Chapter 6: Providers of benefits Flashcards

1
Q

4 Main providers of benefits

A
  • The State
  • Employers or groups of employers
  • Individuals
  • Financial Institutions or other corporations
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2
Q

4 Key roles of the state in relation to benefit provision

A
  • Direct PROVISION and financing of benefits.
  • EDUCATION of the importance of providing for the future
  • regulation to ENCOURAGE or compel benefit provision
  • REGULATION OF PROVIDERS of benefits to protect the consumer
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3
Q

What benefits might the state provide directly?

A
  • retirement
  • ill health
  • death
  • unemployment
    benefits

The state also provide financial instruments such as

  • national debt securities
  • national savings plans
  • state bank accounts
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4
Q

Role of employers in benefit provision

A
  • provide benefit schemes
  • finance benefits
  • educate, encourage or compel employees to make benefit provision
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5
Q

Why do employers finance benefit provision for employees?

A
  • compulsion or encouragement from the state
  • desire to look after employees
  • to attract and retain good quality employees
  • to pool expenses and expertise
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6
Q

Main advantage of Multi-employer schemes

A

Cost efficiency

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7
Q

Main difficulties of Multi-employer schemes

A

Allocating the liabilities between employers

Fund segregation is important.

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8
Q

How do individuals play a role in benefit provision?

A

Finance benefits through a

  • state scheme,
  • employer scheme,
  • insurance company,
  • other financial organisation.
  • may use individual savings
  • or domestic property
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9
Q

4 Vehicles through which individuals may group together and pool their finances

A
  • trade unions
  • employee associations
  • religious organisations
  • continuous care retirement communities
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10
Q

How can domestic property be used to provide benefits?

A

By releasing equity on the property or through inheritance.

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11
Q

What role do financial institutions play in the provision of benefits?

A
  • They provide benefit schemes and insurance products

- They may also educate consumers on the importance of making benefit provision.

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12
Q

State

A
  • Direct benefit provision, eg basic state pension
  • Encourage/ compel private sector provision
  • Regulate to ensure benefit security
  • Educate gen public and employers about benefits
  • Collect sufficient taxes from individuals and employers to meet the cost of benefit provision
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13
Q

Employers

A
  • Provide group benefit schemes covering benefits such as retirement/ death-in-service
  • Enable cheaper benefit provision for employees through economies of scale and provision of expertise
  • Facilitate employees being able to make appropriate provision – eg by offering flexible benefit schemes
  • May be able to compel some elements of ben provision
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14
Q

Individual

A
  • Ensure total provision (incl that from state and employer) gives an adequate standard of living
  • Provide for dependents
  • Purchase products to meet any outstanding needs (eg personal pension to top up existing pension provision
  • Choose benefits provided by employer (where there is a choice) that best meet their individual needs
  • Take part in group schemes
  • May set up own provision, possibly using financial intermediary given likely lack of expertise
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