Establishment


The NSSF was established within the framework of administrative and social reforms implemented by President Fouad Chehab under Decree No. 13955 dated September 26, 1963.

The NSSF is an independent organization on the financial and administrative levels, but functions under the jurisdiction of the Minister of Labor and is subject to surveillance by the Accounting Bureau.

The NSSF includes the following plans:

• Sickness and Maternity insurance plan (put into operation on May 1, 1965).

• Family allowance plan (put into operation on November 1, 1965).

• End of service indemnities plan (put into operation on February 1, 1971).

• Work or professionally-related accidents and diseases plan (not implemented yet)

Coverage


As of June 1, 2002, the number of subscribers under the Sickness and Maternity Plan reached 433,594 subscribers and 1.2 million beneficiaries. The subscriber base is distributed as follows:

• Private sector: 343,547 employees

• Public sector: 16,868 employees

• Drivers: 43,953

• University students: 25,202

• Mayors: 1,061

• Doctors: 2,920

• Newspaper vendors: 43

Compared to the figures of the year 2000, there has been an increase of 14,629 subscribers (equivalent to 3.5%). Such an increase over a period of 18 months is considered minimal since the government has recently lowered subscription fees paid by employers from 38.5% to 23.5% (See Graph 1 for subscriber base and subscriptions from 1997-2001). This is perhaps a reflection of economic conditions, as well as a reluctance on the part of employers to enroll their staff in the plan.

Subscription Fees


Subscription fees are paid by employees and employers (one of which is the government), with the state covering public transport workers. The Sickness and Maternity Plan contributes to 25.5% of the NSSF’s revenues. However, subscription fees are varied, as follows:

• Employees
Fees constitute 23.5% of income (with a maximum of LL 1.5 million) that is divided between the Sickness and Maternity Plan at 9% (2% at the employer’s expense), the Family and Education Allowance at 6%, and 8.5% for the End-of-Service Indemnities.

This fee (23.5%) has been lowered from 38.5% based on Decrees No. 5101 and 5102 that have significantly affected the NSSF’s revenues.

• University Students
Subscription is equal to 30% of the minimum wage (currently LL 300,000) for each student and beneficiary, but students only benefit from the Sickness and Maternity Plan.

• Mayors
Decree No. 225 of May 29, 2000 included mayors in the Sickness and Maternity Plan. The subscription fee was set at 9% of their income (LL 600,000) with 20% at the mayors’ expense and the remaining burden shouldered by the government.

• Drivers
For each of the plans, Decree No. 3683 of July 1993 specified the following subscription fees:
- End-of-Service Indemnity subscription is equal to 8.5% of double the existing minimum wage.
- Subscription to Family and Education Allowance is at 6%.
- The Sickness and Maternity plan rate is 9%.

However, after the termination of the Fuel Support Fund in 1989, Law No. 1/89 altered the fees to 5.5% of the minimum wage for both the Family Allowance Plan and the Sickness and Maternity Plan, while the End-of-Service Indemnity Plan was set at 8.5% of the minimum wage with the government being responsible for settling the difference. In addition, a driver that owns his vehicle pays a combined monthly sum of LL 33,000 for the Sickness and Maternity Plan and the End-of-Service Indemnity plan, while the government assumes a total of LL 75,000.

• Doctors
Decree No. 4822, dated February 2, 2001 included doctors in the Sickness and Maternity Plan, effective September 1, 2001. The subscription fee was set at 10% of income which was estimated to be double the minimum wage.

The NSSF’s revenues and expenses


In the year 2001, revenues totalled LL 1,048.5 billion ($695.4 million), with LL 735 billion ($487.7 million) generated from subscription fees and LL 313.5 billion ($208 million) from interest (See Table 1). Expenses reached LL 828 billion ($549 million), distributed among the different plans, as illustrated in Table 2.

The NSSF’s administrative expenses for 2001 reached LL 86 billion ($57 million), out of which LL 82.5 billion ($54.7 million) was paid out in wages and allowances. This figure constitutes 10.4% of total expenses and 8.2% of revenues (both subscriptions and interest revenues).

Assessment


If interest revenues are disregarded, the three plans generate LL 93 billion ($61.7 million), mostly from the End-of-Service Indemnity Plan.

A closer look at NSSF revenues and expenses reveals losses originating from the Sickness and Maternity Plan in the amount of LL 138.5 billion ($91.9 million), while the Family Allowance Plan suffers a loss of LL 25.2 billion ($16.7 million). The End of Service Indemnity Plan, however, produces a surplus of LL 70.7 billion ($46.9 million).

Problems at the NSSF


The NSSF suffers from a variety of administrative and financial difficulties, namely the following:

• The government’s failure to pay its outstanding balance, totalling LL 748 billion ($496 million) in 2002 and LL 130 billion ($86 million) in 2003, a sum that was not included in the 2003 budget.

• Unsettled accounts estimated at LL 1,500 billion ($995 million), to be paid by private sector employers.

• A decrease in subscription fees that took effect in April 2001 and have resulted in a deficit in the Sickness and Maternity account. This problem is expected to spread to the Family Allowance account in subsequent years.

• The inclusion of a new subscriber category (mayors and doctors) and a new coverage plan (dental) before ensuring sufficient funds to cover the services.

• Delay in settling accounts of previous budgets, which led to a considerable disparity in figures.

• The NSSF has invested a substantial sum, estimated at LL 2,700 billion ($1.8 billion) mainly in the End-of-Service Indemnity Plan. The majority (93%) of such investments have been made in Lebanese treasury bills as the NSSF is forbidden from investing elsewhere. This state of affairs is very risky vis-a-vis employee savings, in the worst case scenario of a devaluation or depreciation in the Lebanese currency.

Under all these circumstances, there are those who advocate privatization as the most effective and promising solution in contending with the problems faced by the NSSF, without taking into account the social impact that may come to pass.

However, others argue that the NSSF is the last social safety net, which should be well protected, and call attention to the government and the private sector to pay their dues. In addition, they note that measures should be taken to improve the administration of the NSSF and to protect against the loss of money invested through treasuries.