Lecture Public Expenses for Social

Protection

Lecture 8 Public Expenses for Social Protection Slide 1

Key issues

1.The necessity and economic essence of

Public Social Protection System.
2.Organization of the state Social Insurance
in the Republic of Moldova.
3.Forms of citizens’ support by means of
Social Insurance in the Republic of Moldova.
4.State expenditure on Social Assistance.
Lecture 8 Public Expenses for Social Protection Slide 2
The system of Public Social Protection of the RM is
regulated by basic laws:
1.The LAW of the Republic of Moldova 489/1999
about the state system of social insurance no.489
from: 08.07.1999
2.The LAW of the Republic of Moldova 156/1998
about the state social insurance pensions
3. The LAW of the Republic of Moldova No.289-XV
from 22.07.2004 about indemnities for temporary
work disablement and other allowances of social
insurances
4. The LAW about the budget of the state social
insurance for 2010 N 129-XVIII from 12/23/2009
Lecture 8 Public Expenses for Social Protection Slide 3
The system of Public Social Protection of the RM
is regulated by basic lows

5.The LAW of the Republic of Moldova № 547-XV

about the social assistance
Bibliography
1. “Finantele Publice” Angela Secrieru pag.138-153
2. “Finantele Publice” sinteze,scheme, teste
Rodica Hincu, Eugenia Busmachiu si altii pag. 74-83

Lecture 8 Public Expenses for Social Protection Slide 4

 I
Social protection consists of policies and
programs designed to cushion (reduce)
poverty and vulnerability by promoting
efficient labor markets, diminishing people's
exposure to risks, and enhancing their
capacity to protect themselves against
hazards and interruption/loss of income.

Lecture 8 Public Expenses for Social Protection Slide 5

There are five main areas of Social Protection (this
classification is used in international practice):

1.labor market policies and programs designed to promote

employment, the efficient operation of labor markets and the
protection of workers
2. social insurance programs to reduce the risks associated with
unemployment, illness, disability, work-related injury and old age
3.social assistance and welfare service programs for the most
vulnerable groups with no other means of adequate support,
including single mothers, the homeless, or physically or mentally
challenged people
4. micro-and area-based schemes to address vulnerability at the
community level, including micro insurance, agricultural insurance,
social funds and programs to manage natural disasters
5. child protection to ensure the healthy and productive
development of children
Lecture 8 Public Expenses for Social Protection Slide 6
 Social insurance programs mitigate
(reduce) risks by providing income support
in the event of illness, disability, work injury,
maternity, unemployment, old age, and
death.

Lecture 8 Public Expenses for Social Protection Slide 7

Social insurance programs include
( this classification is made based on
international practice):
1.unemployment insurance to deal with
frictional or structural unemployment
2. work injury insurance to compensate
workers for work-related injuries or diseases
3. disability and invalidity insurance, linked
to old-age pensions, to cover for full or
partial disability

Lecture 8 Public Expenses for Social Protection Slide 8

Social insurance programs include :
4. sickness and health insurance to protect
workers from diseases
5. maternity insurance to provide benefits to
mothers during pregnancy and recovery
4. old-age insurance to provide income
support after retirement
6. life and survivor insurance to ensure that
dependents are compensated for the loss of
the breadwinner (supporter)
Lecture 8 Public Expenses for Social Protection Slide 9
The main principles of Social Insurance
include:

• Generality of supporting of citizens by

social insurance. This principle provides
social insurance for all workers upon
retirement or due to physical inability, with
no exceptions and independently of sex, age,
nationality, character and place of work,
forms of its payment.
Lecture 8 Public Expenses for Social Protection Slide 10
• General availability, i.e. the conditions,
which define the right to the pension, are
accessible to all.

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• Universality – means the big variety of
kinds of social security by means of payment
of pensions and indemnifications,
employment, various actions for health
growing, the prevention and disease
decrease, prosthetics, leaving in boarding
schools for invalids and aged people etc.

Lecture 8 Public Expenses for Social Protection Slide 12

• Establishment of dependence of the sizes
of pensions and indemnifications on the
previous work: duration of the experience of
work, wages, working conditions and other
factors connected with labour and public
work.

Lecture 8 Public Expenses for Social Protection Slide 13

• Pensions and grants on social insurance
are not assessed with taxes and tax
collections.

