Open AccessAssessing Contribution Collection: A Case of SOCSO’s IPS
Publication year - 2019
Publication title -
international journal of recent technology and engineering
Language(s) - English
Resource type - Journals
ISSN - 2277-3878
DOI - 10.35940/ijrte.b1096.0982s1119
Subject(s) - social security , pension , actuarial science , economics , interest rate , pension system , scheme (mathematics) , business , econometrics , finance , mathematics , mathematical analysis , market economy
Currently, Social Security Organization (SOCSO) administers two types of protection schemes namely the Employment Injury Scheme (EIS) and the Invalidity Pension Scheme (IPS). Both schemes are effective once employers make contributions to SOCSO. These contributions are taken 2.25% of an employee's monthly gross income. Recent statistics show that, the excess of SOCSO’s IPS claims amounted to RM4.5 billion, which was an increase of 19.7% from the previous year. Yet, the contributions only amounted to RM4.3 billion. This critical situation assessed using single linear regression modelling and it can be solved by improving the current SOCSO’s IPS funding system. As suggested in this study, the funding system could be made more effective through an increase of the fund collection by raising the current contribution rate. The contribution rate is determined through recent social and economic data, such as current mortality rate and interest rate.