Eesti 200 announced triumphantly this week that the government has reached an agreement to transition to needs-based social benefits starting in 2028. This initiative stems from the coalition party's election promise to create a more personalized state.

"The problem in Estonia is that we have very high family and child benefits. About 3 percent of our gross domestic product (GDP) is spent on family and child policies, which is one of the highest proportions in the European Union. Of this 3 percent, 2 percent is simply distributed in cash. Meanwhile, only 1 percent of those expenditures is related to services for children and families, such as extracurricular education, daycare services, speech therapy and care services," explained Kristina Kallas, the minister of education and leader of Eesti 200.

However, coalition partners argue that no concrete plan for the transition to needs-based social benefits is in place yet. The agreement simply calls for an analysis to explore the possibilities.

"There is an agreement to seek ways to implement needs-based benefits starting in 2028. However, there is no agreement today on which specific benefits will be affected. We know that there are a number of obstacles. These are primarily related to the information we have, the information we lack and how different agencies can exchange data between their registries. The challenges involve both the IT infrastructure and legal considerations, especially regarding how much sensitive personal data we can or are allowed to exchange," commented Signe Riisalo, minister of social protection from the Reform Party.

"We will continue with the analysis of needs-based benefits. If it is possible to identify areas for needs-based payments, then yes, all coalition parties support this. But it's not possible to predict yet which specific benefit or allowance this will apply to," added Health Minister Riina Sikkut (SDE).

Both Riisalo and Sikkut pointed out that many social benefits are already needs-based. In the case of universal child benefits, the question arises whether the administrative costs would outweigh the benefits of switching to a needs-based system.

"We already have child benefits for large families, single-parent child support and support for parents of children with disabilities, as well as benefits for children in foster care or under guardianship. So, needs-based benefits are already present in our system," Riisalo noted.

"For example, student grants are already needs-based. And for larger expenses, like pensions, no one imagines that pensions should be needs-based. A pension is a right earned through work, and retroactively taking away that right is not possible," said Sikkut.

"Children are not distributed the same way as incomes, and moving to a needs-based system for child benefits would have a marginal budgetary impact but would create a significant administrative burden. I don't see that it would be possible to move child benefits to a needs-based model," she added.

Kristina Kallas also acknowledged that there is no substantial agreement within the coalition yet.

"The main debate isn't about having incorrect data but about our inability to agree on what needs-based means and which universal benefits should be redirected towards services. This is both a legal and a political debate that we're having right now," Kallas explained.

The analysis will be conducted by the Ministry of Social Affairs and is expected to be completed within the next year.

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