March 2007 AEG meeting
Chapter 8
Main substantive comments
Comments
Comments from: UNSD, OECD, Russia, Australia, ECB,
Eurostat, IMF, Germany, Hong Kong, Netherlands,
Czech Republic, Israel, Sweden, Denmark, USA
5 major substantive questions to the AEG
31 comments considered by the ISWGNA
97 comments considered by the editor
Question 1: delineation between social
insurance/social assistance /social security
• The delineation between social insurance and social
assistance is quite important:
– It affects the classification of social benefits
– it affects the future supplementary table on pensions
• In the SNA social security is part of social insurance and
not social assistance. This difference could be made
clearer in the SNA, because the terms « social security »
are sometimes used in countries for social assistance
schemes and there is thus confusion.
• The AEG has recommended (Frankfurt) that the
borderline between employer schemes and social
security be explored.
Questions 1. a: delineation between social
insurance/social assistance
Chapter 8 includes a long description of social
insurance schemes but there is no paragraph in
the beginning which explicitly makes the
difference between social insurance and social
assistance.
In particular paragraph 8.59 which defines social
insurance schemes does not define, by
opposition, social assistance schemes.
Questions 1.a
• Does the AEG agree that a clear definition
should be given in paragraph 8.59 of the
difference between social insurance
schemes and social assistance schemes?
Questions 1.b
• Paragraph 8.64 and old Annex IV gives a
definition of social insurance based on three
criteria:
– Obligation of participation
– The scheme is collective, participation is rectricted to
the group
– There is a contribution (by employer)
• Does the AEG confirm this definition?
Question 1.c
• Social assistance should be defined in
opposition to this definition of social insurance.
• The main criterion seems to be the
« participation » in the scheme
• Social insurance = explicit participation (by being
a member of the scheme, by paying social
contributions)
• Social assistance = no explicit participation : the
benefits comes without prior participation (age,
revenue threshhold).
Question 1.c
• Does the AEG agree that the definition of
social assistance, in opposition to social
insurance, should be based on this notion
of « non participatory schemes. »?
Question 1.d
• The definition of social security in the old and the
new proposed draft are the same:
They are social insurance schemes that are:
imposed
Controlled
Financed
By government units.
Question 1.d
Social security/social assistance
• However, the 93 SNA and the proposed new
draft (8.67 (a)) adds this sentence for social
security: « benefits under these schemes are
often not related to levels of salary of the
beneficiary or history of employment. »
• This is not true of many major social security
schemes. So the term « often » seems
unwelcome.
• This sentence tends to allow social assistance
schemes to be included in social security.
Question 1.d
• Does the AEG agree that this sentence should
be suppressed?
• The definition of social security would thus be
limited to:
social insurance schemes that are:
Imposed
Controlled
Financed
By government units.
•
Question 1.e
delineation between employer schemes and
social security
– The editor has proposed to classify social insurance schemes in
two categories: « social security » and « employment related
schemes »
– This last category is a change of the SNA, because there was
previously three categories: (see paragraphs 8.63 of old SNA)
• Social security
• Private funded schemes
• Unfunded schemes
– The new SNA does not any more make any difference in the
treatment of funded/unfunded schemes.
– This led the editor to propose only two categories: « social
security » and « employment related schemes »
Question 1.e
delineation between employer schemes and
social security
• The problem is that this denomination
tends to conclude that social security are
not, by construction, employment related.
• Does the AEG agree that it would be
preferable to name the two categories:
– Social security
– Other employement related schemes?
Question 2
Pension liabilities
• The AEG has decided that autonomous pension
schemes have by definition a zero net worth (=>
zero saving).
• =>When the scheme is underfunded, we record
an asset of the scheme over the sponsor of the
scheme (employer, government).
• Paragraph 8.70 says that this « asset » should
be recorded as « other account
receivable/payable ».
• This is possible but has the disadvantage of not
notionally linking this asset with pension
liabilities.
Question 2
Pension liabilities
• Does the AEG agree to classify this asset
as a sub category of F6 Insurance,
pension and standardised guarantee
schemes?
• This would have the advantage to link this asset
to pension liabilities, and to allow an easy
consolidation of the accounts of the sponsor and
the pension scheme.
•
Question 3
Treatment of uncollected social
contributions
Paragraph 8.54 discusses
of what amount should be
recorded for taxes when a large part of it are unlikly to be
collected.
• First, this paragraph does not mention social
contributions, while the same problem may affect social
contributions (bankruptcy)
• Second, as for taxes (see future Chapter 21 on the
public sector, paragraph 122) to:
– Record only as tax or social contributions amounts that are likely
to be collected
– If any amount recorded as tax or social contribution is
discovered to be uncollectible, to record a capital transfer from
the government unit to the benefitor.
Question 3
Treatment of uncollected social
contributions
• Does the AEG agree to introduce social
contributions in addition to taxes in
paragraph 8.54?
• Does the AEG agree to add a sentence
explaining that if any social contribution
remains recorded that is unlikely to be
collected, then a capital transfer should be
also recorded accordingly.
Question 4: Taxes payable by
owner occupiers of dwellings.
• Owner occupiers act as producer of
services. Taxes paid by owner-occupiers
on dwellings and land should be classified
as other taxes on production.
• This is indeed the recommendation of the
ESA 95.
• SNA 93 classifies these taxes as « current
taxes on capital » (see 8.57.a).
Question 4: Taxes payable by
owner occupiers of dwellings.
• Does the AEG agree to change the SNA
and classify taxes on dwellings and land
payable by owner-occupiers as other
taxes on production and not as taxes on
capital?
Question 5
D631 social assistance in kind/
D632 transfers non market
• D63 Social transfers in kind corresponds to
individual goods and services provided as
transfers in kind to households by government
and NPISH.
• In the « core accounts », D63 is included in the
final consumption of government.
• D63 is only used in the alternative
« Redistribution of income in kind account »
• D63 = Individual Consumption Expenditures
of GG and NPISH
Question 5
social assistance in kind/social
transfers
• D63 is broken down in:
– D631 Social benefits in kind
• D6311 Social security reimbursements (medicine
reimbursements)
• D6312 Other social security benefits in kind (free
dental surgery)
• Social assistance benefits in kind ??
– D632 Transfers of individual non market
goods and services (the rest, of which health
education…)
Question 5
social assistance in kind/social
transfers
• In the drafting of paragraphs 8.114 and
8.115, it is difficult to distinguish between
– D6313 Social assistance benefits in kind
– D632 Tranfers of individual non-market services
• 8.115 says for example that it includes education
and health but also housing services, cultural
and recreational services.
• Are not housing services « social assistance
benefits in kind »?
Question 5
social assistance in kind/social
transfers
• The ESA proposes to record all transfers
in kind that are social in nature: social
housing, dwelling allowance, day
nurseries, professional training, reduction
in transport prices for social reasons as
D6313 social assitance benefits in kind.
• D632 is then obtained as the residual
between total individual non market goods
and services and D631.
Question 5
social assistance in kind/social
transfers
• Does the AEG agree to make this
clarification?