Private Supplementary Social Welfare

Supplementary Social Welfare corresponds to the third level of protection

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Supplementary Social Welfare corresponds to the third level of protection. It is free and consists mainly of private Social Welfare entities and Pension Funds; its cover is voluntary and it is free to contract. This type of insurance consists basically of welfare and economic benefits.

These can be of an individual or company nature.

Determining factors

Supplementary welfare allows for a long-term and progressive increase in private savings, especially those destined for retirement.

This has led to the appearance of numerous products offered by entities specializing in social welfare and savings.

The emergence of welfare services is due to several factors, such as:

Demographic factors

The aging of the population and the decline in the birth rate have meant that fewer and fewer people are making contributions to state social security systems, but more are receiving benefits for a greater number of years. This aging of the world population is something that has been apparent for decades: the number of people over 60 years of age worldwide has doubled since 1980, and is expected to reach 2 billion by 2050.

This is a very positive development, as the elderly make important contributions to society. However, these advantages are accompanied by special health challenges, and it is important to provide services that are appropriate to the new needs.

Social factors

In recent years, there have been important  social behavior changes that have favored the emergence of special benefits. In addition, society’s needs have led to the emergence of cover, such as for assistance or disability, which is provided through benefits other than public ones.

In the labor market, the increased participation of women has generated the need to implement new social protection measures in those systems in which there are no state benefits to protect against certain contingencies (for example, maternity benefits and risk during pregnancy), and the same has occurred as a result of the increase in the number of unemployed.

Economic factors

The state pension system is funded by workers’ contributions; this money is used to pay the pensions of retired people, as well as other benefits. The problem is that people are entering the labor market later and later, and there has been a sharp increase in early retirement across the world in recent years.

Economists are therefore in favor of a supplementary pension system and other similar products designed to guarantee the welfare of society and in which both individuals and companies participate.