SOCSO: Modest Contributions, Comprehensive Protection
M
isfortune often strikes without warning and in today's increasingly challenging world, insurance protection is no longer a choice but a growing necessity for every family.
Without insurance coverage, a family or individual may face financial pressure in the event of a disaster, particularly involving health or property.
In Malaysia, aside from insurance offered by the private sector – which usually involves high monthly premium payments – the public can obtain similar protection from the Social Security Organisation (Socso).
Socso, an agency under the Ministry of Human Resources, provides social security protection to Malaysian employees who, through small monthly contributions, are entitled to benefits such as accident compensation, medical treatment and disability allowance. It even provides assistance to those who lose their jobs.
The organisation is also actively involved in rehabilitation, retraining and workforce employability programmes.
Amid the shifting employment landscape, Socso is enhancing its role in protecting the security and well-being of the nation's workforce.
DIFFERENT
Sharing his views, INCEIF University Centre of Excellence for Research and Innovation in Islamic Economics director (interim) Mohd Zaidi Md Zabri said making monthly contributions to Socso is mandatory for most workers.
Comparing Socso with private insurance companies, he said the former is a non-profit-oriented organisation and provides protection to contributors under its Employment Injury Scheme, Invalidity Scheme and Employment Insurance.
INCEIF University Centre of Excellence for Research and Innovation in Islamic Economics director (interim) Mohd Zaidi Md Zabri.
Private insurance schemes, by contrast, are optional and profit-driven, with insurers offering coverage plans based on premium payments made by policyholders.
'The benefits provided by private insurers depend on the type of policy taken. But Socso, on the other hand, offers a comprehensive protection package to contributors, regardless of their financial background,' Mohd Zaidi told Bernama.
He added that the protection offered by Socso is inclusive as coverage is also extended to self-employed people including housewives and gig economy workers through its Self-Employment Social Security Scheme (SKSPS).
Under this scheme, self-employed individuals only need to pay RM70 per year, which is 30 percent of the total contribution of RM232.80, with the remaining 70 percent (RM162.80) funded by the government.
The scheme allows the self-employed to enjoy social security protection at a very low cost, yet with comprehensive benefits in the event of an accident, disability or death while performing their work.
'The protection offered by Socso to the self-employed is not only affordable but also more comprehensive compared to most private insurance plans, which charge high premiums for equivalent protection,' Mohd Zaidi added.
Since its introduction under the Self-Employment Social Security Act 2017, SKSPS has reportedly recorded over 500,000 active contributors as of May 2024.
PRINCIPLE OF JUSTICE
Meanwhile, Universiti Sains Islam Malaysia Faculty of Economics and Banking senior lecturer Dr Mohd Faisol Ibrahim said workers' contributions to Socso are based on the principle of justice, regardless of their backgrounds.
He said its contribution system also ensures that lower-income groups receive appropriate benefits, unlike private insurers which tend to operate based on profit motives and commercial risk assessments.
'For example, high-risk individuals such as older people or those with a history of illness will be charged higher premiums or may be outright rejected by private insurers (deemed ineligible for coverage).
'In contrast, Socso offers protection to all contributors without discrimination and its services and products are delivered through the principles of risk-sharing, brotherhood and social solidarity,' he said.
He added that in its nearly 54 years of operations, Socso has implemented many reforms to fulfill its objectives by assisting and easing the burden on contributors through basic yet comprehensive social protection schemes.
'Many reforms have been made by Socso since it was established (in 1971). Even with only a small contribution, the benefits received are still worthwhile compared to existing (private) insurance or takaful (a type of Islamic insurance) schemes.
'These reforms are timely and ensure the claims or benefits provide some relief to contributors, especially those who have lost their jobs or have become disabled (due to work-related accidents),' he said.
TAKAFUL CONCEPT
Elaborating on the matter, Mohd Faisol suggested that Socso reevaluate its strategies by viewing social protection not only from a micro perspective but also from a macro perspective that considers the reality of people's lives.
SKSPS allows the self-employed to enjoy social security protection at a very low cost.
He said although Socso is essentially an institution based on the concept of social insurance, it is time for the organisation to adopt more progressive and dynamic changes.
Among the strategic approaches worth exploring, he said, is the introduction of takaful-based products and services that align with syariah principles.
He explained that this move would not only make Socso more inclusive and responsive to the needs of different segments of society but could also position the agency as a new player in the country's takaful industry.
'Such an initiative can offer Muslim contributors the option of syariah-compliant protection plans, while others (non-Muslims) can either opt for takaful or remain with the conventional model,' he said.
Mohd Faisol added that the development of the Islamic financial system in Malaysia also presents broad opportunities for Socso to maximise syariah-compliant investments, thereby benefiting from the ecosystem in planning its investment strategies.
He said investments in Islamic financial instruments, including syariah-compliant real estate, can generate more stable returns and help grow the organisation's fund which, in turn, can assure contributors of better benefits and compensations in the future.
'The concept of 'insuring the people' should be expanded into a broader mission of 'ensuring the people's well-being',' he said. 'This approach will not only keep Socso relevant but also strong and more proactive in ensuring the overall welfare of the people.'
SIMPLIFY PROCESS
Mohd Faisol also urged Socso to simplify the claims process for contributors and speed up the approval timeline.
He said although standard operating procedures are in place, the organisation can improve them to ease the burden on contributors seeking help in difficult times.
Universiti Sains Islam Malaysia Faculty of Economics and Banking senior lecturer Dr Mohd Faisol Ibrahim
He added that a straightforward claims process could encourage more individuals, especially the self-employed, to contribute to the agency for their own social safety net.
'In some cases, claims may be rejected due to various factors, including incomplete information, employers failing to make contributions or discrepancies in medical reports.
'This situation will certainly affect contributors, especially those in poor health or who have lost their jobs. Therefore, the system must be improved to ensure that the claims process is efficient, transparent and user-friendly,' he said.
Meanwhile, a 45-year-old Socso contributor, who wished to be known as Wati, acknowledged there have been complaints about difficulties in making claims, including complex documentation processes, challenges in obtaining supporting documents and long waiting periods for approval.
'You can see on social media, for instance, people expressing frustration when their applications are rejected or not approved... perhaps because they don't know or understand how to submit a claim, so Socso itself needs to strengthen communication, including making regular announcements to the public.
'As for me, I'm truly grateful to have received compensation after being laid off in 2023… although it took a bit of time to complete the forms, I found it worthwhile. At the very least, I had some pocket money during the period I was unemployed,' said Wati, who received an allowance from Socso for six months after being laid off due to company downsizing.
-- BERNAMA
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