Misleading definitions of “universal” abound, such as “the same rules apply to everyone: if there are no contributions there are no benefits”. I have complained about this before, so am pleased to report that the US Social Security Administration provides a clear definition in the latest edition of their frequently-consulted publication “Social Security Programs Throughout the World”.
Universal programs provide flat-rate cash benefits to residents or citizens, without consideration of income, employment, or means. Typically financed from general revenues, these benefits may apply to all persons with sufficient residency. Universal programs may include old-age pensions for persons over a certain age; pensions for workers with disabilities, widow(er)s, and orphans; and family allowances. Most social security systems incorporating a universal program also have a second-tier earnings-related program. Some universal programs, although receiving substantial support from income taxes, are also financed in part by contributions from workers and employers.
US Social Security Administration, “Guide to Reading the Country Summaries“, Social Security Programs Throughout the World: Europe, 2012.
“Contributions from workers and employers” are payroll taxes. The ‘contributions’ are never voluntary.
I hope (and expect) to see the SSA apply this definition in updates of each country summary. In the past, the SSA has paid little attention to non-contributory pensions in general, and universal pensions in particular.
SSA surveys are published in four volumes, at six-month intervals over a two-year period. All are freely available online. The first volume of the 2012-13 cycle reports on countries of Europe. Future volumes will report, in turn, on countries of Asia and the Pacific, Africa, and the Americas.
