employer makes payments on account or pays a deposit
equal to the estimated amount of contributions due from
him for each period. In this case the undertaking is required
to keep a nominal roll of its employees, indicating the name,
registration number, time worked and contribution corresponding to each ; at the end of the authorised collection period it
must provide the institution with a statement of contributions
for each worker and, when a worker leaves its employ, it must
indicate in his stamp book the contributions paid on his behalf.
It may be pointed out also that the relevant law or regulations should include special provision for insured persons who
have two consecutive employers during a contribution period
or who ordinarily work for more than one employer during such
time. In the former case it may for instance be prescribed
that the first employer shall be responsible for payment of
the contribution for the whole period. Common solutions for
the latter problem are as follows : the principal employer may
be required to pay the whole contribution ; or the worker
himself may purchase the stamps as if he were a self-employed
person and then secure a refund of the appropriate part of the
" employer " contribution from each of his employers.
Supervision of Employers
Under the mixed system, where stamps are combined
with submission of summarised contribution rolls, the insurance institutions are able to keep an employers' basic register
similar to that described with reference to the payroll system ;
they will then know at any moment the period for which each
employer has contributed and the value of the stamps he has
bought—i.e., the amount of contributions paid. If the employer does not pay in due time, the institution will warn
him, requiring payment of surcharge and imposing penalties
if necessary.
As under the payroll system external checking is entrusted
to a corps of inspectors. From time to time these will go to
each employing establishment to examine the stamp books
of all employees subject to the scheme; they will ascertain
first of all whether each worker has a book, whether it has
52
i
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
been kept up to date, and whether the stamps affixed to it
really correspond to the insurable wages. Institutions that
apply the stamp system in its pure form, without a basic register
containing the record of each employer, cannot fail to attach
the greatest importance to the check thus operated by their
inspectors, which must be more frequent and systematic than
under the mixed system.
The external check is supplemented by the insured person
himself, who must be entitled to require the employer to let
him see his stamp book so that he can ascertain whether the
stamps have been correctly affixed to it and correspond to the
deductions the employer has been making from his wages.
If institutions neglect opportunities of periodical checking
and leave the checking of stamp books until the moment when
insured persons claim benefit—at which time they will ascertain
whether the claimant is entitled to benefit and will calculate
the amount—the accumulated irregularities and omissions
ultimately discovered may give rise to insuperable difficulties.
Any system of checking must be backed up by severe
sanctions.
Forgery and Fraud and Their Prevention
As regards illegal practices in connection with the use of
stamps a clear distinction should be drawn between the forging
of stamps and the fraudulent use of genuine stamps. In the
second case, which is the more frequent, an insured person
may remove stamps that have already been affixed to his book,
and sell or give them to a comrade who needs stamps in order
to complete a period of insurance and to claim benefit. The
cancelling marks on the stamps are sometimes first erased and
replaced by others to suit the second insured person. In other
cases the employer may favour one of his own employees by
affixing stamps relating to past periods for which the worker
wishes to appear to have contributed so as to claim benefit.
Apart from the issue of precise instructions regarding the
cancelling of stamps and the imposition of serious penalties if
frauds are discovered, the principal preventive method—one
that is quite essential under the stamp system—consists in
limiting the period of validity of the stamp books, which will
• then have to be exchanged periodically for new ones. The usual
COLLECTION OF CONTRIBUTIONS
53
period of validity is one or two years, longer periods being
rare. Compulsory exchange of the stamp books restricts the
possible fraudulent use of genuine stamps and may be accompanied by the examination of the books (with the aid of special
equipment if necessary) so that such forgeries or fraudulent
practices as may have occurred can be discovered and the
necessary action taken before it is too late.
Another effective means of preventing fraud is the periodical issue of new series of stamps. Of course this step, which
involves the withdrawal and destruction of the unused stock
of old stamps as well as complex accounting and supervisory
operations, is very expensive and cannot be taken frequently.
Handling and Exchange of Stamp Books
As has already been mentioned the employer usually has
charge of the books. Some institutions prohibit the employer
from giving insured persons access to their stamp books, and
require him to hand each book over to the insurance institution when it is due for exchange or when the insured person
leaves his service. If this is the practice, the insured person
must be provided with some permanent social insurance identification document bearing his registration number. When he
enters the service of a new employer, the latter will apply to
the insurance institution for his old stamp book or the stamps
may be affixed to a provisional card, which is subsequently
exchanged for a normal book.
In some systems the employer may hand the stamp
book to the insured person only when the latter leaves his
service. This has, of course, the advantage of enabling an
insured worker to submit his book to any new employer, who
can then take over the function of affixing the stamps to it ;
but it also has a number of disadvantages. Quite frequently,
workers will leave their employers without asking for, or without obtaining, their stamp books ; in such a case the employer
is required to send the book straight to the insurance institution, as he does under the method described in the preceding
paragraph. In other cases an insured person who is unemployed
for some time may forget to send his book to the institution
if it expires in the meantime.
Some institutions require the insured person to present
his stamp book when claiming benefit in order to prove that
54
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
he is an active member, is up to date with his contributions
and has completed the necessary qualifying period (if any),
and also to enable the cash allowances to be calculated if necessary. Accordingly, the employer has to hand the book to the
worker whenever the latter needs it for this purpose. If
the institution thinks fit to adopt this third alternative (which
has the undeniable advantage of enabling the stamp book to
be used as evidence of the right to benefit, even in the case of
short-term insurance), its disadvantages should also be appreciated : in addition to the drawbacks already mentioned in
the paragraph above, the employer will often find himself
without the stamp books of some of his employees when the
time comes for affixing stamps or exchanging the books ; it
is evident also that there will be a danger of loss or damage.
In order to reduce these drawbacks institutions should not
retain a book unnecessarily long (when it is first presented for a
claim for sickness benefit, for example) but should return it
promptly (preferably to the employer) as soon as it has been
checked, the insured person being provided with a certificate
of his continued right to benefit for the contingency in question.
Finally, it is advisable, as under the other two methods mentioned, that provisional cards or special identity documents
should be used whenever necessary.
The reasons for limiting the period of validity of the
stamp books have already been indicated. Another point
arises here. A given insured person's book may be used up
and require replacement individually unless each space is
earmarked for a specified period. However, most institutions
use a system whereby each space corresponds to a predetermined
contribution period, the dates of which are printed in the space ;
under this system the books of all insured persons, or of all
those in a specified class, expire at the same time.
The simultaneous exchange of a large number of stamp
books is a most delicate administrative task and must be
carefully prepared. In order to reduce the difficulties inherent
in this process, it is possible to divide insured persons into
groups, each of which will have a different terminal date ; each
insured person will remain throughout his insured life in the
" exchange group " to which he was allotted on first entry.
The books corresponding to each group will be distinguished
in some conventional manner.
COLLECTION
OF CONTRIBUTIONS
55
The exchange itself is carried out approximately as
follows. The employer returns the expired books to the
institution, where they are checked and the stamps rendered
permanently useless (by perforation, for instance) so that they
cannot be improperly used at a later stage, and new books are
prepared and sent to the employers. In many cases a summary
of the contents of the old books (the number and value of the
stamps of each kind that they contain) is entered in the new
books in case the information is required in connection with
the grant of short-term benefit. Where appropriate, the old
books are returned to the central or regional office, depending
on the degree of centralisation of the scheme. How they are
subsequently used for insured persons' records will be discussed
in the next chapter.
