This paper provides a review of the economic literature on social security systems and of practical experiences with building social security institutions. The focus is on the design of the institutions, and on the complicated relation between social security, economic welfare and economic growth at the macro-level. Special reference is made to the European experience, because social security systems are much more elaborate and diverse in this continent than in the United States and Japan. The aim of this review is to provide lessons for building social security schemes in developing countries and more specifically in East Asian countries, which experience a relatively fast catch-up with the industrialized world.