REPORT for the period of July 1, 2014 to June 30, 2015 by the Government of the Republic of Estonia on measures implementing the provisions of the European Code of Social Security signed by the Government of Estonia on January 24, 2000. I. The provisions of the Code are connected with the following legislation applicable in Estonian social security system. Acts: 1) Health Insurance Act parts II, III, VI, VIII and XII; 2) State Pension Insurance Act parts V, VI, IX, X and XII; 3) Labour Market Services and Benefits Act parts IV and XII; 4) Unemployment Insurance Act parts IV and XII; 5) Employment Contracts Act parts IV, VIII and XII; 6) Public Service Act part IV; 7) Employees Disciplinary Punishments Act part IV; 8) Individual Labour Dispute Resolution Act parts IV and XII; 9) State Family Benefits Act parts VII and XII; 10) Maintenance Allowance Act parts VII and XII; 11) Social Tax Act parts II, III, V, VI, IX, X, XII; 12) Family Law Act parts VII and X; 13) Parental Benefit Act parts VII and XII; 14) Social Benefits For Disabled Persons Act part VII; 15) Administrative Procedure Act part XII; 16) Health Services Organisation Act part XII. Regulations of the Government of the Republic: 1) Conditions and Procedure for Identifying Permanent Incapacity for Work, Its Time of Onset, Cause and Duration and a List of Causes of Incapacity for Work parts VI and IX; 2) Lists of Health Services of Estonian Health Insurance Fund parts II and VIII; 3) List of Diseases and Medicinal Products Meant to Treat or Relieve These and to Be Entered in the List of Medicinal Products at a Discount Rate of 75 per cent or 100 per cent with the Relevant Price Agreement Provided part II; 4) Procedure for Calculating the Earned Income of One Average Calendar Day of an Insured Person pursuant to the Unemployment Insurance Act and for Calculating the Earned Income of One Average Calendar Day in Estonia part IV; 5) Procedure for Calculating the Average Amount of Earned Income of One Calendar Month Taxable with Social Tax in Estonia part VII.
Regulations of the Minister of Social Affairs: 1) Guidelines for Determining, Recalculating and Paying State Pension parts V, VI, IX and X; 2) List of Medicinal Products of Estonian Health Insurance Fund part II; 3) The heading The Basic Rate of Cost-sharing and the Maximum Rate of Benefit for Medicinal Products of Regulation no. 113 of the Minister of Social Affairs of September 24, 2002 has been changed to The Basic Rate of Cost-sharing (entered into force October 1, 2012) part II; 4) Procedure for Composing and Amending the List of Medicinal Products of Estonian Health Insurance Fund and the Evaluators of the Criteria for Establishing of the List and Conformity to the Criteria part II; 5) Composition of Documents and Data Required for Determining and Paying Benefits for Temporary Incapacity for Work and Procedure for Determining and Paying the Benefit parts III, VI and VIII; 6) Guidelines for Establishing the Percentage of Loss of Capacity for Work parts VI and IX. The legislation can be accessed in Estonian at www.riigiteataja.ee. The English translations can be partially accessed at www.legaltext.ee; newer legislation can be accessed in English at the respective Estonian Act s page at www.riigiteataja.ee. II. The assessment of the conformity of periodic benefits to the standards has been presented as of December 31, 2014 or based on the annual average figures of the same year. Thereby, the estimated forecasts of the Ministry of Social Affairs have been used for the wage of a regular unskilled male worker since the latest data of Statistics Estonia concerning the hourly wage of a regular unskilled male worker within the production sector pertain to the year 2008. a. Regular unskilled male worker is defined as an unskilled male industry worker (ISCO-08 International Standard Classification of Occupations, occupation code 9). Gross wage of a regular unskilled male worker is calculated and forecasted on the basis of gross hourly wage of a male worker in processing industry. Processing industry was chosen because it has been the industry with the largest number of employees (20% of all employees) for years (101.9 thousand employees in 2014). b. The average gross hourly wage of full-time and part-time work of a regular unskilled male worker in processing industry is based on the following data and assessments: the survey of Statistics Estonia from October 2010 (gross hourly wage of full-time and part-time employees), according to which the gross hourly wage of a regular unskilled male worker (main group) was 3 euros and 09 cents (database of Statistics Estonia, table PA 632); 2
the ratios of gross hourly wage of full-time and part-time work of a regular unskilled male worker (database of Statistics Estonia, table PA 703) and gross hourly wage of a male worker in processing industry (database of Statistics Estonia, table PA 704) in 2005-2008. According to the calculation, the gross hourly wage of a regular unskilled male worker in 2008 was 61.4% of a male worker in processing industry. This percentage has been used in the calculations of the gross wage of a regular unskilled male worker in processing industry since 2011; a survey on wage differences based on sex, yielding data on average gross hourly wage of male processing industry workers in 2010-2013 (database of Statistics Estonia, table PA5335). As these data are absent for 2014, the growth percentage of average gross hourly wage in 2014 compared to 2013, i.e. 6.5% has been used in processing industry for that year (database of Statistics Estonia, table PA 5212). The gross hourly/monthly wage of a regular unskilled male worker and its changes in various years are in proportion with the average gross monthly wage in processing industry, making up a little over 67% of the latter. The analysis of Estonian legislation and practice is presented as of December 31, 2014 unless another date is specified. PART II HEALTH CARE Article 8 Article 9 A. Reference is made to Article 9 (c) of the Code with regard to protected persons. B. As a clarification of the previous report: with the amendment to 5 (1) of the Health Insurance Act (entered into fore on April 22, 2015), an insured person is also a person legally staying and working in Estonia based on a temporary ground for stay for whom a payer of social tax must pay social tax or who pays social tax for themselves in accordance with the procedure, in the amounts and within the time limits provided for in the Social Tax Act. C. Updated statistical data (Part III Article 74) a) the number of persons insured by Estonian Health Insurance Fund as of December 31, 2014 was 1,232,819 (data by the Health Insurance Fund); 3
