Social security system was founded in 1910 in France. The general scheme is presented in 1945. It was firstly intended to cover the whole population. Social Security consists of a set of institutions that serve to protect individuals from the consequences of various events or situations, usually referred to as social risks. There are four branches in the social security system in France. These are illness, old age/retirement, family and work accident/occupational disease. The compulsory “general scheme” covers the general population and mostly the employees. Another one is the agricultural scheme that includes agricultural-sector employees and non-salaried workers against all risks. Moreover, the last one is the supplementary pension schemes, ARRCO and AGIRC, which are compulsory for all private-sector employees affiliated to the general and agricultural schemes.

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Social security expenditures: A historical perspective

The table shows that total social security expenditures between 1980 and 2013. In 2009, public social expenditure amounted to 22.1% of GDP on average in the OECD area, but this varied considerably between countries. France had the highest rate which is %32.10 of GDP in 2009. Last 8 years, expenditures increase gradually except 2011. In 2013, the total amount of social security expenditures is %33.02 of GDP.

Social Security Payment system (Pay-as-you go or fully funded or a mixture), describe.

In an unfunded defined benefit pension, no assets are set aside and the benefits are paid for by the employer or other pension sponsor as and when they are paid. Generally many countries ensure unfunded pensions arrangements, workers have benefits paid directly out of current taxes and social security contributions. We called this method as a Pay-as-you-go method. Generally most European countries are applying this method. However, many countries like France, have a hybrid systems which means they are partially funded. France set up the Pension Reserve Fund in July, 2001. The pension Reserve Fund, originally “Fonds de Reserve pour les Retraites”, has an aim of using funds from privatisalitions of state holdings to fi