The rationale behind social security contributions

Social security contributions are mandatory in order for the Social Security and the welfare state in general to operate adequately. The introduction of the Social Security system and the compulsory inclusion of all workers ensures that upon retirement the standard of living is not very different from what they had during employment.

Contributions paid correspond to future benefits, as follows:

  • Main and auxiliary pension contributions to ensure a decent income after retirement.
  • Health contributions to ensure access to health services, especially during older age when medical and pharmaceutical needs increase.
  • Unemployment contributions (to OAED) for benefits in case of unemployment.

Contributions are paid today as savings, or as a transfer of income to the future, so that when the need for protection against disability-invalidity, old age, death or unemployment arises, these savings can guarantee a decent standard of living.