b) total population of Estonia as of January 1, 2015 was 1,313,271 (data by Statistics Estonia); c) the number of insured persons amounted to ca 93.9% of the total population. Article 10 A. The list of the services funded by Estonian Health Insurance Fund was provided in Regulation no. 194 of the Government of the Republic of December 19, 2014 List of Health Services of Estonian Health Insurance Fund, entered into force on January 1, 2015. B. On January 1, 2015, amendment to 47 of the Health Insurance Act entered into force, stating that the Health Insurance Fund will additionally compensate for justified and certified amounts starting from 300 euros which were paid during the calendar year for medicinal products entered in the list of medicinal products and necessary for the out-patient treatment of an insured person. If the amount of a patient s expenses is 300 to 500 euros, the Health Insurance Fund will compensate 50 percent of the portion exceeding 300 euros, and if the amount exceeds 500 euros, the Health Insurance Fund will compensate 90 percent of the portion exceeding 500 euros. 47 (6) of the Health Insurance Act was repealed, pursuant to which the Health Insurance Fund did not additionally compensate a patient s expenses exceeding 1,300 euros per calendar year. C. In 2014, 7.6 million euros were used to fund disease prevention projects; 99.3% of the planned budget was implemented. The participation rates in the project to develop the reproductive health services available to the young and the medical examination of young athletes were somewhat below the planned rates; this is related to the population s age composition (i.e. a reduction in the target group). The biggest part of the budget for prevention of diseases was used to finance school health care services, the need for which is assessed on the basis of the statistics on the number of students, provided by the Ministry of Education and Research. In 2014, school health care services were provided in 600 educational institutions, using 320 service providers. Services were provided to 2,300 students in schools for students with special needs in 2014. Counselling services are most used both face-to-face and over the phone; the second place among school nurses activities in schools for children with educational special needs was held by helping administer various medicinal products. In 2014, the number of participants in the early detection of breast cancer project grew by 700 women (+2% change compared to the previous year); the number of participants in the early detection of cervical cancer project grew by 800 women (+6% change compared to the previous year). The target group of the breast cancer detection project is the same as in previous years (50 62 years). A suggestion was received to extend the age group subject to breast cancer screening but this would require a preliminary analysis of the expected health benefit and entailed costs, as well as an improved arrangement and better overall data quality 4
of the screenings. Starting from the 2nd quarter of 2015, the Cancer Screening Registry will organise the invitation of women to the screening. The planned budget for disease prevention in 2015 is 7.9 million euros. Testing of phenylketonuria, hypothyreosis and hearing in newborn babies will be integrated into specialised medical care in 2015. Also, development of a screening for early detection of colon cancer will be started. Disease prevention was funded with 1.9 million euros in the 1st quarter of 2015; 106% of the the planned budget was implemented. D. In 2014, the budget of health promotion projects in the Health Insurance Fund was 1.0 million euros. 857 thousand euros or 85.7% of the resources planned in the budget for 2014 were utilised. The low rate of utilisation is mainly due to calculated postponing of certain activities into 2015. The community level injury prevention project involved regular events in 17 localities, mainly to increase the localities capacity to reduce home and recreation injuries, including health harm from alcohol and toxic substances. The projects also included safety camps for 6th-8th grade students where teachers also received the necessary training. The project for prevention of home and recreation injuries ended in 2014. The healthy teeth in children project involved the organisation of activities across the country. The project s main goal is to develop caries preventing habits in children s oral hygiene and nutrition and to increase the awareness of parents and groups of stakeholders about oral health. The project s target group included 1,659 children and 161 parents. 81 trainings in 44 different educational institutions were held in the project. 82 school nurses, 261 healthcare employees and 340 school/kindergarten teachers participated in trainings. Oral Health in Schools guidelines were completed, available at www.kiku.hambaarst.ee. The project involved the publication of 17 articles on oral health in national newspapers; radio and TV interviews were held. Activities took place in all of Estonia within the Promotion of Health at Schools and Kindergartens project framework. The project s overall goal is to develop a health promoting environment in kindergartens and schools and to increase the capability to implement activities for health development of children. The project included in-service trainings to entrench health promoting thinking and to implement health-related information in practice; a total of 240 employees from 120 educational institutions participated there. Co-operation networks are active in 18 localities through representatives of every county; local coordinators advised 270 educational institutions there. Diabetes nurses have advised and trained 428 educational employees and parents, including 90 children/students from 33 educational institutions. 4 diabetes guidelines have been printed and disseminated in the project, in co-operation with Estonian Child and Youth Diabetes Association. By the end of 2014, 15 preschool educational institutions have joined the TEL6 health promotion network and 7 general education schools have joined the TEK7 network, this is a total of 22 educational institutions. The network connects a total of 450 educational institutions, making up 41.7% of all educational institutions. 5