Finally it must be mentioned that the preparation of the
new books, prior to their issue in exchange for the old ones, is
sometimes entrusted to the employers. Small undertakings
that have not the appropriate personnel for such work may
seek the assistance of the insurance inspectors, who may combine this job with a general inspection of the undertaking.
CHAPTER IV
INDIVIDUAL RECORDS OF INSURED PERSONS
In sickness and maternity or employment injury insurance,
the right to benefit is dependent on the claimant's being an
actively insured person at the time when the contingency
occurs or, if unemployed, on his being still covered by the
" period of protection " provided for in most schemes for sickness
and maternity insurance, and possibly on the additional condition that he has paid contributions during a short qualifying
period. The amount of cash benefits is usually calculated on
the basis of the most recent insurable wage or an average of
the insurable wages received over a period not generally exceeding three months. In other words, the insured person's
qualitative or quantitative entitlement in such short-term
insurance is not affected by whether he has six months, or
ten or 20 years of contributions to his credit. There is therefore no need for the insurance institution to have available
individual records of its insured persons covering the whole
period of their membership.
The position is very different in the case of an institution
providing long-term insurance (such as invalidity, old-age or
survivors' insurance), under which the payment of benefits is
subject to a relatively long qualifying period, which is usually
between two and five years for invalidity, widows' or orphans'
pensions, and may be 25 or 30 years or more in the case of oldage pensions. Moreover, in the majority of institutions, the
amount of the pension depends on the total period of contribution and also on the wages received over a number of years or
even during the whole period. This makes it necessary for the
institution to keep up to date a complete record of periods of
contribution and of insurable wages over a large part or even
the total period of contribution for each insured person.
Individual records are, of course, especially important for
institutions that collect contributions by means of the payroll
INDIVIDUAL RECORDS OF INSURED PERSONS
57
system or one of its variants 1 ; the present chapter, therefore,
is based on the payroll system of collection. In this case the
keeping of individual records consists in transferring, from
the payroll to the documents constituting the individual record,
all information that may affect the right to benefit and the
calculation of the rate of benefit.
Procedures for transferring such data and keeping the
individual record up to date depend on the characteristics of
the scheme (the kind of contingency covered, the calculation
of long-term benefits, the basic collection period, the manner of
calculating the period of contribution, the degree of administrative centralisation or decentralisation, etc.) and on certain
features of the insured population, such as the normal degree
of stability of workers in the service of a single employer,
the method of wage payment and the number of insured
persons.
The data that must usually be known are : the period
covered by the contribution, the wage or wage class on which
the contribution is paid, and the employer's registration number, the last particular being required so that the original document—the payroll—may be consulted in case of doubt. It
will also be necessary in many schemes to record the duration
(for example, the number of days or weeks) for which contributions are paid in the period.
If, as is now the common practice, the regulations treat
as periods of contribution any periods of incapacity during
which the insured person receives a sickness allowance, rest
periods for which an allowance is paid in case of maternity,
and sometimes periods of involuntary unemployment and the
like, particulars of such periods must also be entered either in
the individual record or in a special record.
Administrative procedures in connection with the individual record are so complex in themselves and any delay
may have such unfortunate results, that it is a wise policy not
to overload the record with unnecessary particulars but to
1
Where contributions are collected by the stamp method all an
insured person's expired stamp books, once they have been exchanged
by the institution, constitute his individual record. Naturally the
accumulation of these books may give rise to a storage problem ; for
this reason some institutions summarise the main data of each book
when it is exchanged and transfer the summaries to the new stamp
book and to individual record cards filed in numerical order in a general
filing system. The old books can then be destroyed.
58
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
confine it strictly to the fulfilment of its immediate purpose.
Thus the simultaneous entry of wages and contributions (the
latter often subdivided under branches of insurance) can
almost always be avoided, even in schemes that provide for the
refund of contributions. It is also advisable to eliminate
particulars of a statistical nature, which are not often used
and can be obtained by other means.
The individual record should be regarded as no more than
a memorandum of the insured person's employment covered by
social insurance, and not as an accounting document. There
are some institutions, however, that still regard the individual
record as a kind of savings account and as an essential aid to
bookkeeping ; such institutions include, for example, those
in which the insured person's pension is dependent upon the
capital sum accumulated in his personal account and which
also include among their benefits the partial or total payment
of this capital sum (generally, the insured person's individual
contributions with or without interest) in case of cessation of
work or in lieu of a pension. The total contributions credited
in the individual record would theoretically have to correspond
to the balance of the insured person's account in the institution's
general accounting system, a correspondence that it would be
impracticable to maintain in the long run. The only indispensable check, and one that should be carried out with the greatest
precision, is to transfer particulars from the contribution roll to
the individual record ; once this process is over the individual
record becomes, as it were, independent of the roll and hence of
any accounting process.
Before concluding these general observations, it may be
remarked that there is one institution providing long-term
insurance which keeps no individual records of any kind.
Entitlement to benefits is based on the " employment booklet " that every worker is legally required to possess and in
which the employer must enter exact particulars of periods of
employment and wages. In case of doubt or if there are omissions in the employment booklet, direct reference is made to
the contribution roll. It may be noted that even in this case
the institution has not actually given up the individual record :
instead it uses an existing record that is kept up to date by the
employer. The satisfactory operation of the scheme depends
on the compulsory employment booklet and on the efficiency
INDIVIDUAL RECORDS OF INSURED PERSONS
59
of the check made on the correspondence between the data
entered in the booklet and the contribution roll.
A description was given in Chapter I of the procedure for
initiating the individual record and of the general features
of the registers used ; it was mentioned there that many institutions also use the individual record cards to register benefits
paid to insured persons. This chapter is confined to an account
of the individual record as a memorandum of the particulars
necessary for the payment of benefits.
TYPES OF INDIVIDUAL RECORD AND TRANSFER METHODS
No attempt will be made here to classify systematically
the different types of individual record in existence ; instead
they will be regarded from various standpoints. It should
be explained that the individual record does not necessarily
consist of a card or sheet on which the required particulars
are entered in chronological order, although this is certainly
the most usual form ; the essential feature of the individual
record is that there should be a methodically arranged and
classified collection of documents constituting the historical
record of each insured person and providing direct and unequivocal evidence of his right to benefit.
Particulars may be transferred from the payroll to the
individual record for each collection period—in other words,
from each payroll (the method employed in most institutions) ;
or the so-called " change " method may be successfully employed,
particularly in institutions covering a class of insured persons
that is relatively stable as regards continued employment with
a single employer and the insurable wage or wage class. In
this system entries are made on the individual record only
when there are changes in the circumstances of the insured
person. An entry will therefore be made giving the date at
which the insured person took up employment with a particular
employer, the registration number of the employer and the
insurable wage for a given unit of time—for instance, the month
or week, or whatever period is taken as the basis for contributions. So long as the insured person remains with the same
employer and at the same wage, no further entry is made.
If there is a change in wage, the date at which the old wage
ceased and the new one began and the amount of the new wage
60
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
will be entered ; if the insured person leaves the employer, the
date of separation will similarly be noted. A break in employment with the same employer may be entered as a separation
and a new commencement of employment. The duration of
contributions between two dates entered (the number of weeks
or months, for example) may be added up and noted in secondary columns. The principal methods of transferring data are
direct transfer by hand or by the use of special machines, and
mechanical transfer by means of punched cards.
Direct Transfer
An important feature in applying the method of direct
transfer is the proper classification of individual record cards.
