Th is appendix describes the various organizational
structures used to provide social protection and the as-
sociated government fi nance statistics compiled for the
general government or public sectors.

Introduction.

A2.1 Social protection is the systematic inter-
vention intended to relieve households and individ-
uals of the burden of a defi ned set of social risks.^1
Social risks are defi ned as events or circumstances
that may adversely aff ect the welfare of house-
holds either by imposing additional demands on
their resources or by reducing their income. Needs
may occur due to sickness, unemployment, retire-
ment, housing, education, or family circumstances.
Many governments devote considerable economic
resources to protect citizens and their employees
against these risks.

A2.2 Th is appendix describes the nature of social
protection, the boundary between social protection
and private insurance, and the criteria used in the
classifi cation of social protection arrangements. A
typology of social protection arrangements is pre-
sented. Th e typology has the purpose of identifying
the type and sector attribution of social protection
arrangements, in order to assist the compiler in the
recording of fl ow and stock positions. Examples of
the recording of specifi c fl ows related to various types
of social protection arrangements are presented in
tabular form.^2

1 Th e Classifi cation of Functions of Government (COFOG) (see
Annex to Chapter 6) has a category labeled social protection, but
its scope diff ers from social protection described here, notably by
excluding health care.

(^2) A discussion of the issues involved in the organization and treat-
ment of social protection schemes can also be found in the Euro-
pean Commission, European System of Integrated Social Protection
Statistics (ESSPROS) Manual 2008 (Luxembourg, 2008).

Th e Nature of Social Protection.

A2.3 Households benefi t from social protection in

diff erent ways:

• Households could receive benefi ts when they
  meet certain eligibility criteria that originated
  from a social risk without making any contribu-
  tions. Th ese benefi ts are classifi ed as an expense
  that leads to a redistribution of income through
  transfers.


• Households could make contributions and re-
  ceive benefi ts as transfers receivable in the event
  of the occurrence of the specifi ed social risks.
  Neither the contributions nor the benefi ts con-
  stitute an exchange as no direct exchange of eco-
  nomic value occurs. Th e payment of the social
  contribution entitles the contributor to some
  contingent future benefi ts. Th e fi nances of these
  arrangements function similarly to nonlife in-
  surance schemes (see paragraph A4.70). Such
  social protection arrangements are essentially a
  process of redistribution across a wide section
  of the population, with many individuals con-
  tributing resources so that those in need may
  benefi t.^3 Th ese social benefi ts are classifi ed as an
  expense.


• Households (including employees, self-employed,
  and unemployed) could make contributions (ac-
  tual and imputed) to a scheme to accumulate
  assets. Th ey can withdraw from these accumu-
  lated assets in the event of the occurrence of the
  specifi ed social risk. Examples are employment-
  related pensions and other retirement benefi ts,
  compulsory saving schemes, and other types of
  annuities. Th e fi nances of these arrangements
  function similarly to life insurance schemes (see
  paragraph A4.69). Th ere is relatively little redis-
  tribution among the various households holding

(^3) As described in paragraph 6.97, the category social benefi ts
[GFS] diff ers from social benefi ts as defi ned in the 2008 SNA.

Social Protection

2

APPENDIX