SNA Review: Pension schemes
Report of the Eurostat/ECB Task Force
and implementation of the
supplementary table on pensions
Reimund Mink
John Verrrinder
European Central Bank
Eurostat
Working Party on National Accounts, Paris, 3 to 5 October 2007
Overview
Pension schemes in Europe
Recording of general government pension obligations in the
new SNA
Measurement of general government pension obligations in
Europe
Pension schemes in Europe
Predominant type of pension schemes in European countries and in the US
Social insurance
Social security schemes,
(unfunded) general government
employee defined benefit schemes
(first pillar)
Belgium
Germany
Greece
Spain
France
Ireland
Italy
Luxembourg
Netherlands
Austria
Portugal
Finland
United Kingdom
United States
Defined contribution schemes,
private defined benefit schemes, (funded)
general government employee defined benefit
schemes
(second pillar)
Individual insurance
(third pillar)
Recording of general government pension obligations in the new SNA (i)
New recording of stocks and flows of general government pension schemes
in the new SNA will be formally identical to the recording of stocks and flows of non
government pension schemes
Contributions
• Actual
• Imputed
(of which:
property income)
Based on model
estimations
Pension payments
Financial services
Other flows
• Revaluations
• Other changes
Increase in pension
obligations
(Implicit) pension
obligations at the
end of the period
(Implicit) pension
obligations at the
beginning of the
period
Opening balance sheet +
incoming flows
-
outgoing flows
= Closing balance sheet
Recording of general government pension obligations in the new SNA (ii)
This new recording of general government pension obligations is
based on a worldwide compromise
Recording of all pension schemes in social insurance in a
supplementary table
Distinction between stocks and flows recorded in the core
accounts and recorded only in the supplementary table
Recording of general government pension obligations in the new SNA (iii)
Eurostat/ECB Task Force on Pensions
Methodological issues: Design of the supplementary table
(part of chapter 17 of the 2009 SNA)
Distinction between
(i)
Core and non-core national accounts
(ii) Non-general government and general government sponsorship
(iii) Non-general government and general government sectors
(iv) Transactions and other economic flows
Recording of general government pension obligations in the new SNA (iv)
A supplementary table on pension schemes in social insurance
Core / non-core national accounts
Core
Sponsor
Non-core
Non-general government
General government
Scheme
Position / transaction /
other flow
Row number / column number
General government employee DB
schemes2)
Total
A
Total
B
DC
schemes
C
DB
schemes
and other
non-DC
schemes1)
D
Of which: Schemes
classified in general
government 3)
DC
schemes
E
F
G
H
Social
security
pension
funds
Counterparts: 4)
Of which:
Resident
households
I
J
Opening balance sheet
1
Pension entitlements
Transactions
2
Social contributions relating to pension schemes
Employer actual social contributions
Employer imputed social contributions
Employee actual social contributions
Employee imputed social contributions/ property income
Self employed and non-employed social contributions
3
Other (actuarial) accumulation of pension entitlements in
social security pension funds
4
Pension benefits
5
Change in pension entitlements (rows 2+3-4)
6
Changes in pension entitlements due to transfers of
entitlements
Other economic flows
7
Revaluations5)
8
Other changes in volume5)
Closing balance sheet
9
Pension entitlements (rows 1+5+6+7+8)
Related indicators
DB – defined benefit; DC – defined contribution. 1) Such other non-DC schemes, often described as hybrid schemes, have both a defined benefit (DB) and a DC element. – 2) Schemes organised for general government employees. - 3) These are
non-autonomous DB schemes recorded in the core accounts. - 4) Counterpart data for non-resident households will only be shown separately when pension relationships with the rest of the world are significant. - 5) A more detailed split of
these positions should be provided for columns H and I based on the model calculations carried out for these schemes. – 6) These assets do not include pension entitlements or equity held by pension schemes towards their sponsors.
Recording of general government pension obligations in the new SNA (v)
Criteria to record pension schemes’ entitlements in the core national accounts or in the supplementary table
(preliminary work)
Very important
Important
Less important
Unimportant
FI, DE, NL,
DK
Criterion
Degree of integration within the general government
structure (autonomous versus non-autonomous)
PT, IT, Norway
FR, MT, RO, PL,
ES
AT, CZ, EE, SE,
SK, IE, SI
Risk exposure / ability to change the benefit formula
(general government does not have discretion to
change unilaterally the benefit formula at any point in
time and thereby partially default on its obligations)
FR, FI, DE, IT, ES,
DK
AT, CZ, NL, PL,
SK, IE
PT, MT, RO, EE,
SE, SI
Nature of the contract
(generally not forced by law to participate)
FR, FI, RO, NL, PL
PT, SE, SK, ES, SI
AT, CZ, MT, EE,
IT, IE, Norway
DE, DK
Legal framework close to social security pension funds
FR, CZ, FI, DE,
RO, PL, SK, IE, ES
AT, PT, IT, SI
MT, EE, NL, SE,
Norway
DK
Funding
(funding versus no funding)
CZ, PT, RO, SK,
IT, Norway
AT, EE, SI
FR, MT, NL, IE,
ES
FI, DE, SE,
PL, DK
Other criteria listed by the EU members: FR: As important as the legal framework, is the degree of financial integration within
the social security (participation in an “equalisation” mechanism); NL: Is the whole population covered? Is it related to a
collective labour contract? A collective labour contract is compulsory by law; PT: additional criteria i) the possibility of an
individual leaving the scheme being reimbursed of his contributions; ii) the government faculty of arbitrarily changing the rate of
contribution; FI: Is the scheme part of collective system covering the large part of community or not.
Measurement of general government pension obligations in Europe (i)
Modelling issues: Estimation of pension obligation data
Accrued-to-date liability concept
Models to carry out actuarial estimates (national models,
Freiburg Research Center for Generational Contracts, World
Bank Pension Reform Options Simulation Toolkit (PROST))
Parameters (discount rate, wage growth rate, GDP growth;
ABO (accrued benefit obligation) versus PBO (projected
benefit obligation); benefit formula parameters (years of
service, indexation, etc.)
Input data (demographic data (population, mortality); pension
scheme data (contributors, retirees, pension payments, gross
earnings of contributors)
Measurement of general government pension obligations in Europe (ii)
First results will be presented in a report to the Committee on
Monetary, Financial and Balance of Payments Statistics (CMFB) in
January 2008. The report will cover
Methodological issues
Estimates for EU countries
Data on stocks, transactions and other flows on general government
pension obligations
For general government employee defined benefit schemes and for social
security pension schemes
Based on various models (national, Freiburg, World Bank)
A practical guide for compilers