These may be classified in general numerical order, the records
possibly being divided into two groups—for insured persons
employed in covered employment and those not so employed—
or by groups of employers, the cards being arranged within
each employer group in the same order as insured persons
are listed on the employers' rolls. In the latter case the
cards of insured persons not in covered employment and of
pensioners will, of course, be kept separately.
If the classification is by general numerical order, when
the payroll arrives the cards of the insured persons included
in it must be found in the file before the transfer operations
can be begun. All this naturally slows up the process of
transfer if there is a large number of insured persons ; it also
entails a considerable risk of errors both in arranging the
cards before transfer and even more in putting them back
in the general file. Under this system there is no direct
check on the engagement and dismissal of workers by an
employer, unless each roll is compared with the previous one.
On the other hand, the general numerical classification presents
the advantage of keeping the entire individual record of each
insured person on one card until it is full, whereas the second
procedure described below may make it necessary to keep
several cards simultaneously up to date for a single insured
person. Even this apparent advantage may turn into a hindrance, however, if a worker has one or more employers, and if
the payrolls of both employers are involved in the transfer
process at the same time.
INDIVIDUAL RECORDS OF INSURED PERSONS
61
The system of classifying individual records by employer
groups consists in filing together the cards for all the workers
employed by each employer as shown by the last payroll entered
and, where appropriate, by notifications of engagement of any
new workers subsequently received. An insured person will
have as many different cards in play as he has employers at
any one time. This system makes it necessary to keep a
general register, as far as possible in numerical order, in which
the identification particulars of the workers are entered together
with the registration number of each employer by whom the
insured person is or has been employed and the dates of engagement and of separation. Each employed person has one
" master " card (and one only) in this register which also serves
a second purpose ; when a worker leaves the service of an
employer and the particulars corresponding to the last collection period have been transferred, his individual record card is
taken out of the employer group and attached to his master
card in the general register. When the insured person enters
the service of a new employer, one of the individual record
cards attached to the master card is taken and put in the
appropriate employer-group file ; if no old individual record
cards are attached to the master card a new individual record
card is made out. It may also be necessary to make out a
new card if the former employer is in arrears with his contributions and the new employer is already paying contributions
on behalf of the insured person.
Particulars are transferred from a payroll to the appropriate individual record cards as follows : whatever the order
in which the individual record cards are classified, the first
step is to prepare the cards of the insured persons entered
on the roll. If the original classification is by employer groups
and if the employer is required to notify the employment of
each fresh worker, the cards of the new workers will already
have been put in with the employer group in question ; but
those of the workers whose separation from the employer has
been notified will not have been removed until the particulars
have been transferred to them from the last roll on which
they figure. The payroll must be compared with the cards
in the corresponding employer group since this makes it possible to check whether the employer has fulfilled his obligation
to notify the movement of employees or, where no such obliga-
62
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
tion exists, to register such movements. The employer is
notified of any omissions, cards are made out for any new
workers, and those of workers who do not appear as contributors on the new payroll are withdrawn. In the case of
temporary breaks in employment owing to sickness, leave
without pay, etc., the respective individual record card should
be left in the employer group, but separated from the rest.
Should there be any doubt as to the identity of an insured
person, provisional cards of a different colour may be put in
without holding up the transfer process, and further details
will then be requested from the employer. When the individual
record cards in the employer group have been thus arranged
in the same order as the insured persons appear on the roll,
particulars are directly transferred, the identity of the insured
persons entered on the payroll being once again checked with
those for whom the cards are made out.
If the transfer is done by hand, it will be necessary to
check at least that the wage amounts have been transferred
correctly, for instance by adding up the total wages for each
employer or for each convenient sub-group in the case of larger
undertakings, and comparing the total of the wages on the cards
with the wage total on the payroll.
*
If special machines x are used the process may be simplified
and speeded up. These machines enable the data that remain
constant for each payroll to be set up on a special keyboard
(e.g., the employer's registration number, the collection period
and, where required, the actual date of collection) so that it
is only necessary to type separately for each insured person
the variable particulars (the insurable wage, where necessary
the duration of the employment and, for checking purposes,
the registration number of the insured person). Both the
constant and the variable data are simultaneously imprinted
on the individual record card and on a duplicate tape ; when
all the particulars have been transferred from the payroll,
the machine automatically adds up the wages (and days of
employment, where necessary).
If a mistake is found to be due to the employer, he is
notified and the difference between contributions due and
contributions actually paid is noted in his account. The
1
Of the " current account " type.
INDIVIDUAL RECORDS OF INSURED PERSONS
63
employer is also notified of any error in the personal particulars
of the workers and is asked to correct it in the next payroll or
to provide an explanation. It may be noted in passing that
the over-all data of the duplicate tape may be used for drawing up general collection statistics.
In order to facilitate the transfer, the individual record
cards should be designed with care. It may be advisable to
allot a special space to each collection period so that the entries
for any particular payroll appear in the same place on all the
cards in the employer group.
Transfer by Means of Punched Cards
If punched cards are used, the transfer process comprises
the following stages : punching, collation, sorting, tabulation
and transfer properly so-called.
The first stage generally consists in punching an individual
card for each line on a payroll, in other words for each contributing employee. Naturally the result of a mistake in the registration number of an insured person will be that his contribution
periods are credited to someone else. In order to avoid
such errors—which may be due to a mistake by the employer
in making up the payroll or to a mistake in punching—and also
to speed up the punching process, the following procedure
may usefully be adopted.
Supposing the system to be in full operation, there will
be a punched card for each actively insured person ; this will
carry perforations representing the constant or semi-constant
particulars (i.e., those for personal identification and the
employer's registration number), together with variable particulars for the previous contribution period (i.e., the description of the period, the insurable wage or wage class, and, where
appropriate, actual hours of work). These cards will be filed by
employer groups. If the institution uses a system of notifications of employment and separation, cards will be put in for any
new workers as the notifications arrive, but the cards for workers
who have left the employer in question will not be removed
until the details for the last collection period have been entered
on them. Before the date fixed for sending in the payroll,
or at the latest on that date, the transfer process is prepared
as follows. The constant particulars are reproduced on a
64
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
second set of cards. When the new payroll is received the
first step will be to compare the particulars on it with those
punched on the new set of cards.
Any discrepancies noted are investigated, for example by
reference to the numerical, or, where necessary, the alphabetical
list of insured persons, the employer being immediately notified
of any error or omission. The cards are then completed by
having the variable particulars for the new contribution period
punched on them. After all particulars have been checked
the wages transferred are added up (for each sub-group or for
the whole payroll) by means of a tabulating machine and
the totals are compared with those on the payrolls. Any error
due to punching and not discovered during the checking process
is then rectified ; mistakes made by employers are entered on
the appropriate employer's current account. 1
When the cards for the new collection period for a particular
employer have been prepared and checked the next stage of
the process may take one of two main forms.
(1) The first possibility is that all the perforated cards
for a given insured person are used to make up his individual
record. Except for the most recent card, which has to be
used as a master card for the transfer of constant particulars
to the next card and which is filed in the appropriate employer
group, the cards are kept together in the general numerical
classification of insured persons. The disadvantage of not
having an absolutely complete individual record of any insured
person at any moment may be eliminated by making a duplicate
of each new master card and inserting it directly in the individual record. When each master card has served its purpose
it may be filed separately for possible statistical use. The
same process may also consist in filing, by employer groups,
punched master cards with only the constant and semi-constant
particulars of the insured person ; so long as the latter continues
in the employment of the same employer the master card can
be used for mechanically producing a new card for each collec1
Where the insured population is relatively stable as regards
employment and insurable wages, and where there is in operation a
system of notification of engagement, separation and wage changes,
the set of cards for the previous payroll, after having been adjusted
to take account of notifications received and the results of comparison
with the new payroll, can be used directly for the transfer of particulars
from the new payroll (or copied integrally for the purpose).
