Comparative analysis of social security systems in the United States and Canada

Social Security system is designed to provide benefits to the individual from: the moment the reach the age of 65 or they become disabled. The way that it works is benefits are immediately paid out based upon the number of workers who are contributing to the program. In the future, those who are working will receive theirs, from the total amount of individuals who are employed. The way that it is funded is through a federal payroll tax that is paid by employers (for the benefit of employees). These are placed into a trust fund that is maintained by the U.S. Treasury. In the years where the number of workers is larger than recipients, the funds are invested into non-marketable U.S. Government bonds. To be eligible everyone is provided with a Social Security number. During the years of their employment, this information will be used to identify and determine eligibility. (Livingston, 2007)

Introduction of the Canadian system

The Canadian system is organized under a program called the Public Pension System. This is focusing on providing assistance to a number of areas to include: health, education, unemployment, family / child assistance, old age, disability and survivors' benefits. To achieve these objectives the program has three major components to include:

Canada Pension Plan / Quebec Pension Plan: This is an earnings-based program where everyone will contribute a certain amount from their income. When someone retires or becomes disabled this will provide them with additional revenue. In the event that something happens to them, these benefits can be passed on to another beneficiary. (Wiseman, 2008)

Old Age Security: This is broad-based pension that is financed through the general revenues. It is paid to all Canadians who are over the age of 65. The only exception is for those individuals who do not meet residency requirements or they exceed predetermined income levels. (Wiseman, 2008)

Guaranteed Income Supplement: This is a non-taxable benefit that is provided to senior citizens who have low to moderate income levels. The basic idea is that this can help to account for any kind of short falls the individual is experiencing in their monthly income after they have retired. (Wiseman, 2008)

These different elements are designed to address those who are most vulnerable in society. The way that this is achieved, is by providing support based upon the income they are receiving from other programs. This addresses any kind of gaps the individual may have in their finances. (Wiseman, 2008)

Comparison of the systems (objective similarities between the systems)

Both systems are working based upon a similar formula of having a payroll tax to fund those who are at retirement age and the disabled. At the same time, these benefits can be passed on to other beneficiaries. The combination of these factors is helping to give certain segments (i.e. The elderly and disabled) with some kind of income protection. As a result, the Canadian Pension Plan / Quebec Pension Plan are similar by paying out the amount that is received from existing workers paying into the system. The funds are paid into the system is based upon a tax that is imposed on workers through their employers. (Wiseman, 2008)

Contrast of the systems (objective differences between the systems)

The differences between the two systems are large. This is because the Canadian approach is focused on dealing with a number of social challenges impacting different segments of the population. For example, all workers and residents are given free health care coverage in the province they are a resident. At the same time, there is assistance provided to families who have children under the age of 6 and they are experiencing financial hardships (i.e. The Universal Child Care Benefit). ("Canada Social Security and Welfare," 2012) (Aaron, 1999) (Livingston, 2007)

This is different from Social Security as these areas are not covered. Any kind of assistance for health care would fall under other programs (i.e. Medicare and Medicaid). However, these are only designed to protect those individuals who meet the age and income requirements. To provide assistance for low income families, this would fall under the WIC program (which is used in conjunction with the states). ("Canada Social Security and Welfare," 2012) (Aaron, 1999) (Livingston, 2007)

Moreover, someone who is disabled (in Canada) is eligible to receive long-term care assistance and additional income. Anyone who is laid off and facing financial challenges are provided with a monthly income. Also, there is additional help offered, to someone over the age of 65 years old (who needs extra monthly income). These different programs are paid for from the tax revenues that are received in the general fund. ("Canada Social Security and Welfare," 2012) (Aaron, 1999) (Livingston, 2007)

This is different from Social Security, as these kinds of areas are not covered by the program. In some cases, unemployment insurance is available for laid off workers. However, this is a program that is used conjunction with the states. At the same time, limited to no assistance is provided to the disabled and elderly outside of the primary benefits they are receiving under the program. If they want to receive additional support, they must seek out assistance from the state they live in. ("Canada Social Security and Welfare," 2012) (Aaron, 1999)

Evaluation of the current U.S. system against the Canadian system (subjective analysis)

These differences are showing how the Canadian system is offering everyone with more in comparison with the U.S. This is because Social Security has a limited mandate and many people believe that these issues can be dealt with by the states / communities. Over the course of time, this has resulted in recipients receiving limited benefits from one single program. As a result, the U.S. system is inferior to the Canadian. This is because it ignores the issues that are impacting critical segments of the population. Instead, it is concentrating on passing these issues onto the states or the individual. When this happens, the person will face considerably more financial challenges in addressing a host of issues. (Williams, 2011)