Lecture 8 Public Expenses for Social Protection Slide 14

• Democratic character of the organization
and management of social insurance system.
The big role in it belongs to trade unions.

Lecture 8 Public Expenses for Social Protection Slide 15

• Optimum combination of interests of the
persons, labour collectives and society at use
of means of social insurance.

Lecture 8 Public Expenses for Social Protection Slide 16

 Social assistance and welfare services
provide protection to society's most
vulnerable groups, i.e., those with no other
means of support such as single parent
households, victims of natural disasters or
civil conflict, handicapped people, or the
destitute poor.

Lecture 8 Public Expenses for Social Protection Slide 17

Social assistance interventions may
include

1. welfare and social services to highly

vulnerable groups such as the physically or
mentally disabled, orphans;
2. cash or in-kind transfers such as food
stamps and family allowances
3. temporary subsidies such as life-line
tariffs, housing subsidies, or support of lower
prices of staple food in times of crisis
Lecture 8 Public Expenses for Social Protection Slide 18
 II.
Social insurance in the Republic of
Moldova represents the system of monetary
relations, which form and spend funds of
money resources for the financial support of
the insured old persons or persons who lost
capacity, supporter (breadwinner) or other
persons requiring the help

Lecture 8 Public Expenses for Social Protection Slide 19

 According to Law RМ № 489 – XIV from
July, 8th, 1999 «About the state system of
social insurance» the state system of
insurance is formed and operates on the basis
of following major principles:

Lecture 8 Public Expenses for Social Protection Slide 20

a) principle of uniformity, according to
which the state shall organize and guarantee
the public system of social insurance based
on uniform legal standards;

Lecture 8 Public Expenses for Social Protection Slide 21

b) principle of fairness, that shall ensure a
non-discriminatory treatment; in terms of
rights and obligations, provided for by law to
all participants of the public social insurance
system both contributors and beneficiaries;

Lecture 8 Public Expenses for Social Protection Slide 22

 c) principle of social solidarity, between
and inside generations, under which the
public system participants assume
consciously and reciprocally obligations, and
enjoy the right, which prevents, limits or
removes social risks, as provided by law;

Lecture 8 Public Expenses for Social Protection Slide 23

 d) principle of mandatory execution,
according to which individuals and legal
entities are committed under the law to
participate in public system;

Lecture 8 Public Expenses for Social Protection Slide 24

 e) principle of contribution, according to
which the social insurance funds shall be
created form the contributions payable by the
individuals and legal entities - participants to
the public system; the rights to social
benefits are offered based on paid
contributions to the social fund;

Lecture 8 Public Expenses for Social Protection Slide 25

 f) principle of distribution, based on which
the generated funds shall be redistributed for
mandatory payments the public system has
to make under the law;

Lecture 8 Public Expenses for Social Protection Slide 26

According to The LAW of Republic of Moldova
489/1999 about the state system of social insurance
no.489 from: 08.07.1999
The budget of the public system of social
insurance is a component part of public
finances and is independent of the national
(state) budget.
The budget of public social insurance system
includes the revenue side, the expenditure
side and financial results in the public system
of social insurance.
Lecture 8 Public Expenses for Social Protection Slide 27
Sources of incomes of the state budget of Social
Insurance for 2010:

I. Own incomes
1. Current incomes
1.1. Payments (fees) of obligatory state social insurance
a) The payments of obligatory state social insurance
transfered by employers

b)Individual payments of obligatory state social insurance

c)The individual payments of the state social insurance

listed by physical persons, concluded the individual
contract
d)The payments of obligatory state social insurance
Lecture 8 Public Expenses for Social Protection Slide 28
transfered by owners of the enterprise patent
1.2. Other incomes from the enterprinorial activity and the
property

a) Percent on the rests of money resources of the budget

of the state social insurance on current accounts in
banking institutions

2. Other incomes

Lecture 8 Public Expenses for Social Protection Slide 29

II. Transfers
a) Transfers from the state budget to the
budget of the state social insurance
b) Difference indemnification in tariffs of
obligatory state social insurance in
agricultural production sphere
c) Transfers from the state budget for a
covering of a budgeted deficit of the state
social insurance