INDIVIDUAL RECORDS OF INSURED PERSONS
65
tion period, the perforation of the latter card being completed
in the manner described above. This process naturally results
in the filing of a large number of punched cards for each individual record. In order to reduce the number of cards a
summary punched card may be mechanically produced each
year.
(2) A possible alternative procedure is the following.
All the payrolls received over a given period are taken and
the corresponding record cards are punched and sorted. Then,
using a tabulating machine, the principal data extracted from
each card are printed on a continuous paper roll impregnated
with special ink (one line being used for each card). The
individual accounts are then arranged in the same order as the
list thus prepared and each line of the list is mechanically
transferred to the appropriate account. Once this has been
done the individual accounts are returned to the general file.
Alternatively, by using a special machine and punching
special holes in the cards it is possible to transfer the data
directly to the individual records without preparing the abovementioned list.
The automatic and semi-automatic processes described
above, using punched cards, may naturally be varied and modified
in many ways. Furthermore, new and more complex machines
are constantly coming on the market and mechanised techniques are continually developing.
General Remarks on Transfer Procedures
To decide which of the two main procedures described
above better suits a given institution it will have to be considered, among other things, whether the number of insured
persons justifies the use of mechanical methods, whether the
transfer of data and allied operations will have to be done
at frequent intervals, whether the cost of the necessary machines
stands in reasonable relation to that of human labour, whether
the work of punching cards and checking them is compensated
by the saving in time and work involved in the many operations that can then be done automatically (transfers sorting,
statistics, tabulation, production of auxiliary indexes, etc.),
whether the insured population is relatively stable, whether
identification of insured persons is sufficiently reliable, and
66
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
whether the number of payroll errors made by employers
remains within reasonable limits.
If either of the two methods is to work satisfactorily, due
attention should be given to examining the payroll before the
data it contains are transferred, comparing it with the respective
employer group file, and notifying the employer of any anomaly
so that it may be corrected in the next payroll. The data
transferred to the individual records must be completely checked
so that the record may really be a reliable basis for the grant
of benefits.
Another essential point is to keep strictly to a certain
time schedule—rapid transmission of payrolls from the reception service to that handling the individual records, co-ordination of the various operations connected with the process of
transferring data from the payroll to the cards, completion
in advance of certain jobs (such as the preparation of cards
punched with the constant particulars of insured persons if
the system of punched cards is used) and other measures for
the rational distribution of work so that some jobs may be
switched from days when many of the payrolls usually arrive
in each period and done at times when there is less business.
In order to keep the rhythm of work as even as possible, the
personnel should be grouped appropriately and if necessary
special teams should be formed to reinforce any groups of
employees who may be in difficulty owing to the accumulation
of their work on certain days.
In short, every effort must be made to keep the individual
accounts up to date. Any delay in transfer tends to mount
up ; gaps in the records involve additional checks that become
more and more troublesome the longer they are postponed
and in their turn retard the process of transfer still further
until a situation is reached in which individual accounts are
literally paralysed.
CENTRALISATION
OR
DECENTRALISATION
OF INDIVIDUAL
RECORDS
Internal movements of workers from one part of a country
to another, the inadequacy of communications hindering the
co-ordination of regional registers, the low density of the insured
population in certain areas, and the administrative difficulties
INDIVIDUAL RECORDS OF INSURED PERSONS
67
that these and other factors may cause in connection with the
maintenance of complete records of insured persons explain
why the individual accounts of persons insured against longterm contingencies are usually kept at the headquarters of the
insurance institution. However, three interesting examples
are given below of the use that can be made of decentralised
records provided the various regional registers are co-ordinated
so as to ensure that no errors will arise in the grant of benefits.
The first example *• concerns an institution grouping a
number of regional old-age insurance funds. Each of these
keeps individual records for all insured persons in its area
and for all other persons who were first insured in that area.
It also keeps an auxiliary register of all insured persons throughout the country who were born in the particular area. In order
that this latter register may be kept up to date, each fund,
whenever it opens an individual record for an insured person
not born in its area, is required to inform immediately the fund
responsible for the area where the insured person in question
was born. If, at a later stage, the person makes application
for an old-age pension, probably addressing it to the fund
where he was last insured, this fund asks the one responsible
for the area in which the applicant was born for complete information regarding the various regional funds that have records
relating to him. When all this information has been collected,
the fund of last insurance will pay the pension. Insured persons
born abroad are deemed to belong to the area of the national
capital.
In the second case 2 the individual records are kept at
each provincial capital. If an insured person moves from one
province to another, his record is transferred to the corresponding capital, so that each insured person's complete record
is always available at a single place. However, this method
has a number of disadvantages, and if these are accentuated in
unfavourable circumstances they may cause it to break down :
the transfer of the individual records from one province to
another involves the risk of loss, cuts the record off from its
original documents and divides or confuses the administrative
responsibility regarding the person's record as a whole.
Furthermore, delay by an employer in transmitting contribu1
a
See National Monographs,
Ibid., pp. 173-179.
pp. 141, 143 and 150.
68
ADMINISTRATIVE PRACTICE OF SOCIAL
INSURANCE
tions may make it necessary to retain in one capital the individual record of an insured person who has moved to another
province a considerable time ago, and thus give rise to difficulties that can sometimes never be solved.
In the third example x the individual records are kept
by local or occupational funds. There is a central body that
maintains a general register of all persons insured with these
funds, indicating against each person's name the title of any
fund that has opened an individual record for him. In this
way it is easy to bring together an insured person's various
records when necessary.
A similar procedure is applied in countries where, besides
general social insurance on a compulsory basis, there are also
special funds for certain groups of employed persons (public
servants, bank employees, railwaymen, etc.). It would in these
cases be advisable (and this course has in fact been taken in
some countries) to establish a service for mutual notification
among the institutions in question regarding all cases of multiple
affiliation, and to entrust one institution with the job of handling
these cases and granting benefit to the persons concerned. If
the institutions are separately financed, as they usually are, the
problem will arise of splitting the cost of benefit or of transferring
the corresponding capital.
Some reference must also be made to the case of countries
where there are several institutions simultaneously insuring
the same persons—with some exceptions—against different
risks. In the discussion on the collection of contributions in
Chapter III stress was laid on the advisability of entrusting
one such institution, or a special central body, with the whole
task of collecting and apportioning contributions. Logically
this same institution might also keep the individual records
of insured persons : if necessary, it would provide copies for
the use of the other institutions.
As has already been suggested the accumulation of documents making up the individual records (cards, payrolls,
notices of entering and leaving employment and of changes in
wage rates, etc.) may give rise to a serious problem. Although
institutions may wish to keep these originals so long as they
may affect the rights of an insured person or his relatives,
1
See National Monographs, pp. 194-196.
INDIVIDUAL RECORDS OF INSURED PERSONS
69
it is essential to set a limit to the unreasonable swelling of
records.
If the method used to transfer data from payrolls to individual records is efficient the payrolls and other original documents may be destroyed after a certain time, unless they are
required as evidence in legal actions arising from disputes. In
any case, if it is decided that complete records must be kept
the use of microfilm makes it possible to copy and store all
the institution's documentation in a relatively small space.