The pan-estonian health promotion conference Moving for Health took place with the purpose of promoting the healthcare system, 276 people participated in the conference. The participants assessed the organisation, content and implementation of the conference as excellent. In June 2014, a three-day training for preparers of treatment guides was held with the purpose of introducing the new methodology: preparing the scope, making searches, assessing treatment guides using the AGREE tool, assessing the evidence by the GRADE principles, and preparing recommendations. To improve the awareness of people, a first contact level campaign was held in the first half of 2014, titled Solving health issues starts with your family physician and family nurse. The campaign s purpose was to increase people s awareness about the possibilities of the first contact level health care system. The campaign aimed to explain the substance of the service provided by family physicians and family nurses so that people would understand that a family physician is a specialised physician able to diagnose and treat most diseases. The first contact level campaign was repeated in the second half of 2014. The campaign s visibility was 84% of the population and the primary target group for the initial campaign and an equally good 83% for the repeat campaign. Health pages reporting on the Health Insurance Fund s topics have been published in daily and weekly periodicals since February, with additional attention paid to Russian-speaking readers. Among printed materials on children s health, a repeat run of Diabetes in children and young people was issued and a new tooth-themed calendar for children was compiled. Follow-up activities for six repeat runs are postponed to the first half of 2015. The goal of the project to promote pregnancy crisis counselling is to ensure the availability of the service of relevant counselling for pregnant women and their next of kin, in order to empower them to make informed decisions in matters of pregnancy, improve their awareness of possible risks, as well as help them stay informed about the support services and allowances guaranteed by the state. Pregnancy crisis counselling involves assessing the client s health status, using a diagnostic interview, followed by making forecasts and planning interventions. In 2014, 2,200 different people were counselled on 4,500 occasions, under referrals and with the Health Insurance Fund s support; this makes up an average of 2 contacts per client. The health promotion budget planned for 2015 is 1.1 million euros; 22% (245 thousand euros) of that have been utilised in the first quarter. In March, the campaign Reasonable use of medicines was implemented, with the goal to improve people s awareness when choosing prescription medicines and thereby reduce their self-contribution when buying medicines. A sub-goal of the campaign was to increase the number of people using the prescription view service of the citizen portal eesti.ee and thereby empower people to make reasonable choices, in order to reduce people s expenses on buying medicines and also to improve their compliance with their medical regimes. A study of the campaign s visibility will be completed in the 2nd quarter. In January and February, the population was informed about the screening for early detection of cervical cancer, titled Give yourself a gift of certainty! ; the campaign involved radio and 6
outdoor media. With information disseminating activities of the screening, the updated information materials about screenings for breast cancer and cervical cancer were distributed to contract partners and family physicians. The project for children s dental health has involved information days, trainings, lectures to kindergarten and school teachers and university students in health promotion faculties. The co-operation network of children s oral health promoters has been expanded. Materials for a campaign about children s oral health are compiled and will reach the target group in the coming months. In the framework of empowering the first contact level services, Estonian Health Insurance Fund organised a conference titled Opportunities and challenges of Estonian healthcare system in holistic vision of chronic illnesses in March, introducing the target groups and stakeholders to the analysis of holistic vision of the patient and integrated treatment principles, prepared by the World Bank. In the first quarter, information materials about the Health Insurance Fund were posted for all households, for the purpose of increasing the population s knowledge about their rights, duties and health insurance possibilities in Estonia. Preparations of children s health materials for print are ongoing. Among patient guidelines, Patient Guidelines for Hypertension in Adults and among treatment guidelines, Approach to Generalised Anxiety Disorder at First Contact Level were completed and disseminated to the target groups and stakeholders. The main activities for the 1st quarter were the improvement of the coping of children with diabetes in schools and kindergartens, as well as the development of health trainings and the enhancement of existing training packages. Article 11 Starting from July 1, 2014, employers are required to provide the Employment Register of the Tax and Customs Board with data about every person by the time the person starts working at the employer; the Employment Register forwards the data required for health insurance to the Health Insurance Fund. The data must be provided to the Employment Register by the time the person starts working. Pursuant to 6 (1) of the Health Insurance Act, the insurance cover of an employee will commence upon expiry of a waiting period of fourteen days from the date of commencement of work entered in the Employment Register specified in 25 1 of the Taxation Act. Article 12 1. 2. 7