Lecture 8 Public Expenses for Social Protection Slide 30

Sources of expenditures of the state budget of Social
Insurance for 2010:
A. Social insurance payments
1. Social insurance pensions
a) Pensions on age
b) Disability pensions
c) Pensions on the occasion of loss of the supporter
d) Long-service pensions
e) Pensions to deputies
f) Pensions to members of the Government
j) Pensions to public servants
h) Pensions to local elective persons
i) Pensions to employees of customs bodies
j) Pensions to public prosecutors and judges
k) The remaining sum after partial payment of pensions to the
pensioners leaving in institutes of guardianship
Lecture 8 Public Expenses for Social Protection Slide 31
2. Social insurance aids:

a) Single payment at a birth of a child, for the insured persons

b) The monthly aid on upbringing of the child before achievement of age of three
years, for the insured persons
c) Temporary disablement allowances in connection with industrial traumas or
occupational diseases
d) Temporary disablement allowances
e) Aid on motherhood
f) Disability pensions
j) Aids to burial owing to an industrial trauma or occupational disease
i) Aids to burial for the recipients of pensions of social insurance
f) Aids to burial for the employed
i) Aids to burial for the unemployed
j) The unemployment benefit and social payments to the unemployed

3. Other payments of social insurance

a) Expenses on improvement of the insured persons by means of sanatorium
treatment and rehabilitation
Lecture 8 Public Expenses for Social Protection Slide 32
4. Expenses for the organization and functioning
of the state system of social insurance
a) Expenses on delivery of pensions, aids and
indemnifications, including postal orders
b) Expenses on bank service
c) Expenses on development and conducting the
State register of the individual account in the state
system of social insurance
d) Charges of National Agency of social insurance

including capital expenses

Lecture 8 Public Expenses for Social Protection Slide 33
According to The LAW about the budget of
the state social insurance for 2010 N 129-XVIII
from 12/23/2009 list of programs included in the
budget of the state Social insurance for 2010 is the
following :

Lecture 8 Public Expenses for Social Protection Slide 34

The List of programs, Included in the budget of the state Social
insurance for 2010 (thousands MDL)
The program The program purpose Program Sources of Sources of
Costs financing financing
State Social State
Insurance Budget
Budget

Activity for Management of the 193296,8 180469,1 12827,7

supporting the budget of the state
system of social social insurance
protection
Protection in case Compensation of not 1614409,9 1425073,4 189336,5
of disease or received income due
temporary to temporary
disability disability, physical
inability, accidents
and motherhood
 The List of programs, Included in the budget of the state
Social insurance for 2010 (thousands MDL)
The program The program purpose Program Sources of Sources of
Costs financing financing
State Social State
Insurance Budget
Budget

Social protection Compensation of not 4843182,2 4710782,8 132399,4

due to old age received income due
approach to pension age
achievement

Protection in case Rendering of social 168544,6 165234,4 3310,2

of loss of the protection to
supporter successors in case of
loss of the supporter
 The List of programs, Included in the budget of the state
Social insurance for 2010 (thousands MDL)
The program The program purpose Program Sources of Sources of
Costs financing financing
State Social State
Insurance Budget
Budget

Family and child Financial support of 614369,9 452237,5 162132,4

protection families with children

Employment of Financial support of 46265,0 46265,0

the population the unemployed
and protection in
case of
unemployment
 The List of programs, Included in the budget of the state
Social insurance for 2010 (thousands MDL)
The program The program purpose Program Sources of Sources of
Costs financing financing
State Social State
Insurance Budget
Budget

Protection against Rendering of the 586396,7 586396,7

exception from social help by social
the society payments to the
persons who are in a
difficult situation

Additional support Financial support of 210912,4 10000,0 200912,4

to some categories the persons having
of citizens special merits before
the state
According to the law RМ № 489 – XIV from
July, 8th, 1999 «About the state system of
social insurance» management of the state
system of social insurance is carried out by
National Social Insurance Agency –
independent official body.