Finally, as a precaution against the destruction of the files of
individual records by fire or other disaster for instance, it may
be advisable to keep in a safe place a special set of these records in
the form either of microfilm copies or of summarised punched
cards or lists prepared from them.
CHAPTER V
CHECKING QUALIFICATIONS FOR BENEFIT
The procedures and methods described in the foregoing
chapters constitute the basic steps that must be taken by social
insurance institutions before they can fulfil their fundamental
purpose—to grant the benefits provided by law. The more
efficient the administrative procedures adopted for the registration and identification of insured persons and employers,
for the collection of contributions and for maintaining records
and individual accounts, the easier will be the final process,
which consists essentially in establishing the fact that claimants
are indeed entitled to benefit. For this purpose the insurance
institution will have to ascertain that the applicant is the
rightful holder of the identity document he presents in support
of his claim or is a member of the rightful holder's family ;
check that the insured person is up to date with his contributions, has contributed during the prescribed minimum period
and fulfils any other statutory requirements ; and, if the benefit
is a cash benefit, calculate its amount, which usually depends
in some degree on the period of contribution and on average
insurable wages over a specified period. 1
In addition to these general checks the administrative
procedure of the insurance institution will have to provide for
special investigations regarding, for example, the existence
and degree of disablement or invalidity, the age of the claimant
where legal documents are not available, the bona fides of any
person applying for benefit on the grounds that he was a dependant of the insured person (which is so important in case of
claims for benefit on an insured person's death), and the fact
that pensioners are still alive.
1
For detailed descriptions of the provisions of national schemes
regarding cash benefit, see National Monographs (Part A " Procedure
for the Grant of Benefits ", in each national monograph).
CHECKING QUALIFICATIONS FOR BENEFIT
INSURANCE AGAINST
71
SHORT-TERM CONTINGENCIES
As was pointed out in the preceding chapter, the problem
of checking claims to benefit arises in somewhat different
forms under insurance against short-term and long-term contingencies. In the case of short-term contingencies the benefit
usually has to be granted immediately, and special legal documents cannot be required or examined. The main tasks here
are to establish the identity of the claimant as a registered
insured person (or his connection with such person) and secondly
to make sure—if the relevant Act or regulations so require—
that the insured person has completed the prescribed minimum
period of contribution (one, two or six months for example),
which will in most cases be covered by the period of service
with his last employer. In fact, the essential problem is to
find the means of reducing the risk of fraud or abuse to a
minimum.
The benefits referred to in this section are benefits in
kind granted in case of sickness, maternity or industrial accident, and cash allowances payable during temporary incapacity for work due to sickness or accident, or during prenatal
and postnatal rest.
Before going into detail, two principles should be stated :
the measures adopted to prevent or eliminate fraud and abuse
must not result in unnecessary inconvenience for the mass of
the insured population nor offend claimants for benefit ; and
the direct and indirect cost of such measures should not exceed
the losses that would result from the frauds they are designed
to prevent.
Naturally there will be differences in the handling of
applications for benefit according to the system of medical
care applied—i.e., whether medical practitioners are freely
chosen by insured persons and attend to them in private consultation, or whether the insurance institution has its own
medical officers and establishments. In the present study
more attention is paid to the latter method. Despite some
differences, however, most of the basic problems are identical
or similar and the following paragraphs will not be devoid of
interest for institutions that do not have their own medical
officers.
In order to simplify the present analysis, reference is made
72
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
as a rule to the commonest risk, namely sickness. However,
the remarks apply also to maternity and industrial accidents,
and certain characteristics of these latter contingencies that
involve considerable divergence in procedure are separately
mentioned.
Normal Handling of Applications for Medical Care
Let us now follow an application from its submission,
through the procedure of checking, and to the payment of the
benefit. It will be best to take the case of an application for
medical care made by the insured person himself. The
procedure varies very widely according to the administrative
and medical organisation of the scheme. However, the most
usual features of existing practice with the principal variants,
are as follows :
The insured person first applies in person to a special
section responsible for reception and identification, which should
be in immediate proximity to the medical services. The applicant will bring with him the special identity document issued
to him by the insurance institution when he was registered or,
if necessary, his civil identity card, disk, or the like. The
advisability and efficiency of using fingerprints as an additional
means of identification have already been questioned in a
previous chapter ; but in case of doubt, supposing the applicant can write his name, a simple check consists in requiring
him to sign some document on the spot and comparing it
with the specimen in the identity document he has presented.
Once it has been proved that the applicant is a registered
insured person, it must also be checked that he is up to
date with his contributions. 1 For this purpose it is common
practice to require the sick insured person to present an
" employer's certificate of sickness " together with the abovementioned identity documents, in which the employer certifies
that the claimant is his employee. It is also advisable for
this certificate to specify the last date of payment of contributions and the period covered by the last contribution roll
remitted to the insurance institution and including the employee
concerned. For obvious reasons the validity of the employer's
1
For the case of applicants for medical care not in covered employment, see below.
CHECKING QUALIFICATIONS FOR B E N E F I T
73
certificate of sickness must be limited to a very short period—
not more than a few days from the date of signature by the
employer.
Under the stamp system, completion of the qualifying
period can be checked immediately on submission of the stamp
book. Under the payroll system, an insurance book containing particulars of the date of entering and leaving employment with various undertakings is of similar value ; in, these
cases the record of entry into the service of the last employer
may be supplemented by the employer's certificate of sickness.
The service responsible for identifying applicants for
medical care generally accepts the employer's certificate and
if necessary checks—by referring to the basic or auxiliary
register of employers—whether the employer is duly registered.
Only in case of doubt will reference be made to the individual
record or payroll if these documents are available without
unreasonable delay. 1
Before going further it will be best to interpose a few
remarks on a document that is essential not only from the
medical point of view but also from that of identification.
This is the medical case history started when an insured person applies for the first time for care from the social insurance
medical service ; it includes all the medical information (date
of attention, diagnosis, prescriptions, laboratory examinations,
treatment, etc.) regarding each sickness that the insured person has suffered and for which he has received medical benefit
from the institution.
The identification service will have a complete register
of all medical case histories. The applicant will of course be
asked whether he has had treatment before, and in any case
it will be ascertained whether he has a medical case history ;
this fact, and the number of the case history if it is different
from the insured person's registration number, will be noted
on the written order issued to the applicant on completion of
the checking process described above. The insured person
then goes on to the internal medical services to await his turn
for attention.
Of course the identification service, which has to act
1
As regards the subsequent handling of employers' certificates
and their use as a supplementary means of supervising employers, see
above, p. 40.
6
74
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
rapidly in the insured person's own interest, will not be able
to avoid all types of fraud in every case, including the subsequent fraudulent use by one person of a pass made out for
another. The institution must be able to count on the help,
in this regard, of the medical officers and their assistants. If
the insured person for whom a sick man tries to pass himself
off, already has a medical case history—which will be the case
in the large majority of instances—the data it contains will
help to enable the doctor to discover any fraud. When an
insured person is applying for medical care for the first time
the medical officer or his assistant should ask, if there is any
doubt, to see the sick person's identity documents.
Hitherto, only the case of insured persons in covered
employment who themselves apply to the medical services has
been considered. Two variants of this situation can be mentioned
here. First of all, if the state of the sick person makes treatment
in a consulting room or at an out-patients' department impossible,
a relative or fellow worker will go to the identification office
with all the sick person's documents and ask in his name for
a written order authorising treatment at home. The second
variant is the case of a worker who, although not in covered
employment, is still entitled to medical care ; here it will
be for the administrative services of the institution, instead
of the employer, to issue a certificate of sickness marked
with the data attesting the applicant's right to benefit, which
may be extracted from his individual record or from the
payrolls. In other respects neither of these cases involves
any special features as regards subsequent procedure.
