The institution implements the key processes of collecting contributions and transferring corresponding amounts to the fund or social programme administration.
These processes play a fundamental role in the sustainability of the social programmes because they enable the transfer of the financial resources they are intended to receive.
Where these collection functions are carried out by banks or other financial institutions, it is especially important that the social security institution is able to monitor the collection and transfer of contributions to ensure that the processes meet the standards set by the social security system.
Guideline code
CCC_01300
Mechanism
Mechanism
- To improve effectiveness and efficiency, the collection of contributions could be done in partnership with employers, who would retain contributions from individual salaries and pay a lump sum to the contribution collection system. Employers would also be responsible for collecting and sending information to the contribution collection system.
- Contribution payment could be done through partnership with banks and financial institutions. Mechanisms must be in place to assure a steady flow of contribution revenues so that benefits are paid on time and investment of assets can be properly managed.
- After receiving payment, institutions collecting contributions should notify administrators of funds and social programmes of the contributions and transfer the corresponding amounts (ideally, as soon as the contributions are deposited), to maximize investment potential.
- The management and the board should establish a unit to inspect employers’ compliance with the determination, billing (see Guideline 9) and collection processes.
Parent
Structure
Structure
- The management should design and implement the processes of contribution collection and transfer to the fund administration(s), and establish internal duties and responsibilities for this.
- The management should clearly define the roles and responsibilities of the institutions involved, especially if contribution collection is carried out by institutions other than the fund administration(s).
- The management should clearly define the roles and responsibilities of employers in these processes, especially when they involve contribution retention on behalf of employees.
- The management should develop partnership agreements with other institutions such as banks and financial institutions if they participate in the contribution collection system, taking into account regulations on data privacy.
- Cash flow requirements, especially of fund administrators, have to be taken into account when defining collection frequency.
- The management should make arrangements to communicate periodically with contributors to provide information on their contribution records.
Title HTML
Guideline 10. Collecting contributions and transferring them to the fund administration
Type
Guideline_1
Weight
18