PART III SICKNESS BENEFIT Article 14 Starting with October 18, 2014, the certificate of sickness leave is issued electronically and forwarded by the physician, dentist or midwife to the health insurance database via the X-road system immediately upon the end of the sickness leave. A certificate of sickness leave may be issued on paper if the forwarding of the data to the health insurance database via the X-road system is impossible for technical reasons. In that case, the issuer of the certificate of sickness leave must forward the certificate s data to the health insurance database via the X-road system at the first opportunity. Article 15 Reference is made to Article 15 (b) of the Code with regard to insured persons. B. C. Updated statistical data (Part III, Article 74): a) the number of economically active insured persons as of December 31, 2014 was 600,998 (data by Estonian Health Insurance Fund); b) total population of Estonia as of January 1, 2015 was 1,313,271 (data by Statistics Estonia); c) the number of economically active insured persons made up 45.8% of the total population of Estonia. Article 16 Reference is made to Article 65 of the Code with regard to calculation of sickness benefit. Titles I and II, Article 65 A. In 2014, the minimum monthly wage for full-time work was 355 euros and the upper limit of income of sole proprietors taxable with social tax respectively 5,325 euros per month. From January 1, 2015, the minimum monthly wage is 390 euros per month. The sickness benefit is taxable with income tax (in 2014, the income tax rate amounted to 21 percent and the income tax exemption was 144 euros per month; in 2015, the income tax rate is 20 percent and the income tax exemption is 154 euros per month). B, C. The average income of insured persons taxable with social tax was 908.12 euros per month in 2014 (data by the Social Insurance Board). Respectively, the gross monthly earnings 8
of a regular skilled male worker pursuant to Article 65 (6) (c) of the Code were as follows in 2014: 1.25 * 908.12 = 1,135.15 euros. D. In 2014, the amount of the sickness benefit for a standard beneficiary (in in-patient care) for one month was as follows: 0.7 * 1,135.15 = 794.60 euros. E, F. In 2014, the amount of family benefits for a standard beneficiary with two children amounted to 38.35 euros per month. Payment of family benefits is not related with working/not working of parents or receiving other social security benefit, i.e. the same family benefit is paid both while working and receiving sickness benefits. G. The gross replacement rate of a standard beneficiary of sickness benefit was: (794.60 + 38.35) / (1,135.15 + 38.35) = 71.0%. Article 17 Article 18 1. As a reply to the Committee s conclusions about the payment period of sickness benefit, we inform that a draft act to repeal 75 (5) of the Health Insurance Act is being prepared and will enter the Parliament together with another draft act to amend an act, in order to optimise the proceeding of short draft acts. Pursuant to the draft act, the respective provision will be repealed starting with January 1, 2016. 2. PART IV UNEMPLOYMENT BENEFIT Article 20 Article 21 A. Reference is made to Article 21 (a) of the Code. 9
B. C. In 2014, according to Estonian Tax and Customs Board, unemployment insurance premiums were collected from 608,476 insured persons. The total number of employed and unemployed persons was 674,400 in 2014 (according to Statistics Estonia). Therefore, 90.2% of the total number of employed and unemployed persons was insured. In 2014, the unemployment insurance premiums from insured persons added up to 113,517 thousand euros and the unemployment insurance premiums from employers added up to 61,124 thousand euros. Article 22 A. Reference is made to Article 65 of the Code with regard to unemployment insurance benefits. Titles I and II, Article 65 Unemployment insurance benefit is taxable with income tax; in 2014 the income tax rate was 21% and the income tax exemption 144 euros per month. In 2015 the tax rate is 20% and the income tax exemption is 154 euros per month. B, C. The average income of insured persons taxable with social tax was 908.12 euros per month in 2014 (data by the Social Insurance Board). Respectively, the gross earnings of a regular skilled male worker pursuant to Article 65 (6) (c) of the Code were as follows in 2014: 1.25 * 908.12 = 1,135.12 euros. D. The amount of unemployment insurance benefit to a standard beneficiary (during the first 100 days of unemployment) in a month was: 0.5 * 1,135.12 = 567.57 euros. E, F. In 2014, the amount of family benefits for a standard beneficiary with two children amounted to 38.35 euros per month. Payment of family benefits is not related with working/not working or receiving other benefits, i.e. the same family benefit is paid both while working and during unemployment. G. Accordingly, the gross replacement rate of a standard beneficiary of unemployment insurance benefit was: (567.57+38.35) / (1,135.12 +38.35) = 51.6%. Article 23 10
Article 24 1. Starting with July 1, 2014, the insurance accumulation period is accounted in months and years. Every 12 months of an insurance accumulation period are accounted as one year of the insurance accumulation period. If the insured person s insurance accumulation period is: - shorter than 5 years, the Unemployment Insurance Fund grants the benefit for 180 calendar days; - 5 to 10 years, the Unemployment Insurance Fund grants the benefit for 270 calendar days; - 10 years or more, the Unemployment Insurance Fund grants the benefit for 360 calendar days. 2. 3. 4. PART V OLD-AGE PENSION Article 26 No substantial changes. In 2015, the retirement age for women is 62.6 years and for men it is 63 years. Article 27 A. Reference is made to Article 27 (b) of the Code. B. C. Updated statistical data (Title II Article 74) a) the number of economically active insured persons as of December 31, 2014 was 600,998 (data by Estonian Health Insurance Fund); b) the total population of Estonia as of January 1, 2015 was 1,313,271 (data by Statistics Estonia); c) the number of economically active insured persons was 45.8% of the total population. 11