After the first consultation, if further attention or treatment is required the date and time for this will be notified
to the insured person. He will not be required to go through
the checking procedures again, but need only present himself
as instructed with the certificate issued by the medical service.
However, if continuance of the treatment already started
depends on further contributions, a check may be required to
ascertain whether these have been paid.
As regards the grant of cash benefits, it should be borne in
mind that this is always preceded by at least one medical
consultation and frequently by a waiting period of from three
or four days to a fortnight ; the interval between the first
consultation and payment of the first instalment of the allow-
CHECKING QUALIFICATIONS FOR B E N E F I T
75
ance will leave time enough to clear up the insured person's
situation if there is any doubt regarding his right to receive
cash benefit. A few words should be added here on the subject
of the amount of such benefit.
Under a stamp system the allowance will be paid on the
basis of the stamps affixed to the insured person's book. If
contributions are collected by the payroll system, payment
of benefit will be made on the basis of the individual record,
if it exists and is available, or by direct reference to the payrolls themselves. It should be remembered in this connection
that even institutions with a centralised structure usually
require an additional copy of payrolls to be sent to them for
use by the local agencies, which play a direct part in the administration of sickness insurance.
Some institutions fill in the gaps due to payrolls that
have not been sent in by employers with information obtained
by their inspectors.
An additional means, which will enable
this work by the inspectors to be limited to cases of excessive
delay, consists in having the relevant Act or regulations provide that the wages taken as a basis for calculating cash benefits
shall exclude those applying to the last collection period, for
instance ; if this is the rule, the amount of the benefit can be
calculated in the great majority of cases by reference to documents already available at the institution. Once the first
stage in the life of the insurance institution has been completed
the simplest course will be to accept as reliable the wages stated
in the employer's certificate of sickness ; a check may be made
subsequently and the employer rendered responsible for any
surplus allowance paid.
Special Cases and Considerations
There are usually special regulations to cover emergency
cases in which medical care cannot be postponed. In such
cases, all that will be required of the sick person (claiming to
be an insured person) is production of any documents which
he may happen to have with him ; indeed, in the last resort
all documents may be dispensed with and reliance placed on
verbal statements alone. Once first aid has been given—this
will often involve admitting the sick person to hospital—a
period of 24 hours, for instance, is allowed in which he (or
76
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
others acting on his behalf) may establish his status as an insured
person entitled to benefit ; if this can be done, the treatment
will be continued ; if not, refund of expenses is required.
As regards benefit in case of industrial accident, it should
be remembered that most schemes do not require completion
of any qualifying period before benefit may be paid. Usually
a declaration by the employer regarding the accident is accepted
as evidence ; in case of doubt, the institution's inspectors will
make inquiries at a later stage.
In places where an insurance institution has several medical
establishments, there is some danger of fraudulent duplication
of benefits in kind and particularly of prescriptions. The danger is not great if the additional establishments are of an auxiliary character (posts for first aid, injections or certain treatments only), for in this case they will not make out separate
case histories but will report all benefits to the central establishment for entry in the appropriate case history files. If, on
the other hand, there are several establishments where complete medical attention is given, appropriate precautions must
be taken, such as the allocation of a specific group of insured
persons to each establishment and transfer of the case history
if an insured person changes from one establishment to another.
In case of sickness of a family member 1 it will be advisable
to require production of an employer's certificate if possible,
to which particulars regarding the sick person himself must
be added. Here again, the medical case history will be an
excellent aid to identification. For this purpose, the case
histories of all members of a given family should be collected
in a single file, and the particulars of the dependants should
figure also in the case history of the insured person himself.
For the rest, it should be remembered that benefit under
family insurance is in kind only, and that the right thereto
is as a rule automatically acquired when the insured person
himself has qualified for it. This certainly simplifies the problem.
INSURANCE AGAINST LONG-TERM CONTINGENCIES
In insurance against long-term contingencies, the fundamental problem is to keep an individual record on the basis
1
As regards the special problems of identification arising in family
sickness insurance, see above, p. 15.
CHECKING QUALIFICATIONS FOR B E N E F I T
77
of which the period of contribution and the insurable wage
can be easily ascertained and the pension rapidly and correctly
paid.
The long-term benefits involved in the discussion that
follows comprise those granted in case of invalidity, old age and
death of breadwinner. 1
Due identification of the applicant for benefit can always
be guaranteed in normal circumstances, since the institution can take such action as may be necessary to clear up
doubtful points, more particularly by requiring submission
of any document or evidence it considers appropriate in addition to the usual means of identification and the birth, baptism
or marriage certificates, etc.
It then remains to prove that the insured person has
completed the prescribed qualifying period and to calculate
the amount of the benefit. This generally depends to some
extent on the time during which contributions have been paid
and on the insurable wages received during the whole or part of
such time. These two tasks can be performed by reference to the
insured person's individual record ; the data found there may be
supplemented if necessary by a certificate from the employer or
by information obtained from direct inspection regarding the
contributions that he has not yet remitted. The insurance
book and employers' notifications of the dates of entering and
leaving their service will also be of the greatest importance for
control purposes.
Stress must be laid on the principle that it is for the insurance institution to check the periods of contribution and the
insurable wages, and that it cannot require the claimant to
state these or similar data in his application. The same, of
course, holds good a fortiori in the case of applications for payment of benefit after the death of the insured person himself.
1
The procedures described are also applicable to lump sums paid
to reimburse expenses incurred for the funeral of an insured person
and those payable to survivors.
CHAPTER VI
STATISTICS
If a social insurance institution is appropriately organised,
statistics of insured persons, employers, collection of contributions and benefits can be produced as a by-product of its
daily work—in some cases with the aid of additional arrangements that will not greatly add to the cost of routine operations. The present chapter attempts to show by means
of examples related to the subjects already discussed how this
aim can be achieved ; it is not intended to draft a general plan
of social insurance statistics, for which a much more detailed
and extensive study would be required.
While one of the aims of these statistics is to provide
information of a general character, the other is clearly and
undeniably technical—to serve the actuary, the doctor and
the economist in their work in connection with social insurance.
For these experts, and for the administrative official, statistics
are a means of checking, of discovering anomalies in the development of the institution and of making corrections and adjustments—in the actuarial bases of the scheme, in the organisation of medical and other technical services, or in administrative
organisation—and subsequently of supervising the effect of
any remedial action taken. Comparative analysis is an element of great importance in this process : sometimes a statistical fact must be viewed in the light of a chronological series
of data ; in other cases it must be compared with those concerning the same phenomenon but obtained from other sources.
As regards the purely informative function of statistics it
will be difficult to distinguish between the interest they may
present for public authorities in general—since social insurance
is one of the basic elements of national social and economic
policy—and the use that may be made of them in administering
a social insurance scheme. It will be enough to mention that
statistics of this type include : classification of industrial and
STATISTICS
79
commercial undertakings by area and type of business ; changes
in the numbers of persons employed in each such class and in
their wages ; and figures indicating the structure of the gainfully
occupied insured population (as regards occupation, sex and age),
the incidence of sickness and employment injury, the numbers
of persons receiving benefit classified by contingency, etc.
