A basic income guarantee is a form of social reform that provides individuals with a specific level of income. National or federal governments may decide to set up a social security system that provides income for citizens under certain conditions. Private companies can also offer this system by providing an annuity or other investments. A basic income guarantee is closely related to a minimum income guarantee, which is for older individuals. The system may be a pay-in option or a government subsidy.
A social security system may operate as a basic income guarantee model and will either require payment into the system or be a general redistribution of wealth. The former system will take a small portion of money from each individual and set it aside in a fund for later use. A government usually handles this system. The second system is more of a government subsidy. Tax revenues go into a fund that pays out income for qualified individuals.
Minimum income guarantees are often funds for retired individuals. In a basic income guarantee model, specific requirements must be met for individuals to qualify for this system. The biggest qualifier is age. Individuals must meet specific age requirements as different ages at retirement may qualify for different dollar amounts. Documentation is necessary to prove an individual’s age for this government system type.
Private sector companies can also offer individuals a basic income guarantee. Insurance companies often provide policies called annuities for just this purpose. Individuals set up an annuity with specific terms and pay into the investment for a certain time period. After a certain number of years, the policy kicks in with its basic income guarantee. The policy will make specific payments over time to these individuals in order to repay their investments and provide them with income, usually after retirement.
Though an individual can receive some form of a basic income guarantee through either a government or private option, the money received is not necessarily a full-time income. The money is often much less than an individual earned during a working career. In most cases, the basic income guarantee is simply meant to supplement an individual’s income later in life. Though some may be able to live on the income, it is usually not possible to maintain a high quality of life. A government system that redistributes the wealth of citizens may also create an imbalance in a nation.