How does the French social security fund work?

Social security fund is related to the stability of a country. France is the country with the most perfect social welfare in the world, and its social security fund operation procedures are complicated. However, a good mutual supervision mechanism has been formed, making it more difficult for individuals or institutions to misappropriate and occupy social security funds, and ordinary people will not take risks.

Layers of supervision and protection law has a set of "from cradle to grave"

The huge social security system and various social subsidies can be described as "all-encompassing". This series of social security systems has played a great role in narrowing the gap between the rich and the poor, alleviating social contradictions, promoting social harmony and justice, and maintaining social stability.

In addition to the perfect legal system, the internal control mechanism of the French social security fund management department is also a key factor to promote the good operation of the social security fund. Although the foundation has great independence, there is also a relatively perfect supervision system within the foundation. Even the top leaders cannot operate the social security fund independently without any supervision.

Capital operation "pay as you go"

The establishment of French social security fund has the dual characteristics of "decentralized management" and "government support". It takes the industry as the unit and takes insurance as the principle, and implements a relatively independent decentralized management model for insurance plans of various industries. In the case of insufficient industry insurance funds, the state has the responsibility to give financial support.

Bruno Palir, an expert on social security system in France and Europe, said that the main body of the social security fund in France is "social contribution", which is based on the wage income standard and paid by both employers and employees, and the total amount paid is almost equal to the salary level of employees. Generally speaking, the higher the wage level, the higher the contribution rate.

The operation mode of the fund is "pay as you go". When the income exceeds the income, it should be subsidized by the state tax (mainly a part of automobile tax and tobacco tax), state and local finance and other regular income. Therefore, a national system based on social contribution has been formed.

France's social security fund is operated by the public welfare department, namely the foundation, with two revenue and expenditure institutions and two revenue and expenditure management. Among them, the "Social Insurance and Family Subsidy Collection Association" is responsible for the collection, but the specific business is completed by the local collection alliance. There are more than 100 fund collection alliances in France. These alliances are private institutions and charge fees under the guidance of the National Federation, which is also their only function. Local tax collection unions collect insurance premiums and financial allocations on a monthly basis, and remit them to the special account of the National Social Security Central Fund Administration in time.

The expenditure of the French social security fund is coordinated by the National Social Security Central Fund Administration. The National Social Security Fund Administration allocates funds to the special accounts of the National Endowment Insurance Foundation, the National Medical Insurance Foundation and the National Family Subsidy Foundation through different channels according to the needs reported by various localities. Then the grassroots foundation will directly remit the premium paid to the bank account of each insured person, which can basically be paid in place on time. Each foundation adopts the form of board management, that is, the insurance trade union and the Committee jointly form a board of directors to jointly manage the foundation.

Usually, foundations have great independence, but the state also plays a certain role in them, mainly in two aspects: first, the parliament makes major decisions, such as reviewing the annual budget, approving the adjustment of rates, and establishing new supplementary foundations; Second, the government decides various rates and subsidies, and supervises the management of social insurance funds.

Most people don't take risks. Palir said that the separation of income and expenditure and dual management of social security funds, coupled with the supervision mechanism composed of external supervision such as legislation, administration, finance and auditing, make the operation procedure more complicated. However, a good mutual supervision mechanism has been formed, making it more difficult for individuals or institutions to misappropriate and occupy social security funds, and ordinary people will not take risks.

Palir said that France has not formulated special laws to supervise the operation of social security funds, because the existing legal system has clearly defined the rights, obligations and responsibilities of relevant social security fund operators. According to these laws, all social security funds must operate transparently and openly. Few people in France dare to misappropriate social security funds. A special institution (social affairs monitoring institute) is responsible for supervising and managing the social security fund, and government agencies can also send people to supervise and inspect the implementation of the fund at any time. If something similar happens, it will soon be exposed and become a scandal. The perpetrators will not only suffer huge losses in reputation, but also be fined and even imprisoned.

Social security funds have nothing to do with investment. On the investment of social security funds, Palir said that French institutions in charge of fund operation are all non-profit public welfare organizations. Moreover, the social security fund in France operates in a "pay-as-you-go" mode, so it does not involve capital investment, and there will be no investment risks and corruption problems.

Palir added that a good supervision and management system ensures the normal operation of the French social security fund. However, the persistently depressed economy and high unemployment rate have brought about a huge financing crisis of social security funds, forming a vicious circle of "spending money to buy food". Every year, the government responsible for the bottom has to spend huge sums of money to fill the gap in the social security fund. To this end, the French government has been looking for reform strategies for a long time. However, due to the complexity of its system, all parties have been very cautious on this issue in order not to offend the people, so the results are not obvious.

Netease statement: The content of this edition is purely the author's personal opinion, which is for investors' reference only and does not constitute investment advice. Investors operate accordingly at their own risk.