Friday, October 23, 2009

Social Security

For many families, children and elderly social security is a savior when difficult times come to their life. Every country develops a social security system that fits its economy and demography. Social security as your property is a pension to have at old age, care to have in case of loss of a job or a physical capacity to work, and a payment in case of illness. You create these funds over many years while working hard. You accumulate and save it in a public fund and take it back when the time comes.

It is the largest public pool of funds that is collected in every country through law enforcement from every citizen while they are young, healthy and working. The government uses it for public needs for a while and gives it back to its citizens. The Mongolian government takes it from citizens also by force to use this fund. It takes 10 percent of your salary directly from you and another 10 percent – from your employer. In other words, 20 percent of your revenue, which would have otherwise been brought to your home, remains with the state. This amount reached 29 percent last year. Out of this sum, as we are told, 1 percent goes to social care, 4 percent to medical care, 1 percent to unemployment insurance and the remaining 14 percent - to your pension fund. You pay this amount every month for 40 years. Fines will be charged if this social security fee is not paid on time. You may even go to prison. Apparently, there is no problem on the side of collecting.

But there are many problems on the side of giving back. First, nobody knows exactly how much the government has collected from you, or where that money actually is, or how this fund is used. Small group of few people who come to power on behalf of their political parties run these funds on your behalf. How and with what return? That remains a secret. When giving back, nobody accounts for the multiple price increases of the past 40 years. It would be a completely different matter if this money were in your personal bank account.

Our leaders who do not bother to even report on what they did with our funds recently have started to talk about increasing the fee for another few percent. Only robbers talk about taking more without telling what they did with the previous collection. In a civilized country, all operations of elected public officials, including the collection and distribution of public funds, are transparent and clear. The citizens of those countries periodically receive reports on their pension funds which they will use at a senior age. They can live and work with peace of mind because their social security serves as a guarantee in their hard times.

In Chile, for example, this fund is divided into certain categories and invested in government bonds and some stocks in order to increase the value. In Singapore, there is even a medical saving account for every citizen along with the pension account. Since not everyone gets sick at the same time, this fund is used for upgrading the health sector facilities. As a result, they created hospitals of a world standard and treat not only Singaporeans but also foreign patients. Singapore’s citizens do not need to go abroad for medical treatment. Mongolians, however, do go abroad for just a reliable and truthful diagnosis for their treatment, spending their entire life’s savings and even getting additional bank loan. In Singapore, people may also use their fund once for purchasing real estate (housing). This is very profitable for those who are healthy and need only a few medical analyses from time to time.

A few years ago, the Mongolian government has announced that it created a personal pension account for every citizen born after 1960. But the people do not know how much they have in their account. It is doubtful that there even is any money at all.

The accumulated social security funds can be used for house mortgages and other purposes of social and economic development. By this time, the government of Mongolia is supposed to know all these advantages. Social Security is a fund created by people while they have jobs, accumulated in mutual funds and used for financing social development projects. For us, ordinary citizens, it is also a tool used in case of problems or at a senior age, the values of which at the time of taking back should have not reduced but increased.


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