Article 28 A. Reference is made to Article 66 of the Code with regard to the calculation of old-age pension. As of April 1, 2014 the base amount for pension was 134.9093 euros per month, the monthly national pension rate was 148.98 euros and the value of a year was 4.964 euros per month. As of April 1, 2015 the base amount for pension is 144.2585 euros per month, the monthly national pension rate is 158.37 euros and the value of a year is 5.245 euros per month. According to the Income Tax Act, income tax is charged in 2015 on the component of pension that exceeds 220 euros per month. Every person, including an old-age pensioner, is entitled to receive additional basic exemption of 154 euros per month. Therefore, pensioners are entitled to a basic exemption of 374 (220+154) euros per month in 2015. Any amounts above this sum will be subject to 20% income tax. Taxation by income tax will be imposed cumulatively and on accrual basis. Titles I and III Article 66 a. Regular unskilled male worker is defined as an unskilled male industry worker (ISCO-08 International Standard Classification of Occupations, occupation code 9). Gross wage of a regular unskilled male worker is calculated and forecasted on the basis of gross hourly wage of a male worker in processing industry. Processing industry was chosen because it has been the industry with the largest number of employees (20% of all employees) for years (101.9 thousand employees in 2014). In 2014, the calculated average gross hourly wage of a regular unskilled male worker for fulltime and part-time work was 4 euros and 05 cents and the calculated average gross monthly wage was 658.49 euros. The calculation is based on: first, the average gross hourly wage of a male worker in processing industry i.e. 6.61 euros (according to the survey on wage differences based on sex in 2013, the average gross hourly wage of a male worker in processing industry was 6.20 euros (database of Statistics Estonia, table PA 5335), corrected by the growth of gross hourly wage in processing industry from 2013 to 2014 (6.54%)); second, to calculate the hourly wage of a regular unskilled male worker in processing industry, the gross hourly wage was corrected by 61.4% as its percentage in gross hourly wage of a male worker in processing industry; third, the average calculated monthly number of work hours per month in processing industry was 162.1 hours in 2014. Since the income tax exemption for 2014 was 144 euros per month, the income tax rate was 21%, the unemployment insurance premium rate was 2.0% and the rate of contributions to the mandatory funded pensions (the second pillar of pension insurance) for people who had joined pension insurance was 2%, then in this case the net wage was 529.64 euros. c. According to the pension formula, in 2014 the old-age pension of a standard beneficiary with a pensionable period of 30 years was 134.9093+ 4.964 * 30 = 283.83 euros. 12
(According to the pension formula, starting with April 1, 2015 the old-age pension of a standard beneficiary with a pensionable period of 30 years is 301.61 euros (144.42585 + 30 x 5.245).) d, e. The persons with pension insurance shall still not receive family benefit for their wife during their work or pension period. f. In 2014, the old-age pension of a standard beneficiary (a man with a wife of pensionable age) formed (283.83+148.98) / 529.64 * 100 = 81.7% of a regular unskilled male worker's net wage. C. On April 1, 2015 the Government of the Republic established an index with the value of 1.063 and according to the established index the Social Insurance Board calculated the national pension rate, the base amount of pension and the value of a year (see Article 28). As a reply to the Committee s question about the conditions of receiving national pension, we state the following. National pension ensures the minimum pension for those people 63 years old or older who do not become entitled to old-age pension based on work contribution and who have been permanent residents of Estonia or have resided in Estonia on the basis of a temporary residence permit or temporary right of residence for at least five years immediately before making a pension claim. A dependant spouse who is not entitled to old-age pension is paid national pension according to his or her age, if the dependant spouse meets the conditions of receiving national pension. Therefore, it is his or her individual pension right. The amount of national pension is 100% of the national pension rate. Starting with April 1, 2015, the amount of national pension is 158.37 euros. National pension is adjusted by an index once a year. If a person receives national pension, the national pension is paid also while he or she works. If the person has worked before making a national pension claim, but has done so for less than 15 years and he or she continues working and attains a pension accumulation period of at least 15 years, he or she has the right to transition to old-age pension. In addition to age-based national pension, Estonia pays national pension to persons declared permanently incapable for work whose established percentage of loss of work capacity is at least 40 and who lack the pension accumulation period required for incapacity for work pension, if the person being incapable for work has lived in Estonia at least one year before making the pension claim. National pension for a survivor is granted to a person having survived his or her provider and not having the right to a survivor s pension due to the provider s lack of required pension accumulation period, if the provider lived in Estonia for at least one year before his or her death. Article 29 13
Article 30 PART VII FAMILY BENEFIT Article 40 Pursuant to the State Budget Act of 2015, the income threshold for needs-based family benefit is 329 euros per moth for the family s first member. For every subsequent family member of at least 14 years of age, the income threshold for needs-based family benefit is 164.5 euros per month; for every family member of less than 14 years of age, the income threshold for needs-based family benefit is 98.7 euros per month. Article 41 A. Reference is made to Article 41 (b) of the Code. B. C. Updated statistical data (Title II Article 74): Title II of Article 74 is not the most suitable for getting statistical data on persons affected by the State Family Benefits Act. Therefore, in order to show the fulfilment of the requirements in Article 41 of the Code, the number of covered persons shall be deemed equal to the total number of male population of economically active age (15 64). a) In 2014, the number of Estonian male population aged 15 64 was 425,348 (Statistics Estonia); b) In 2014, the total population of Estonia (annual average) was 1,314,545 (Statistics Estonia); c) The number of covered persons amounted to 32.4% of the total population. Article 42 Reference is made to Article 42 (a) of the Code. In 2015, the amount of child allowance for the first and second child of a family is 45 euros and for third and every consequent child it is 100 euros. In 2015, the amount of foster care allowance is 240 euros. 14
