Workshop on the implementation of the 2008 SNA
WPFS+WPNA |OECD
Paris, 24-27 October 2011
Pension statistics for the new ESA:
compilation issues and some results
for Portugal
Ana M. de Almeida
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
Deputy-Director
Statistics Department
1
Outline
• METHODOLOGICAL FRAMEWORK
• DATA COMPILATION AND RESULTS FOR PORTUGAL
• FUTURE DEVELOPMENTS
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
2
METHODOLOGICAL FRAMEWORK
Definition
• Definition: Pension entitlements are classified in the SNA 2008 as a
subcategory of the financial asset category Insurance, annuities, pension and
standardised guarantees schemes, and show the extent of financial claims
which existent and future pensioners hold against either their employer or a
fund designated by the employer to pay pensions earned as a part of the
compensation agreement between the employer and the employee.
• As a consequence of the recognition of the entitlements as being an asset of
the households, it is necessary to show them as being built up by
contributions from employers and employees over the period of employment.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
3
METHODOLOGICAL FRAMEWORK
Definition
• The entitlements due under pension schemes comprise two elements: one
when the formula determining the amount of the pension is agreed in
advance (as under a defined benefit scheme) and one where the amount of
the pension depends on the performance of specific financial assets (a
defined contribution scheme).
• For the former an actuarial estimation of the liabilities of the pension
provider is used; for the latter the market value of the financial assets held
by the pension fund on behalf of the future beneficiaries is used.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
4
METHODOLOGICAL FRAMEWORK
From 1993 SNA to 2008 SNA
• Three main reasons for changing the treatment of unfunded employer
retirement pension schemes in the 1993 SNA:
– Funded and unfunded schemes with different recordings, lead to different effects across
countries, on key variables like income, saving, financial assets or liabilities.
– Unfunded employer schemes are particularly significant for the general government and
the public sector; in light of demographic developments and the foreseeable fiscal burden
from ageing populations in almost all developed countries, there is well-founded interest
in having available more comprehensive statistical information on commitments of
governments.
– Convergence of statistical and accounting international standards, the last (IPSAS)
already recognising unfunded employer retirement pension obligations as liabilities.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
5
METHODOLOGICAL FRAMEWORK
Core and non-core accounts
• Within the discussion of the new international statistical standards, namely
SNA 2008, discussions were held concerning the degree of harmonisation in
the recording of pension entitlements in the national accounts, when the
underlying institutional reality differs significantly across countries.
• Pension assets (or future rights) in countries with mainly capitalised systems
are recorded as household wealth, while future pension rights in countries
with government managed pay-as-you-go scheme were not recorded.
• Consensus was reached on distinguishing pension schemes managed by
general government which should be recorded in the core national accounts,
from those schemes that should be recorded only in a new Supplementary
table on pensions (like social security schemes).
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
6
METHODOLOGICAL FRAMEWORK
Fiscal sustainability?
• The overall aim of the table is to present the opening and closing
stocks of pension entitlements of social insurance pension schemes
(including social security) and the transactions and other economic
flows during the period that account for the difference between the
opening and the closing positions.
• Pension entitlements derived for government-managed pay-as-you
go schemes are not measures of fiscal sustainability which require
elaborate modelling simulations, as they do not take into account the
amounts to be received by governments through social contributions.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
7
METHODOLOGICAL FRAMEWORK
Contact Group on Pensions
• The Contact Group (CG) on the statistical measurement of the assets
and liabilities of pension schemes in general government was
established by the CMFB in 2008 and took over the follow-up work of the
Task Force with the same designation mandated in 2006.
• The TF/CG has developed an international compromise on the treatment
of pension schemes in the updated SNA , particularly focusing on the
treatment of unfunded government-managed pension schemes and
developed a standard Supplementary table on pension schemes which
provides a complete accounting of pension entitlements (stocks and
related flows) for all pension schemes in social insurance, including social
security pension schemes.
• It serves a double purpose: presenting users with an overview of
pension scheme data and providing the means by which more
comparable data could be achieved across countries worldwide.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
8
METHODOLOGICAL FRAMEWORK
Supplementary table
• A Supplementary table to be provided in compulsory terms by all European
Union countries in the context of the new ESA regulation:
Table 29 of the ESA Transmission Programme
Supplementary table on pension schemes in social insurance
(annual – 12 months timeliness – from 2014 onwards)
•In column, core and non-core accounts (GG defined benefit and Social security;
pension schemes according to its manager (non GG and GG); and nature of the
pension schemes (defined contribution and defined benefit).
•In row, opening and closing stocks in Households pension entitlements, changes
in positions including transactions and changes due to revaluations and other
changes in volume.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
9
METHODOLOGICAL FRAMEWORK
Supplementary table
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
10
METHODOLOGICAL FRAMEWORK
Supplementary table
• The main assumptions behind calculation in the Supplementary table:
– Pension entitlements for survivors and also for disability or invalidity type benefits
provided for within a pension scheme, and only of a social insurance type (excluding
benefits which are of the type of social assistance)
– Recording gross of taxation and social contributions
– Accrued to date pension entitlements – present value of the current and of the
projected future pension benefits paid to all pensioners and current workers, in a
certain reference date
– Discount factor based on yields of central government bonds (where the market is
sufficiently liquid and the instruments sufficiently mature)
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
11
METHODOLOGICAL FRAMEWORK
Supplementary table
– The Projected Benefit Obligation (PBO) approach will be the most
appropriate for the treatment of real wages changes on pension
entitlements in national accounts, while assuming a non-zero (usually
positive) future development of real wages; unlike the alternative
Accumulated Benefits Obligation (ABO) approach which assumes zero
future changes in real wages only taking account of wages’ growth due
to inflation
– Demographic assumptions should be based as far as possible in the
comparable demographic data compiled by Eurostat (EUROPOP).
