The background of persons applying for subsistence benefit should be examined in greater depth

Toomas Mattson | 4/5/2006 | 12:00 AM

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TALLINN, 5 April 2006 - The NAO encourages local governments to examine the background of persons applying for subsistence benefit in greater depth to ensure that help reaches only those who need it and not those who have enough property to manage on their own.

The NAO audited the payment of subsistence benefits on a random basis in five local governments, which had received the largest amounts in 2005: Tallinn, Narva, Sillamäe, Tartu and Valga. In Tallinn, the payment of the benefit was audited in the Lasnamäe and Mustamäe City District Governments. The audit showed that the award and payment of subsistence benefits varies between local governments and in many cases the beneficiaries included in the random sample had not informed the social workers of their income.

The NAO believes that it is not certain whether the benefit is paid only to needy persons. The NAO found a number of cases where the financial situation of beneficiaries enabled them to acquire cars and real estate during the period of receiving the benefit: for example, 14 families receiving the subsistence benefit had acquired a total of 20 cars during the period of receiving the benefit, whereof 2 families had purchased 3 cars each. Similarly, in the City of Tartu, 12 beneficiaries had acquired a total of 23 cars, whereby one of these beneficiaries had acquired 7 cars, one of which was sold.

In most cases, the purchased cars were relatively old, but there were 3-4 years old vehicles. Unfortunately, the law does not prohibit the payment of benefit in such cases. The audit demonstrated that even if the beneficiaries indicate the existence of property, the necessary materials for the valuation of property are sent to the relevant committee of the city government only in exceptional cases.

In his comments on the audit results, the Auditor General, Mihkel Oviir hoped that in the future the local government officials pay more attention to background examination. “Unfortunately, there are still a few individuals who act inappropriately and accept money targeted to those who are really in need. This possibility must be excluded," assured the Auditor General.

At the beginning of 2005, several amendments were made to the Social Welfare Act. One of the most important amendments is the option of not awarding the benefit, if the property owned or used by the applicant provides sufficient means of subsistence to him and his family. However, in some cases the beneficiaries had sold their property during the benefit period, but the income from the sale of property had not been taken into account with regard to granting the benefit. The social workers did not have information on such income.

The Auditor General, Mihkel Oviir was satisfied with the fact that the rapid development of the Estonian economy has a clear impact on the people's ability to cope themselves and in the recent years the number of families receiving the benefit for ensuring the level of subsistence has constantly dropped.

The NAO audit showed that each year much more funds are allocated in the budget than actually needed. As a result, 10 % of the funds for subsistence benefits remained unused in 2003, and in 2004 and 2005 the percentages were 21.7 and 23.8, respectively. It is likely that tens of millions remain unused this year as well.

Most of the beneficiaries are families with unemployed persons and families with children. According to the number of times of receiving the benefit (for ensuring the subsistence level), the largest group is families which received the benefit for every month of the year. In 2003, 18.3 % of the benefiting families received the benefit each month, and in 2004 and 2005 this figure was 23.9 % and 23.1 %, respectively.

Although subsistence benefit is a government allowance for supporting families in temporary difficulties until their financial situation improves, a large share of families receive the benefit continuously for 5-10 years (according to the audit results, 50-60 % of the families receiving the benefit throughout the year). This indicates that these families have been unable to improve their situation sufficiently to no longer need the benefit.

According to the number of times of receiving the benefit, another large group is families which received the benefit only once during the year: 4.4 % in 2003, 17.1 % in 2004 and 15.9 % in 2005.

The share of student families receiving the benefit has dropped significantly – this is due to the amendment to the Social Welfare Act which entered into force on September 5, 2003 and which provides that a student receives the benefit only if his parents received the benefit for the preceding month.

The subsistence benefit is paid since 1994. A person living alone or a family whose monthly net income, after the deduction of the fixed expenses connected with dwelling, is below the subsistence level has the right to receive a subsistence benefit. Since 2005, the subsistence level is EEK 750 per first family member and EEK 600 per every following family member.

The residence expenses (rent, utility costs, etc) are taken into account within the limits approved by the council of the local government and within the standard allotted living space established by the central government. Thus, the amount of the benefit depends on the family’s net income, residence expenses, the subsistence level for the family and the number of family members.

The subsistence benefit is paid by local governments. The equalisation fund for the 2005 state budget had EEK 328 million earmarked for this purpose, and the amount is the same this year.

In addition to paying the benefit for ensuring the subsistence level, the funds allocated for subsistence benefits from the state budget are used for paying additional benefit to single parents, and if some funds remain in excess, additional social benefits are paid in accordance with the procedure established by the local government.

Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: [email protected]

  • Posted: 4/5/2006 12:00 AM
  • Last Update: 9/18/2015 2:15 PM
  • Last Review: 9/18/2015 2:15 PM

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