STATISTICS OF INSURED PERSONS
Numbers Entering and Leaving Employment
If insured persons' registration numbers are coded to
represent various data (such as sex, age, etc.), not only will
the internal administrative processes of the institution be
aided but the task of compiling statistics will be greatly simplified, since it will be enough to consult the appropriate register
where the insured persons may be grouped according to the
different classes to which the code elements refer. When
punched cards are used to constitute, or reproduce mechanically, indexes of insured persons, statistics can be extracted
automatically under different headings, the only limitation
being the number of particulars that have been recorded upon
registration.
If the institution registers the numbers of insured persons
entering and leaving employment on the basis of payrolls and
special notifications, corresponding statistics may be produced
showing the length of payment and of interruption of contributions, causes of terminating employment, etc., and all these
data may be classified by type of economic activity, sex and
age of workers, and the like.
Insured Persons in Covered Employment
In addition to these " dynamic " statistics of the movements of insured persons it is useful to establish classifications
of insured persons in covered employment at any given moment
by sex, age, economic activity, geographical area and insurable
wages. If the individual records are made up with the aid of
punched cards, such classifications can be produced automatically ; and, where annual summary cards are used, additional
information can be extracted regarding the " density " of
80
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
contributions in the year and the average number of msured
persons exposed to risk—all of which data are of undoubted
value to the social insurance actuary.
If the punched cards used for individual record purposes
are to provide all the classifications required without excessive
work, the registration numbers of insured persons and employers
must be appropriately coded. Otherwise it will be necessary
to use, for the internal purposes of the institution, code numbers
supplementing the actual registration numbers.
The classifications so obtained are a kind of " internal
census " of insured persons in covered employment : but two
factors that differentiate them from ordinary census operations
must be borne in mind. In view of the irregularity of the
remittance of payrolls (assuming that the payroll system of
contribution is used), the individual accounts of insured persons
as they stand at a given moment will not all relate to one and the
same period of contribution. To overcome this difficulty, a
specific contribution period is taken as the period of reference :
as the various employers pay the contributions for this reference
period, the " paid-up " cards are separated from the remainder ;
when this remainder of employers and insured persons still
in arrears is negligible, the collection of data will be halted, a
correction coefficient being applied to the results in order to
allow for the remainder if desired.
A second difficulty is that, whereas a census proper relates
to a certain day, these statistics relate to a period, usually
a month. There will be insured persons who worked for only
a part of the period ; others will have worked in succession for
two or more employers and consequently count as several
statistical units ; and there will also be insured persons working
for several employers at the same time. These factors of
disturbance may be corrected after appropriate investigation,
although in many of the statistics their effect will be negligible.
If one of the methods of direct transfer 1 has been adopted
for the individuals records, the cards making up these records
(or the " master cards ") will serve as a source for similar statistics. Naturally it will not be wise to rearrange the individual record cards themselves : as a rule, the data required
will be reproduced on specially punched copies. By reason
1
See above, p. 60.
STATISTICS
81
of the great volume of the cards, some institutions successfully
apply a sample method, choosing a representative sub-group
for the statistical operations.
The situation is rather different if collection is done by
means of insurance stamps. Individual statistics can then
only be obtained after the stamp books have been exchanged,
and the summaries of the books that many institutions make—
and often transfer onto punched cards—are useful for this
purpose. It is possible to obtain immediately statistics giving
classification by sex, age, wage class, number of contributions
in a year, place of work and employer's business.
General Registration
When all insured persons are to be registered or re-registered 1
this operation is usually combined with a comprehensive statistical investigation aimed at obtaining the data required
for the financial and actuarial control of the scheme. Sometimes the statistical object is the principal one, in which case
the registration becomes a real census of insured persons. In
any circumstances it is indispensable, when planning a general
registration or re-registration, to prepare in advance a complete
plan of the statistical tables which it is intended to obtain
and of internal procedures—co-ordinated with the normal
work of registration—to facilitate the compilation of the relevant figures.
Registration for Family Insurance
When the scheme includes family insurance (sickness and
maternity), the registration of family members must be accompanied by compilation of certain statistics, the material for
which can easily be obtained from the registration forms.
For the medical services it will be important to know the
absolute numbers of persons registered, classified by relationship, sex and age. A figure of actuarial interest will be the
average age of wives in relation to that of their husbands.
Nevertheless, the current registration of individual family
members should not be over-estimated as a source of statistical information. Many families will not register at all, or
1
See above, p. 14.
82
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
only to the extent required in order to obtain some benefit.
Only the general, simultaneous registration of all members
of insured persons' families can provide complete data regarding the composition of families—average number of family
members per insured person, classification of children by their
own age and that of the father, probability of marriage in
relation to age, etc.
STATISTICS OF EMPLOYERS AND OF
CONTRIBUTIONS COLLECTED
Naturally, those who administer a social insurance institution will periodically need to see the statistics of employing
establishments (registration of new establishments, re-registration of those which had suspended operation, deletion of those
suspending operation or going out of business) with the numbers
of workers concerned and the appropriate classification by area
and type of business. All this is easy to obtain from the
employers' registration forms and other notifications.
The remaining statistics of major importance relate to the
collection of contributions when this is done by means of the
payroll system. 1
From the basic employers' register it is at any time possible to obtain statistics of the employers registered as " active ",
classified by area and type of business, with the numbers of
employees and the total wages in any wage class as indicated
by the last payrolls received. Another useful classification
is that showing the number of employees by area and type of
business. Compilation of such statistics is facilitated if each
employer's registration number includes figures representing
the area and type of business, since in that case the numerical
arrangement of the card index actually provides a classification according to these two criteria. 2
The basic figures regarding contributions collected (number of payrolls received in each month, corresponding number
of insured workers and total contributions or insurable wages)
1
The following remarks apply also to a large extent to the " mixed "
stamp system under which, on each periodical purchase of stamps by an
employer, a summarised payroll is remitted or the total data are entered
in the employer's basic register.
2
See above, p. 25.
STATISTICS
83
can be obtained from the daily control sheets showing all payrolls received, from the control summaries made when the data
are transferred to the individual records 1 , or by other simple
means.
However, the above-mentioned statistics have another
defect already mentioned : the data (numbers of insured persons
and total wages, for instance) do not refer to a certain date or
period. Let it be supposed, for simplicity, that the payrolls
are remitted monthly : most of those coming in during a month
do in fact relate to the preceding month, but there will be an
appreciable proportion which relate to earlier months. There
are employers who fail to send in any payroll or contributions
during a whole month and others who send several at a time
so that the data extracted from all payrolls received during a
given month do not necessarily reflect the real state of affairs
at that time.
Statistics that are free from this defect and are both
more detailed and more complete may be obtained by means
of the master index of " dynamic " punched cards 2 or by means
of an appropriate system of summary cards punched for each
payroll as it comes in. The grouping of payroll figures according
to the contribution periods to which the payrolls effectively
relate (supposing once more that the period is a month) results
in progressive indication of the number of employing establishments really active in each month, the corresponding number
of insured persons contributing, their total insurable wages
and consequently thè average insurable wage per person, with a
breakdown by area and type of business if desired. Naturally
the figures for a given month will not be regarded as complete
until the end of a certain period, when the number of payrolls
in arrears for that particular month and the corresponding
numbers of insured persons have become negligible.3 Normally, satisfactory results can be obtained after five or six
months.
While an " internal census " of insured persons will take
place only occasionally—for the purposes of an accurate actuarial estimate, for instance—these over-all statistics of em1
See above, p. 63.
See above, p. 30.
See above, p. 80, regarding the possible use of a correction
coefficient.
