ABSTRACT
Social security is predominantly funded by contributions, rather than by general tax revenue. And suspension of legal indexation provisions has been an important way of economizing on social expenditures. The basic financing mode of social security is contributory. In the insurance model of social security “taxes and benefits cannot be separately analyzed; rather, the expected value of the insurance protection should be compared with the tax price of the package. Of course, the insurance model of social security does not correspond closely to existing social security institutions. Moreover, it has probably lost some of its normative appeal; since the mid-1970s benefits and entitlements have been reduced while social security contribution levels increased. The exemption of social benefits from most income and social security taxation implies that a large and increasing part of the population is not faced with the increasing cost of social security.
