1. MISSOC Analysis 2013/1 - Overview of means testing in MISSOC countries
MISSOC NETWORK MEETING Dublin, 15 & 16 May 2013
MISSOC Analysis 2013/1 - Overview of means testing in MISSOC countries
Prof. Jean-Philippe Lhernould
Academic expert

2. Test of means plays a minor part in European social protection
BACKGROUND
Test of means plays a minor part in European social protection
11.2% of total social protection expenditure
Part of means-tested benefits varies widely among MISSOC countries
Proportion of means-tested benefits slightly increased in 10 years

3. Not an international law concept
BACKGROUND
Not an international law concept
Neither ILO conventions, nor Council of Europe, nor EU refer to the expression “means test”, “means testing” or ”means-tested benefits”
Tight links with social assistance
European Convention on Social and Medical Assistance
Complex interactions with
Insurance and universal models
Non-contributory benefits

4. Benefit amount is inversely dependent upon beneficiary’s resources
DEFINITION
Entitlement is made conditional upon the beneficiary’s income/resources falling below a specified level
Benefit amount is inversely dependent upon beneficiary’s resources

5. WHAT IS MEANS TESTING USED FOR?
Means test: a technique to fight poverty and address basic needs
Impact on ceiling, benefit amount/calculation
Absolute / relative poverty
Not having a standard of living acceptable in the society where they live
MISSOC countries usually have an « official administrative poverty line »
Food, housing, access to energy, cultural goods, reading materials, means of transportation, communication tools…

6. WHAT IS MEANS TESTING USED FOR?
Earning replacement benefits
Granted to
persons with insufficient periods of contributions,
persons whose entitlements have expired,
persons who have not yet entered job market…
Inability to make decent income
temporary/permanent
Beneficiary at work or not
Additional costs compensation
Family, LTC, job research

7. WHY IS MEANS TESTING CHALLENGED?
Efficient?
Poverty/inactivity trap
Worsen state of poverty?
Better redistribution of resources?
Non-take up ratio
Administrative costs
Risks of fraud
Stigmatising effect?
Against self-support principle?
Undermine « social contract »?
Better alternative policies?
Social insurance / universal schemes, tax policies

8. METHODOLOGY & STRUCTURE OF REPORT
Focus on risks most susceptible to means testing
GMR (general social assistance), unemployment, sickness in kind, LTC, family, invalidity & old age
Comparative analyse 2004/2012
Resources: MISSOC data
MISSOC countries classified into groups inspired by Esping-Andersen’s welfare state classification
Overview table per risk/country (in annex)

9. MEANS TAKEN INTO CONSIDERATION FOR THE TEST

10. MEANS TAKEN INTO CONSIDERATION FOR THE TEST
Work income and other income
All countries include job earnings
In full or partly
Other income sources
Property income, cash and savings, interests
Social security benefits
Most countries remove some benefits from overall resources
Family, unemployment, disability allowance

11. MEANS TAKEN INTO CONSIDERATION FOR THE TEST
Other assets
Dwellings and estate properties
In full or partly (depending on value, size, habitual place of living/secondary home …)
Movable assets
Usually counted, but exceptions apply (basic needs, work tools, threshold, percentage…)
Scope of means in relation to risk
Hard to draw conclusions

12. MEANS TAKEN INTO CONSIDERATION FOR THE TEST
Household approach
Dominant model
Better targetting of poor families, but harder to assess
« family members »? Pragmatic view: spouse (same sex?), partner, children, dependent persons…
Variation per risk / per « country model »?
Individual approach
More focused on the beneficiary’s needs

13. MEANS TAKEN INTO CONSIDERATION FOR THE TEST
Exhaustion of other rights
Means-tested benefits usually granted only if other rights exhausted: « safety net »
Scope of claims to be exhausted is flexible
Other social benefits
Pension rights
Civil law rights, like maintenance claims

14. MEANS TAKEN INTO CONSIDERATION FOR THE TEST
Scope of means depends on
Goals
Absolute/relative poverty
Other objectives
E.g. family policy, return to work policy
Coordination with other means-tested benefits
Avoid unfair overlapping
Administrative burden
Exclusion of « hard-to-assess » means, flat-rate assessment

15. TRENDS BEYOND DIVERSITY

16. TRENDS BEYOND DIVERSITY: ANALYSIS PER RISK
GMR: usual
Unemployment: rare
LTC: depends on structure of scheme
Family: minority of countries
One among many benefits
Old age / invalidity
Separate means-tested benefits
GMR with elderly people specific rules
Sickness
Copayment/remainder based on income, access to supplementary coverage

17. TRENDS BEYOND DIVERSITY: ANALYSIS PER RISK
Evolution 2004/2012
Slight increase
Sickness in cash / family benefits
Variable changes
Some countries have tightened access to means-tested benefits
Some countries have made access easier

18. TRENDS BEYOND DIVERSITY: ANALYSIS PER COUNTRY
UK/IE
Frequent users
Southern countries
Frequent users, for family & LTC
CEEC
Depends on risk (GMR, family)
Western European countries
Depends on risk (rejected for family)
Nordic countries
Reluctancy, except for « basic pension »

19. Threshold impact on benefits

20. THRESHOLD IMPACT ON BENEFITS
Cliff edge effect
Claimants with resources above a level are not eligible for support whereas those with resources under receive the « full package »
Not very popular
Except for family benefits

21. THRESHOLD IMPACT ON BENEFITS
Gradual decrease of benefit
Differential benefits
« Taper method »
Rate at which benefit is reduced to take accounf of extra income
Resources brackets
Highest income may receive a low benefit or no benefit

22. Means-testing not widely used by MISSOC countries
CONCLUSIONS
Means-testing not widely used by MISSOC countries
Perverse effects: effectiveness, administrative complexity, frauds/errors
Alternative solutions: insurance/universal schemes, tax policies
When used, impression of diversity
Per risk, per (or even inside) country
Reasons: economic/political history, social security background, weight of alternative policies, economic development, political context

23. Common trends « Income-tested » benefits
CONCLUSION
Common trends
« Income-tested » benefits
Participate in « relative poverty » fight
Mainly present in social assistance
In social security, family and sickness in kind benefits are most concerned
No striking evolution between , but
Many reforms involving means testing
Scope of resources
Thresholds