Lecture 8 Public Expenses for Social Protection Slide 39

Functions executed by the National Social
Insurance Agency:
a) guidance and monitoring of the implementation of legal
provisions by local agencies, branches, funds, individuals
and legal entities, which have rights and obligations
pursuant to this law;
b) providing data, necessary to formulate and substantiate
the budget of social insurance;
c) submitting reports about management of the social
insurance budget to the Government and social partners;
d) publication of annual reports of the National Social
Insurance Agencies;

Lecture 8 Public Expenses for Social Protection Slide 40

Functions executed by the National Social Insurance Agency:
e) transfer of social insurance contributions,
unemployment and other contributions, in
accordance with current legislation;
f) monitoring of the receipt of revenues of
the public social insurance budget, in
conformity with the current legislation;
g) taking measures, as established by the law,
to improve and administer the public system
efficiently, and maintain its integrity and
comprehensiveness;
Lecture 8 Public Expenses for Social Protection Slide 41
Functions executed by the National Social Insurance Agency:
h) taking measures for protection of the social
insurance funds;
i) accounting of all contributors to the public
system of social insurance at the national level;
j) keeping records of rights for social insurance
benefits and obligations at the national level,
based on the personal social insurance number ;
k) issue of annual certificate to each insured
person confirming the period during which
contributions have been made;
Lecture 8 Public Expenses for Social Protection Slide 42
Functions executed by the National Social Insurance Agency:
l) guidance and monitoring of activity of the
board of medical experts, which certify
recovery of capability to work;
m) providing data for updating benefits in the
public system of social insurance in the
course of execution of the social insurance
budget;
n) ensuring the implementation of
international conventions on social insurance,
to which Moldova is a part;
Lecture 8 Public Expenses for Social Protection Slide 43
Functions executied by the National Social Insurance Agency:
(o) developing relations with similar social
insurance organizations of other countries;
(p) selection, training and improvement of skills of
the personnel in the sector of public social
insurance;
(q) provision for introduction, , expansion,
maintenance and protection of computerized
accounting systems;
(s) representation in court in the cases it is
involved following the implementation of the
provisions of this law;
Lecture 8 Public Expenses for Social Protection Slide 44
III. The right for allowances of social insurance
is accomplished by the means of public system
of social insurances. The insured persons resident
in the Republic of Moldova and unemployed ones
entitled to receive the unemployment benefit have
to the right to allowances of social insurances. A
person has the right to allowances of social
insurances related to the social risks against which
he / she is insured.

Lecture 8 Public Expenses for Social Protection Slide 45

Insured persons from public system of social
insurance have the right to the following
allowances:
a) indemnity for temporary work disablement
caused by ordinary illnesses or by work-unrelated
accidents;
b) allowance for preventing the illnesses
(quarantine);
c) allowance for recovering the work capacity;
d) indemnity of maternity;
e) single indemnity at childbirth;
f) indemnity for child rising till the age of 3 years;
g) indemnity for maintenance of a sick child;
Lecture 8 Public Expenses for Social Protection Slide 46
h) aid in case of death.
Conditions for granting the allowances of social
insurances are the following:
1) Insured persons have the right to allowances of
social insurance if they have a total length of
insurance of at least 3 years.
2) Insured persons who have a total length of
insurance till 3 years benefit from the allowances
of social insurances if they have a total length of
insurance of at least 3 months, accomplished
during the last 12 months previous to the
occurrence of the insured risks.
Lecture 8 Public Expenses for Social Protection Slide 47
Conditions for granting the allowances of social
insurances:

3) Insured persons who activate the individual

work contract on unlimited period, including those
who work seasonally, benefit from allowances of
social insurance if they have the length of
insurance specified in items (1) or (2) or at least
12 months, accomplished in the last 24 months
previous to the occurrence of the insured risk.

Lecture 8 Public Expenses for Social Protection Slide 48

Conditions for granting the allowances of social
insurances

4) Unemployed people benefit from allowances of

social insurance with the condition that for this
period the payment of unemployment other
benefit or the scholarship are suspended.

Lecture 8 Public Expenses for Social Protection Slide 49

The insured persons constantly living in Republic
Moldova have the right to pension, also the
persons who at the date of pension age are not
insured persons, but correspond to the conditions
stipulated by the present law. This right is realized
according to the legislation through the public
system of insurance upon social risks in case of
disability (due to an pension age, invalidity) and
also in case of loss of the supporter.

Lecture 8 Public Expenses for Social Protection Slide 50

Categories of persons that are subject of
obligatory insurance that, according to the
requirements of the legislation, are defined in the
Law on the state system of social insurance.