The amount of needs-based family benefit is 45 euros per month for a family with one child receiving child allowance and 90 euros per month for a family with two for more children receiving child allowance. In 2015, the ceiling for parental benefit is 2,548.95 euros per month. The parental benefit rate is 355 euros per month in 2015. Article 43 Article 44 A. In 2014, the gross wage for a regular unskilled male worker in processing industry was 658.49 euros (see information under Article 28). B. The total amount of family benefits (excluding parental benefits and (one-time) childbirth allowance) for 2014 was 96.704 million euros (data by the Ministry of Social Affairs), which makes on average 8.0 million euros per month. C. i. The number of children (average, entitled to payment of child allowance) was 220,345 in 2014 (data by Statistics Estonia, children 0 15 years of age); ii. In 2014, the total value of family benefits was 5.52% of the multiplication of the gross wage of a regular unskilled male worker by the children of all residents. Article 45 PART VIII MATERNITY BENEFIT Article 47 Article 48 A. Reference is made to Article 48 (b) of the Code B. C. D. 15
Article 49 Article 50 A. Reference is made to Article 65 of the Code with regard to maternity benefit in cash. B. Updated statistical data (Titles I and V, Article 65): a. Maternity benefit is subject to income tax. In 2014, the income tax rate was 21% and the income tax exemption was 144 euros; in 2015, the income tax rate is 20% and the income tax exemption is 154 euros. In 2014, the minimum wage was 355 euros per month in case of full-time work and accordingly the upper limit for the income taxable with social tax for sole proprietors was 5,325 euros per month. As of January 1, 2015 the minimum monthly wage for full-time work is 390 euros per month and accordingly the upper limit for the income taxable with social tax for sole proprietors is 5,850 euros per month. b, c. In 2014, the gross earnings of a regular skilled male worker pursuant to Article 65 (6) (c) were 1,135.15 euros. d. In 2014, the standard beneficiary s maternity benefit per month was: 1.00 * 1,135.15 = 1,135.15 euros. g. The gross replacement rate of a standard beneficiary of maternity benefit was: 1,135.15 / 1,135.15 = 100%. Article 51 Article 52 1. 2. 3. 16
PART IX BENEFIT FOR INCAPACITY FOR WORK Article 54 Article 55 A. Reference is made to Article 55 (b) of the Code. B, C. See information under Article 27. Article 56 A. The national pension rate is the minimum guarantee in determination of pension for incapacity for work. Starting with April 1, 2014, the national pension rate was 148.98 euros per month. Starting with April 1, 2015, the national pension rate is 158.37 euros per month. B. In 2014, the old-age pension for a person with 30 years of pensionable service was 283.83 euros per month. In 2015, the old-age pension for a person with 30 years of pensionable service is 301.61 euros per month (see information under Article 28). For the taxation of all state pensions (including pensions for incapacity for work), see information under Article 28. Titles I and II Article 66 a. For the selection of a regular unskilled male worker, see information under Article 28. b. In 2014, the gross wage for a regular unskilled male worker was 658 euros and 49 cents and the net wage was 529 euros and 64 cents (see also information under Article 28). c. At the end of 2014, the pension for incapacity for work for a standard beneficiary (a person totally incapacitated for work) was at least 283.83 euros. d, e. In 2014, the family benefit sum paid for a standard beneficiary with two children was 38.35 euros per month. Payment of family benefits is not related to the parents working or receiving other social security benefits, i.e. the same family benefit is paid both while working and during periods of incapacity for work. f. In 2014, the standard beneficiary s pension for incapacity for work amounted to: (283.83+ 38.35) / (529.64+ 38.35) * 100 = 56.7% of a regular unskilled male worker s net wage. 17
C. For the regular recalculation of pension paid, see information under Article 28. Article 57 1. 2. The national pension for a person with total incapacity for work is 100 percent of national pension rate. Starting with April 1, 2015, the national pension rate is 158.37 euros per month and the national pension for a person with 40 percent incapacity for work is 63.35 euros per month. Article 58 PART X SURVIVOR S BENEFIT Article 60 Article 61 A. Reference is made to Article 61 (b) of the Code. B. See information under Article 27. Article 62 A. Survivor s pension for a spouse with two children is equal or bigger (but no less) than oldage pension, available to a person with a pensionable period of 30 years. Starting with April 1, 2014 the old-age pension for a person with 30 years of pensionable service was 283.83 euros per month and starting with April 1, 2015 the old-age pension for a person with 30 years of pensionable service is 301.61 euros per month. Therefore, in 2014, the survivor s pension for a spouse with two children was at least 283.83 euros per month and starting with April 1, 2015 the survivor s pension for a spouse with two children is at least 301.61 euros per month. Titles I and IV Article 66 a. For the selection of a regular unskilled male worker, see information under Article 28. b. In 2014, the gross wage for a regular unskilled male worker was 658.49 euros and the net wage was 529.64 euros (see also information under Article 28). 18
c. In 2014, the survivor s pension for a standard beneficiary (spouse with two children) was at least 283.83 euros. d, e. In 2014, the family benefit paid for a standard beneficiary was 38.35 euros per month. f. In 2014, the survivor s pension for a standard beneficiary was: (283.83 + 38.35) / (529.64 + 38.35) * 100 = 56.7% of a regular unskilled male worker s net wage. C. For the regular recalculation of pension paid, see information under Article 28. Article 63 1. Reference is made to Article 63 (1) and (2) of the Code. 2. In 2015, the national pension rate is 158.37 euros. 5. Article 64 PART XII COMMON PROVISIONS Article 69 1. Parts V, VI (long-term financial benefits), IX and X Parts II, III, VI (care services and short-term financial benefits) and part VIII Part IV Part VII 19
