March 2007 AEG meeting
Chapter 17 - pensions
Main substantive comments
Question 1: three systems
• Paragraphs 17.91 to 17.95 essentially
describe two pension systems:
– Universal pension
– Employment related
• Universal includes « social assistance »?
• Better to present three systems:
– Social security pension scheme
– Other employment related schemes
– Social assistance schemes
Question 1
• Three systems = Three treatments of
pension liabilities:
– Social security = not in core accounts but in
supplementary table
– Other employment related schemes = in core
accounts (optional for government)
– Social assistance = no recognition at all
Question 1
Does the AEG agree that these three
categories should be clearly presented in
the chapter?
Question 2 : supplementary table
• AEG (near) consensus on compromise on
pension
•
=> supplementary table
• Objective = controlled flexibility for better
international comparisons
• Principles:
– (1) all non government pension liabilities in the core
accounts
– (2) government sponsored: optional in the core
accounts, but compulsory in the supplementary
accounts.
Question 2
• Does the AEG agree that the principles
governing the supplementary table should
be introduced in a prominent position in
the chapter?
Question 3: transfer of pension
entitlements
• Paragraphs 17.145 and 17.146 describe
pension transfers between pension funds.
• But no description of transfers between different
types of pension schemes, in particular when no
liability is recorded for one of them (government
sponsored)
• Frankfurt AEG: « when the obligation to pay
pensions passes from one unit to another, this
should be recorded as a trabsaction in pension
liabilities even if neither unit has previously
recorded them »
Question 3
• Does the AEG recommend that this
principle is included in Chapter 17 or, a
reference is made in Chapter 17 to
relevant paragraphs of the future Chapter
21?
Question 4: sub-social security
schemes
• Social security scheme = no pension
liability
• Social security unit can include several
schemes, including independent defined
contribution scheme, or funded defined
benefit scheme.
• Frankfurt AEG => separate these
schemes and record liability
correspondingly
Question 4
• Does the AEG agree that the principle of
recording pension liabilities for a scheme
« where the benefits are related to
contributions » even though the scheme
may be described as part of a social
security unit, is referenced in Chapter 17?
Question 5: sponsor and pension
• AEG principle: pension funds have zero net
worth => any underfunding is attributed to the
sponsor (employer)
• Paragraph 17.133 describes the possibility of
this asset of the pension fund towards its
sponsor.
• But does not propose a classification of this
asset.
Question 5
• Also, the paragraph does not introduce the
necessary imputation of a property income from
the sponsor to the pension fund, based on this
asset.
• This imputed property income is necessary to
ensure that the net saving of the pension is zero
(zero net worth).
• Property income = amount of increase in (past
service) pension liabilities due to passing of one
year, minus any property income received by the
pension fund on its funds.
Questions 5 a and 5 b
5. b: Does the AEG agree that it is essential
to record this imputed property income
from the sponsor to the pension fund?
• 5 a: Does the AEG agree to classify this
asset as F6 (insurance, guarantees and
pension) rather than in « Other accounts
receivable payable »?