2
3
84
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
ployers and insured persons may be compiled progressively,
month by month ; in this way the institution will be able to
appreciate its real development in the course of time, its seasonal fluctuations, and any variations due to economic prosperity or depression, whether these occur in one or more areas and
branches of industry or throughout the country and its whole
economy.
To avoid erroneous interpretation it should be pointed
out again that the total of all insured persons figuring in the
payrolls of a given month is not necessarily equal to the number of insured persons in covered employment : indeed, in some
occupations and industries with a rapid labour turnover (the
building industry, for instance) the difference may be great.
Another fact to be borne in mind is the variation in the number
of working days per month ; this produces variations in the
monthly earnings of workers paid by the working day.
STATISTICS OF BENEFITS
Short-Term Insurance
The commonest and most direct statistics are those derived
from the reports that medical officers or practitioners and the
heads of the various medical services 1 (out-patient centres,
hospitals, laboratories, pharmacies, etc.) are usually required
to make every day, week or month. From these reports it is
possible to show, for a specified period such as the month,
the numbers of the various kinds of consultations, treatments, etc., that have been given, classified by type of insurance (sickness, maternity, employment injury), by sex if desired
and (in the case of family insurance) according to the status
of the beneficiary. If the doctor can also be induced to differentiate between the first consultation for a given case of sickness, maternity etc., and subsequent consultations, the results
will be very useful. Furthermore, the periodical reports of
hospitals and other establishments provide the materials for
statistics showing increases, decreases and total numbers of
insured persons hospitalised in each period.
If an institution has contracts with public or private medical
1
It is assumed that the insurance institution has its own medical
services. See above, p. 71.
STATISTICS
85
establishments for the care of its insured persons, these establishments should always be required to supply a minimum of
statistical data ; provision of this material could easily be
combined with the periodical submission of their accounts.
A second and particularly well defined class of sickness
insurance statistics is that which takes the completed case
of sickness as the unit. Naturally it is impracticable to include
all instances where a person has been slightly indisposed, or
was ill for a short time only ; accordingly, statistics of this kind
are usually restricted to cases of sickness causing incapacity
and consequently involving payment of a cash allowance—i.e.,
those that were under the strict supervision of the insurance
institution for their whole duration. As soon as a case of sickness is terminated, the important data are extracted from
the medical case history, summarised on individual statistical
slips and perhaps transferred to punched cards. Here again,
coded registration numbers for insured persons and employers
will be most useful. With their aid it will be possible to obtain
classifications by sex, age, marital status, job or occupation,
insurable wage, employer's business and area (all of which factors
affect the sickness rate), as well as classification by diagnosis
and outcome. It will also be possible to calculate the average duration of each case of sickness, classified by diagnosis,
sex and age, and the average number of consultations, treatments, etc., to which it gives rise. Finally, it will be important
to know the breakdown by duration of incapacity allowance,
with the average duration by sex and perhaps also by age group.
Pension Insurance and Death Benefits
Statistics on pension insurance and death benefits are
easy to obtain. A file exists for each case, and nearly always
a control sheet of some kind will be indexed, with perhaps a
punched card also. These latter will serve for the compilation
of lists of pensions and monthly orders for their payment ;
if the cards are appropriately designed, they can produce
mechanically most of the statistics mentioned below.
These statistics will include, primarily, the number and
amount of pensions, classified by types of benefit—invalidity,
old-age, widows' and orphans', employment injury (with a
further classification by degree of incapacity). The number
and amount of pensions in course of payment at the beginning
86
ADMINISTRATIVE PRACTICE OF SOCIAL INSURANCE
of the period (month or year, for instance) will be indicated,
together with the number and amount of new pensions granted
and of pensions expiring during the period (classified if possible
by cause of expiry) and lastly the number and amount of
pensions payable at the close of the period.
Invalidity pensions should be classified by cause of invalidity, sex, age and, if required, by occupation, area, employer's
business and period of membership. Death benefits will be
similarly classified on the basis of particulars relating to the
deceased person.
Classification of current pensions by age and sex of beneficiaries will enable the actuaries to calculate the present value.
As regards death benefits, the actuaries will also wish to have
statistics showing the relationship between the age of the
deceased insured person, the age of his wife and children receiving benefit, and the number of such children.
RELATIONSHIP
BETWEEN
STATISTICS AND
ACCOUNTING
Although it is not intended to deal with social insurance accounting in the present study, this chapter would not
be complete if accounts were not considered at least from the
statistical point of view.
In the section on statistics of contributions collected,
reference was made primarily to numbers of employers and
insured persons and amount of insurable wages. The institution's accounts will not only give additional data on the amounts
received in the different classes of contributions ; they also
make it possible to compare these amounts with the total income
of the institution.
Similarly, as regards benefits, the accounts have to show
the cost of the various types of benefit and, if taken together
with the statistics mentioned above, they will make it possible
to calculate the average cost of such items as a medical consultation, a prescription, a case of hospitalisation, etc., with a breakdown by areas if desired. Only in this way will it be possible
to analyse the costs of sickness and maternity insurance. The
accounts are thus a direct, essential source of statistics if adequately organised in accordance with the special needs of social
insurance.
Publications of the International Labour Office
Approaches to Social Security
An International Survey
Studies and Reports, Series M (Social Insurance), No. 18
(Fifth Impression)
This study, first published in 1942, has again been reprinted
in response to a persistent demand. Its purpose is to trace
the evolution of social assistance and social insurance until
they converge in an integrated conception of a comprehensive
social security system.
The subject is treated under three headings : the social
assistance approach ; the social insurance approach ; social
security systems.
The study is highly condensed and only schemes which had
proved their practicability are mentioned. As a result of this
simplification, the book presents a very clear picture of the
background against which the rapid development of social
security has taken place during the last ten years.
100 pages
Price: 50 cents; 2s. 6d.
Post -War Trends in Social
Security
Reprinted from the International Labour Review,
Vol. LIX, No. 6, June 1949,
and Vol. LX, Nos. 1-3, July-September 1949
(Second Impression)
This article has also been reprinted to supplement and bring
up to date Approaches to Social Security. The article is divided
into two parts. The first part deals with income security with
special reference to the classes of persons protected, the range
and definition of the contingencies covered, adequacy of protection, administration and the financing of social security. The
second part is devoted to the organisation of medical care in
relation to the scope of medical protection, the range of medical
care, rational organisation and co-ordination with general health
services, the quality and availability of medical care, problems
of administration and costs.
83 pages
Price: 25 cents; Is. 6d.
Publications of the International Labour Office
Systems of Social Security
New Zealand
The first of a series of handbooks on national systems of
social security prepared by governments according to a plan
drafted by the International Labour Office, this study describes
the structure of the New Zealand scheme, which provides for
benefits in respect of maternity, child maintenance, conditions
requiring medical care, maintenance of community health,
incapacity for work, unemployment, old age, death of the
breadwinner, and other contingencies.
67 pages
Price: 40 cents; 2s.
United States
The second of the series, this study includes complete
descriptions of the basic national system of old-age and survivors'
insurance, the federal-state and the state-local programme of
public assistance, the state systems of unemployment insurance
and temporary disability insurance, the federal and state workmen's compensation programme, and the special social insurance
programme for railroad workers. Reference is made to various
related public programmes which provide services rather than
cash benefits—i.e., the programmes administered at the federal
level by the Children's Bureau, the public health programmes
administered by all levels of government and the vocational
rehabilitation and employment services.
106 pages
Price: 75 cents; 4s. 6d.