Article 70 1. In 2015, unemployment insurance premium rate applicable to an employee is 1.6% and the payment rate of an employer is 0.8% (Regulation No. 151 of the Government of the Republic of September 26, 2014). 2. Estonia has not accepted Part VI. 5. 6. Changes made in the last year are provided in relevant parts of the present report. 7. Article 71 For specification purposes: the Deputy Secretary General on Health manages the functioning of the Health System Development Department, Medicine Department and Public Health Department through Department Heads; the relevant area of administration includes such government institutions as the Health Board, the State Agency of Medicines, the National Institute for Health Development. * * * Replies to the Committee s questions Concerning the payment period of sickness, see Article 18 about repealing 57 (5) of the Health Insurance Act. The conditions for receiving national pension are described under Article 28. Categories of persons covered by social insurance Social tax payments ensure health insurance and pension insurance for people. Social tax is paid by employers on behalf of employees. Additionally, categories of persons are established, on behalf of whom social tax is paid by the state, a public legal entity, a city or a rural municipality; these are listed in more detail under Article 27 of Estonia s reports No. 6 (2011), 8 (2013) and 9 (2014). There are also categories of persons covered by health insurance, on whose behalf no social tax is paid but who are considered to be equal to insured persons in the meaning of the Health Insurance Act (see Article 9, report No. 6 (2011)). 20
Methodology to determine the reference wage used in calculating benefits For the methodology of determining the reference wage used to calculate benefits, we cannot however refer to the technical note prepared by the ILO s Office, nor can we use the options proposed therein, because our statistics do not permit it. The wage rate calculations used and the relevant explanations are provided in the general part and under Article 28. Implemented and planned measures to raise pensions above poverty lines, as well as actuarial studies conducted for that purpose A pension increase is connected to the financial balance of the pension system. The Ministry of Social Affairs in co-operation with the Ministry of Finance has currently started public discussion on the adequacy and the solidarity of pensions. Project team and management committee of social partners, target groups, officials and analysts will prepare an analysis and proposals about the social and economic sustainability of the national old-age pension by the end of March 2016. The analysis will deal with three main topics the compliance of pensions (incl. national pensions), the financial sustainability of the pension system, and the solidarity of pensions. The government s Coalition Programme sets out that starting with 2017, a financial measure will be set up to improve the coping of pensioners living alone. The structure and role of the minimum wage and minimum benefits in Estonian social protection system; their comparison to the absolute and relative poverty lines. Assessment to the effectiveness of minimum guarantees in fighting poverty. An overview of absolute and relative poverty is provided in the Report on Poverty (see enclosed). The Report on Poverty also indicates the effect of different social transfers on poverty. The graphs and data in the note prepared by the ILO s Office and referenced by the Committee cannot be however used by us, because our statistics do not permit it. Minimum rates of benefits related to wages National pension and family benefits (Article 42) are generally set to a fixed amount received by entitled persons. National pension ensures the minimum pension for those people 63 years old or older who do not become entitled to old-age pension based on work contribution, as well as those persons declared permanently incapable for work whose established percentage of loss of work capacity is at least 40 and who lack the pension accumulation period required for incapacity for work pension (see more under Article 28). Concerning sickness benefit, unemployment insurance benefit and parental benefit, insured persons are guaranteed to receive at least the minimum rate, which is connected to the minimum rate of monthly wage. 21
Sickness benefit It is calculated on the basis of the monthly base wage or the minimum monthly wage rate valid on the date preceding the start date of the sickness leave, noted on the sickness leave certificate. In 2015, the minimum wage is 390 euros. If the person had no income in the preceding year or it was less than 390 euros per month then daily wage is calculated as the minimum rate of monthly wage divided by 30. Unemployment insurance benefit An insured person is always guaranteed to receive the minimum amount or 50% of the minimum rate of one calendar day s wage for the previous calendar year, even if the benefit amount calculated on the basis of the insured person s actual received income is smaller. Parental benefit Parental benefit in the amount of the minimum wage rate is paid to a person whose average monthly income for the preceding calendar year was equal to or less than the minimum wage. In 2015, the minimum wage rate is 390 euros per month. Parental benefit in the amount of the benefit rate is paid to a person who had no income taxable with social tax in the preceding calendar year (e.g. not working students). In 2015, the parental benefit rate is 355 euros per month. Whether the financial resources earmarked in the development plan or in other relevant activities are sufficient compared to the extent of problems faced by Estonian social welfare system? National objectives to combat poverty and social exclusion. The development plan of the area of governance of the Ministry of Social Affairs provides a short overview of the performance area as well as the main activities for the strategic period of 2016 2019; the development plan s objective is to form a social insurance system that takes into account the changes in society. Currently, one of the main causes for leaving the labour market is incapacity for work due to health problems. Work incapacity reduces the state s revenue because people exit the labour market while the state s expenses on work incapacity benefits and pensions increase. A reform was implemented in order to ensure the pension insurance system s sustainability and to increase the supply of labour force; in the course of the reform, the work incapacity pensions scheme will be replaced by work ability allowances scheme starting with 2016. The main objective of the new scheme is to preserve a person s work capacity, activate people with lowered work capacity, prevent unemployment and return people to work. 22