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
12
METHODOLOGICAL FRAMEWORK
Cross-country comparison (2006, PBO, % GDP)
• Pension entitlements very large, especially for social security
Source: Müller et al. (2009), p. 165.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
13
DATA COMPILATION AND RESULTS FOR PORTUGAL
Overview of pension schemes
• There are two main government managed pension schemes in Portugal:
– Social security general scheme – Regime Geral da Segurança Social (SS)
– Civil servants’ pension scheme – Caixa Geral de Aposentações (CGA).
• They are both unfunded defined benefit schemes (on a pay-as-you-go
basis).
• Starting 2006: new civil servants were enrolled in the Social security
general scheme – CGA closed for new admissions!
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
14
DATA COMPILATION AND RESULTS FOR PORTUGAL
Pension schemes – Main results
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
15
DATA COMPILATION AND RESULTS FOR PORTUGAL
Freiburg University Model
•
Contract between Banco de Portugal and the Research Center for
Generational Contracts of Freiburg University to develop a report and an
estimation for the Portuguese pension entitlements according the
Freiburg model: “Estimating pension entitlements of government
employer and social security pension schemes in Portugal” , delivered in
2010.
•
In conformity with the pension entitlements of EU countries calculated
by the CG, also based upon the Freiburg model.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
16
DATA COMPILATION AND RESULTS FOR PORTUGAL
Compilation sources and data
• Data are compiled under co-operation between Banco de Portugal and
National Statistics Institute from the following institutions:
Ministry of Labour
and Social Solidarity
Ministry of Finance
Insurance and
Pension Funds
Portuguese
Supervisory Authority
SS
Government
Employer
•Budget data broken
down by pension type
•Average sex-specific
retirees benefits
•Average sex-specific
pension profile for
future retirees
Private
pension funds
•Retirement criteria
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
17
DATA COMPILATION AND RESULTS FOR PORTUGAL
Model assumptions
•
Actuarial cross-section country model.
•
Accrual estimation of the pension entitlements under the accrued
to date gross liabilities approach of the government pension
schemes.
•
Projected Benefit Obligations (PBO) vs Accumulated benefit
obligations approach (ABO).
•
GDP growth rate according to Ageing Working Group (an average
estimate of 1.7% in the period 2007-2060, for Portugal).
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
18
DATA COMPILATION AND RESULTS FOR PORTUGAL
Model assumptions
•
Wage growth rate: 1.5%.
•
Discount rate: 3%, approximately the ten year average of Euro area
ten-year government bond yields.
•
Constant employment rate.
•
Mortality / fertility rates: EUROPOP2008 (Migration was ignored).
•
Matlab programme is used for estimations.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
19
DATA COMPILATION AND RESULTS FOR PORTUGAL
Filling in the Supplementary table
• Portuguese data are provided for in the following columns:
– Columns A, B and C, private autonomous / non-autonomous pension
funds.
– Column E, autonomous government managed pension funds classified as
financial corporations.
– Column G, civil servants’ pension scheme (CGA).
– Column H, social security pension scheme (SS).
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
20
DATA COMPILATION AND RESULTS FOR PORTUGAL
Supplementary table – Results 2009
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
21
DATA COMPILATION AND RESULTS FOR PORTUGAL
Pension schemes – Main results
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
22
DATA COMPILATION AND RESULTS FOR PORTUGAL
Pension schemes – Main results
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
23
FUTURE DEVELOPMENTS
Institutional arrangements
• An institutional framework (which includes the relevant
national entities – NCB, NSI, MF, MLSS) is being developed
with the following purposes:
– Collect the necessary pension statistics
– Ensure the provision of data on time and with quality
– Compile pension statistics to fulfil the reporting obligations to
international organizations
– Analysis of the results.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
24
FUTURE DEVELOPMENTS
Institutional arrangements
• Main reasons to gather these entities:
– Data providers will be involved in the process of data compilation from
the beginning
– Participation on the definition of methodology / share the responsibilities
for the compilation
– Combine all the expertise to improve the estimations and procedures
used in the report.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
25
FUTURE DEVELOPMENTS
Analysis
• Development of a national dynamic general equilibrium
model which takes into account:
– National specific assumptions
– Comparison of the results with the Freiburg model
– Incorporate model specifications in order to measure the main changes
and future reforms related to pension schemes in Portugal
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
26
FUTURE DEVELOPMENTS
Analysis
– Sensitive-case analysis: measuring the impact of social security
reforms and demographic changes, in the calculation of pension
entitlements
– Analysis of the sustainability of social security schemes
– Comments and analyses of the reported figures should be transmitted
to the public in order to guarantee a correct interpretation of the
results.
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
27
Thank You
for Your attention !
Ana M. de Almeida
ammalmeida@bportugal.pt
Pension statistics for the new ESA:
compilation issues and some results for Portugal
Workshop on the implementation of the 2008 SNA
WPFS+WPNA | OECD, 24-27 October 2011
28