Social security and pensions

Inserting a coin into a piggy bank

Social Security system (SS), pensions, healthcare and medical service in Andorra.

All employees and members of their families have the right for medical service in Andorra within the bounds of state system of social security (, CaixaAndorrana de Seguretat Social) that is financed by the fees of employers and employees, in proportion to the wages. 75% of medical service cost is covered by the insurance in case of out-patient treatment (the expenses for medicines and for the visits of doctors), 90% in case of hospitalization and 100% in case of accidents at work. The rest of expenses may be covered by the private insurance policy. Other citizens (passive residents, in particular, and tourists) need a private medical insurance. The cost of 1-year-long medical insurance makes up 700 euro.

The system of social insurance was launched in Andorra in 1968 and is regulated, as it was mentioned above, by CaixaAndorrana de Seguretat Social (CASS).  On October, 10 2008 General Council endorsed the Law  17/2008 about Social security that came into force on November,11 2009. One of the key alterations of new legislation is related to the fact that CASS maintenance will be obligatory not only for employees and retirees, but also for small entrepreneurs. New system also presupposes significant improvements of social bonuses and settles new bounds of social security contributions. For employees such contributions will vary from 5.5% up to 10.5% of their wages, the rest (14.5%) will be paid by the employer. The amount of contributions for entrepreneurs will make from 20% to 25% of the average monthly wages of budget sphere employees that contribute in CASS within the ongoing year.

The Law 25/2011 from December, 29 2011, amplifying the Law 17/2008 from October, 3 About Social Security, is aimed  at the improvement  of social security system and healthcare services for problematic groups as well as for rationalizing of expense objects.

The Law 34/2008 from December 18, 2008 that regulates healthcare and security at working places, contains major protection principles, settled in many other European countries. The goal of this law is to avoid risks at work  and to protect health and security of employees by means of complete elimination or diminishing of risk factors, by the information quality improvement,  by consultations and trainings for employees, and also by teaching them the major principles and measures of working place security level improvement.

The goal of the Law About Labor Relations Regulations from December, 18 2008 is to accumulate into one text all the clauses of the Law 8/2003 from June, 12 2003 (that regulates labor contracts), and also new issues: regulation of collective representation rights and delegation of employees with  the powers to call meetings and discuss collectively working issues. This law came into force on March, 18 2009.

The Prescript about Social Payment Regulations from February,16 2011 cuts down on the period of carrying the status of resident for getting social payments with the purpose of major expenses coverage and increases the level of legal  security , settled  in line with  the Prescript about Social Payments  from June,23 2010. These bonuses are paid to the employees that were fired contrary to their free will, participate in professional trainings and accept all job offers (that correspond to the professional skills and the level of qualification).

The major hospital Nostra Senyora de Meritxell is located at  Escaldes-Engordany, Av. Fiter I Rosssell, 1-13. There are 12 centers of first medical aid in the country.

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Pension scheme. Pension calculator.

Age-based retiring pension. Necessary requirements.

– Attain the age of 65.

– Deposit a sum not less than 180 monthly payments to a Pension fund.

How is the sum of age-based (65 years) retiring pension calculated?

The following factors must be considered:

– The point selling price (SP): It is the price of purchased pension points which is regulated by the Law on the Budget.

– The point purchasing price: This sum is fixed according with the Law on the Budget annually. Any increase of the purchasing price means an increase of deposit size for the replacement rate maintenance or increase.

Pension points of a person, who was insured before 1/3/2015, are calculated as follows:
Pension points PP (fv) = points that were purchased before 1st of March, 2015 / (12 * amount of monthly deposits before 1st of March, 2015 (MD (fv))

Pension points of a person, who was insured after 1/3/2015, are calculated as follows:

Pension points PP (fv-fj) = points that were purchased after 1st of March, 2015 / (12* amount of monthly deposits after 1st of March, 2015 (MD (fv-fj))

Pension points (PP1, PP2 i PP3)

PP1 = 200% of minimum-wage / (480 * SP)

PP2= 250% of minimum-wage / (480 * SP)

PP3 = 300% of minimum-wage / (480 * SP)

Reduction indexes
RI1=0,75

RI2=0,50

RI3=0,25

Calculation of pension with points, purchased before 1/03/2015

Pension = SP * number of months * pension points

Calculation of pension with points, purchased from 1/03/2015 until a retirement date

Following formulas are applied:

– If pension points are equal or less than PP1:

Pension = SP * MD(fv) * PP(fv) + SP * MD(fv-fj) * PP(fv-fj)
– If pension points are higher than PP1, but equal or less than PP2

Pension = SP*MD(fv)*PP(fv)+SP*MD(fv-fj)*[PP1+(PP(fv-fj)-PP1))*RI1]
– If pension points are higher than PP2, but equal or less than PP3:

Pension= SP*MD(fv)*PP(fv)+SP*MD(fv-fj)*[PP1+(PP2-PP1)*RI1)+(PP(fv-fj)-PP2)*RI2]

– If pension points are higher that PP3:

Pension=SP*MD(fv)*PP(fv)+SP*MD(fv-fj)*[PP1+(PP2-PP1)*RI1)+(PP3-PP2)*RI2)+(PP(fv-fj)-PP3)*PP3]

When it is appropriate to make an enquiry about age-based pension.

Pension becomes effective on a day of required age attainment, if a request has been made not later than three months after this day. If a request is made later than above-noted period, pension becomes effective on a day of the request in terms of article 114.2 of the Law №17 dated 3rd of October, 2008 – «Social security law».

Therewith, the right to receipt each of monthly payments stops three years after expiration of a corresponding period.

If you still work, you are not entitled to the age-based pension after 65.

An insured person, after attainment of the age of 65 years, has a possibility to choose pension receipt delay, provided always that the person will forward deposits to general fund and pension fund until the moment of real retirement.

Pension capital. Pension capital – refund of deposits that were paid to the pension fund. If a person has a right to the pension capital, he/she can refund deposits made to the pension fund. These sums renew along with annual current Consumer price index (CPI) that is modified by the Law on the Budget.
Such update is not applicable to deposits, corresponding to 24-month period, which predate the year of pension capital provision. Mean value of French and Spanish CPI is applied to update monthly deposits made before 1998.

How is the pension capital calculated?

Necessary requirements:

1. Attain the age of 65.

2. Deposit from 60 to 180 monthly payments to a Pension fund.

In accordance with his/her choice, insured person is a recipient of an age-based pension that is equal or less than 5% minimum legal wage.

Payment

Renewed in accordance with CPI, sums of deposits are refunded to insured person.

Year CPI
1998 1,62%
1999 2,68%
2000 4,32%
2001 2,77%
2002 3,40%
2003 2,88%
2004 3,35%
2005 3,10%
2006 3,20%
2007 3,87%
2008 1,98%
2009 0,00%
2010 1,60%
2011 2,50%
2012 1,1%
2013 0%
2014 0%

 

Mean value of French and Spanish CPI is applied to update previous deposits.

When payments accrue:

– Eligibility for payment comes into effect since an insured person makes a request upon the attainment of the age of 65.

– If insured person died without receiving the pension capital, widower/widow has the right to receive a half of the pension capital when he/she conforms to necessary requirements for receiving widower/widow life pension.
When does the right to receive a benefit stop? Means, what is the deadline for the submission of request?

– One-time and one-use right to receive a benefit stops three years after the moment of accrual of such right to receive. Consequently, if you did not make a request for pension capital receipt during three years after the day of attainment needed age, you will lose the right to receive the benefit.

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