The results of the new scheme s implementation will be monitored, the accuracy of forecasts and the relevance and performance of measures will be assessed and if necessary then the design of measures will be developed further. The abjective is to ensure a modern, relevant, well-performing and practically usable legal framework and an integral body of measures/services. In that, the reform s financial model needs to be developed and the sustainability of the measures and services connected to the reform needs to be ensured. The implementation of the work ability allowance scheme enables to reform old-age pensions with favourable conditions and ordinary old-age pensions. The reform of special pensions paid in old-age pension period will also be continued. From the viewpoint of the sustainability of old-age pension, reforms are important which ensure that pensions have an adequate size and a solidarity level conforming to the society s expectations, and that the pension system is financially sustainable at the same time. For this reason, the purposefulness and opportunities of automatic adaptation mechanisms for the pension system (e.g. applying the factor of life expectancy to pension amounts, documenting the length of the pension period, documenting the ratio of the average work period and the average pension period, and retaining the balance of the pension system s assets and liabilities) are analysed in Estonia in co-operation with the Ministry of Finance, monitoring changes in Estonian demographic and economic situation. It is important to ensure that Estonian social protection system would ensure protection against the traditional social risks and help in case of need, while also preventing people from ending up in the unemployment trap, the inactivity trap or the low income trap. One priority of the development plan is also the increase of the subsistence level and the changing of the subsistence benefit into an accountable expense. In order to ensure that people have the minimum necessary means of subsistence, subsistence benefit is paid to them in cooperation with local governments. The established objective is to ensure that the subsistence level would correspond better to the subsistence minimum i.e. would cover at least the expense components of the latest published subsistence minimum, except dwelling costs. To ensure that the subsistence minimum will continue to rise in line with the increase of living costs, the methodology to calculate the subsistence minimum will be established at the level of legislation and the subsistence benefit will be made into an accountable expense. Pursuant to the Action Programme of the Government of the Republic for 2015-2019, the subsistence level will be raised to 130 euros per month starting with January 1, 2016. The definitions of subsistence minimum, subsistence benefit and subsistence level; the latter s relation to the needs-based family benefit In Estonia, absolute poverty line, also known as subsistence minimum, is calculated on the basis of expenses. Subsistence minimum is calculated on the basis of three components: food expenses, housing expenses and individual non-food expenses. Food expenses are calculated on the basis of the minimum shopping basket. 23
The subsistence level is established by Estonian Parliament in the state budget. The subsistence level is established on the basis of minimum consumption costs on food, clothing and footwear and other goods and services for primary needs. Pursuant to the State Budget Act of 2015, the rate of subsistence level for a person living alone or the first member of a family is 90 euros per month in 2015. The subsistence level for every minor-age member of a family is also 90 euros per month in 2015. The subsistence level for the second member and every subsequent member of a family is 72 euros per month. Starting with 2016, the subsistence level of for a person living alone or the first member of a family will be 130 euros per month; the same is valid for every minor-age member of a family. The subsistence level for the second member and every subsequent member of a family will be 104 euros per month in 2016. Subsistence benefit is the state s financial aid to persons in need. Subsistence benefit is paid by the local government from the state budget s funds. Subsistence benefit is calculated on the basis of the preceding month s net income of the person living alone or all members of the family, minus maintenance payments, fixed costs of the dwelling payable in the current month and the established subsistence level. A recipient of subsistence benefit, all family members of whom are minor-aged, is entitled to receive additional social benefit of 15 euros together with the subsistence benefit, the additional social benefit being paid by the local government from the state budget s funds. Subsistence benefit is established so that it would ensure that a person living alone or a family would have guaranteed income in the extent of the subsistence level, together with the family members incomes, after paying the fixed costs of the dwelling. A family s income includes the following income types: wage; parental benefit; maintenance payment; sickness benefit; pension; caregiver s allowance; disabled parent s allowance; allowances paid under the State Family Benefits Act; unemployment allowance; business income and income from individual work activities (incl. business income on ownership basis); income from sales and rental of immovable and movable property; income from sales of securities and privatisation vouchers; grants; education allowance; royalties; interest from credit institutions and compensation funds; other income. The following income types are not accounted when calculating subsistence benefit: single benefits paid to a person living alone, a family or members thereof out of the funds of the state budget or local budget; periodic benefits paid from local government budget funds pursuant to the legislation of the local government which are dependent on family income or granted to compensate for the cost of a specific service; benefits paid on the basis of the Social Benefits for Disabled Persons Act, except for the disabled parent's allowance; student loan granted with security guaranteed by the state; grants and transport and accommodation benefits paid on the basis of the Labour Market Services and Benefits Act or from the structural assistance funds; needs-based study allowance and needs-based special allowance paid on the basis of the Study Allowances and Study Loans Act and allowance paid from a special allowance fund established by an educational institution; child allowance for the third 24