Agriculturists also have the right to pension on the

conditions stipulated by the Moldovan Legislation.

Lecture 8 Public Expenses for Social Protection Slide 51

Pensions appointed according to the present
are paid from the pension fund.

Incomes of pension fund are formed of:

a) employers payments;
b) insured persons contributions;
c) contributions from other funds;
d) receipts from the state budget;
e) other incomes.
Lecture 8 Public Expenses for Social Protection Slide 52
The following types of pensions are paid by
the public system of the RM:
a) old-age pension;
b) disability pension;
c) survivor’s pension.

Lecture 8 Public Expenses for Social Protection Slide 53

IV. Social Assistance in the Republic
of Moldova is the component of the
national system of social protection.
Following this system the state and
society undertakes to prevent, to limit or
eliminate the effects of temporary or
permanent events which are regarded as
social risks.
Lecture 8 Public Expenses for Social Protection Slide 54
The social assistance (welfare ) is based on
the following principles:
a) recognizing the independence and
autonomy personality, respect human
dignity;
b) universality entitlement to welfare;
c) social solidarity ;

Lecture 8 Public Expenses for Social Protection Slide 55

The social assistance (welfare ) is based on
the following principles:
d) flexibility measures of social assistance,
bringing in accordance with their real needs
of the person or family in difficulty;
e) partnership as a means of making and
assessment of the measures of social
assistance;
f) personal responsibility of the recipient of
social assistance.
Lecture 8 Public Expenses for Social Protection Slide 56
From social assistance benefit individuals
and families who, (because of economical,
physical, psychological or social factors),
have no possibility to ensure the decent level
of life, i.e.:
a) children and young people whose health,
development and physical, mental or moral
integrity is damaged in the environment they
live;

Lecture 8 Public Expenses for Social Protection Slide 57

b) families who fail to fulfill the
appropriately obligations on care,
maintenance and educating children.
c) families without income or low income;
d) persons without family, which cannot
household themselves, which require care
and supervision or are unable to cover
medical needs;
e) children with disabilities until the age of
18 years;
f) families with children;
Lecture 8 Public Expenses for Social Protection Slide 58
i) disabled persons;
j) other categories of individuals and families
in difficulty.

Lecture 8 Public Expenses for Social Protection Slide 59

Social assistance is given in the form of:
(a) cash benefits (allowances, compensation,
benefits, etc.);
(b) social services.

Social assistance can be granted indirectly, in

the form of discounts to the procurement of
goods or current payment of services and
utilities.
Lecture 8 Public Expenses for Social Protection Slide 60
The categories of individuals and
families that need social assistance
are determined according to criteria
established by the Ministry of health
and social protection, in agreement
with the Ministry of Finance (LAW
of the Republic of Moldova № 547-XV
about social assistance )
Lecture 8 Public Expenses for Social Protection Slide 61
The sources of financing of Social
Assistance are the following:
a) the state budget
b) the budgets of administrative territorial
units
c) the Republican and local funds of
supporting the population
d) donations
e) sponsorships
f) contributions from recipients of social
assistance.
Lecture 8 Public Expenses for Social Protection Slide 62
Types of social assistance benefits are regulated
by the LAW of Republic of Moldova Nr. 133
from 6/13/2008 about the social benefits

Lecture 8 Public Expenses for Social Protection Slide 63

 Size of the minimum monthly income on each member of
a family stipulated as follows:
a) 100 percent of the minimum guaranteed monthly
income for the applicant;
b) 70 percent of the minimum guaranteed monthly
income for each following adult member of a family;
c) 50 percent of the minimum guaranteed monthly
income for each child;

Lecture 8 Public Expenses for Social Protection Slide 64

Size of the minimum monthly income on each member of a family
is:
d) in addition 30 percent of the minimum guaranteed monthly
income for each adult member of a family having group of physical
inability;
e) in addition 50 percent of the minimum guaranteed monthly
income for each child-invalid;
f) in addition 10 percent of the minimum guaranteed monthly
income if the unique adult member of a family is the invalid.

Level of the minimum guaranteed monthly income is established

annually in the Law on the state budget.

Lecture 8 Public Expenses for Social Protection Slide 65