Treatment of social insurance schemes in
the 2008 SNA
Regional Seminar on Developing a Programme for
the Implementation of the 2008 SNA and Supporting
Statistics in the ECO Member Countries
Ankara, Turkey
11-13 September 2013
United Nations Statistics Division
Outline of Presentation
 Overview of social insurance schemes
 Social security
 Employment-related social insurance schemes other than
social security
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Overview of social insurance schemes
 Insurance scheme where the following two conditions are satisfied:
• Benefits received are conditional on participation in the scheme
and constitute social benefits; and
• At least one of the three conditions following is met:
▫ Participation in the scheme is obligatory either by law or under
terms and conditions of employment
▫ Scheme is collective one operated for the benefit of a
designated group of workers, whether employed or nonemployed, participation being restricted to members of that
group;
▫ Employer makes a contribution (actual or imputed) to the
scheme on behalf of an employee, whether or not the
employee also makes a contribution
 Always involves at least one unit (employer, general government,
financial corporation, or NPISH) other than the beneficiary
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Overview of social insurance schemes
 Two main classes
• Social security schemes
• Employment-related social insurance schemes other than social
security
 Can be broken down into various attributes including:
• Institutional sector allocation
• Type of benefit (pension and non-pension)
▫ Non-pension schemes are not common
• Autonomy (autonomous vs. non-autonomous)
▫ Autonomous social insurance schemes are those schemes with funds
which operate as separate and independent institutional units from the
units (such as corporations) which create them
• Funding (funded vs. unfunded)
▫ A funded scheme is one where identifiable reserves have been
accumulated to meet the obligation to pay future benefits accrued to
the present
 Beneficiaries can be resident or non-resident households
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Overview of social insurance schemes
Terms
 Social contributions
• Actual or imputed payments to social insurance schemes to
make provision for social insurance benefits to be paid
▫ Employers, employees, self employed and unemployed
 Social insurance benefits
• Social benefit payable because the beneficiary participates
in a social insurance scheme and the social risk insured
against has occurred
• Contribution supplements
• Investment income payable on pension entitlements which
is retained by pension funds
• Equivalent of premium supplements
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Social security
 Social insurance scheme covering the entire community, or
large sections of the community, that are imposed,
controlled and financed by government units
 Individual must participate in the scheme to receive social
security benefits
 Two types
• Pension
• Non-pension
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Social security
Output
 Separate unit
• Sum of costs of non-market output
 No separate unit
• Output is included with the output of the level of government
at which it operates
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Social security
Recording of transactions (similar for pension and non-pension)
 Value of output
• Production account of social security fund (general government)
 Employers’ and employees’ actual social contributions
• Generation of income account
▫ “Uses” of employers
• Allocation of primary income account
▫ “Resources” of households
• Secondary distribution of income account
▫ “Uses” of households
▫ “Resources” of social security fund
 Social security benefits
• Secondary distribution of income account
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Social security
Recording of transactions (similar for pension and nonpension)
 Government (individual) final consumption expenditure
• Use of disposable income account
 Social transfers in kind
• Redistribution of income in kind account
 Service charge (output of social security fund)
• Adjusted disposable income account (actual final
consumption)
• Rest of the world account (Exports of goods and services)
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Employment-related social insurance schemes other than
social security
 Two types
• Pension
▫ Defined contribution
▫ Defined benefit
• Non-pension
▫ Unfunded
▫ Funded
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Employment-related social insurance schemes other than
social security – pension
 Defined contribution
• Fund must exist
• Benefits payable on retirement are defined exclusively in
terms of the level of the fund built up from the
contributions made over working life and increases in
value that result from the investment of these funds
• Entire risk to provide adequate income in retirement is
borne by participant
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Employment-related social insurance schemes other than
social security – pension
 Defined benefit
• Fund may exist. If not, a notional fund is assumed to exist
• Benefits payable on retirement are determined actuarially
by the use of a formula, either alone or as a minimum
amount payable
• Risk to provide an adequate income in retirement is
borne either by the employer or is shared between the
employer and employee
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Employment-related social insurance schemes other than
social security – pension
Output
 Operated by employer
• Sum of costs of market output
 Employer uses pension administrator to administer scheme
• Output is explicit fee paid to pension administrator
 Insurance corporation runs scheme for several employers
(multiemployer scheme)
• Output is calculated as:
▫ Social contributions
▫ plus contribution supplements
▫ minus benefits payable
▫ minus increases (plus decreases) in pension entitlements
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Employment-related social insurance schemes other than
social security – pension
Recording of transactions (defined contribution)
 Value of output
• Production account
 Employers’ and employees’ actual pension contributions
• Generation of income account
▫ “Uses” of employers
• Allocation of primary income account
▫ “Resources” of households
• Secondary distribution of income account
▫ “Uses” of households
▫ “Resources” of pension fund
 Investment income payable on pension entitlements
• Allocation of primary income account
• Contribution supplements in secondary distribution of income account
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Employment-related social insurance schemes other than
social security – pension
Recording of transactions (defined contribution)
 Social insurance pension benefits
• Secondary distribution of income account
• Financial account
 Changes in pension entitlements
• Use of disposable income account
• Financial account
 Service charge (output)
• Use of disposable income account (final consumption)
• Rest of the world account (Exports of goods and services)
• Secondary distribution of income account
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Employment-related social insurance schemes other than
social security – pension
Recording of transactions (defined benefit)
 Similar to defined contribution, but increase in pension
entitlements is actuarially determined considering
• Current service increase (increase in entitlement
associated with the wages and salaries earned in the
current period)
• Past service increase (increase in the value of the
entitlement since retirement is one year nearer)
• Decrease in the level of entitlement due to the payment of
benefits to retirees of the scheme
• Other factors (reflected in other changes in assets
account)
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Employment-related social insurance schemes other than
social security – pension
Recording of transactions (defined benefit)
 Sum of employers’ and employees’ actual pension
contributions may be insufficient to meet current service
increase and service charge of pension fund
• Imputed employers’ pension contribution is needed to
ensure equality
▫ Generation of income account
▫ Allocation of primary income account
▫ Secondary distribution of income account
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Employment-related social insurance schemes other than
social security – pension
Recording of transactions (defined benefit)
 Past service increase reflects investment income payable on
pension entitlements which may not be matched by actual
property income earned from investing pension funds
• Imputed interest on the pension fund’s claim on the
pension manager
▫ Allocation of primary income account
 Claim of pension fund on pension manager
• Represents imputed employers’ social contribution and
imputed interest on pension fund’s claim on the pension
manager
▫ Financial account
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Employment-related social insurance schemes other than
social security – non-pension
Unfunded
 Typically operated and managed by employers
 Employers make imputed non-pension contribution on
behalf of employees
 No investment income and thus, no contribution
supplements
 Output is calculated as sum of costs of market output
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Employment-related social insurance schemes other than
social security – non-pension
Recording of transactions (unfunded non-pension)
 Value of output
• Production account
 Employers’ imputed non-pension contributions
• Generation of income account
▫ “Uses” of employers
• Allocation of primary income account
▫ “Resources” of households
• Secondary distribution of income account
▫ “Uses” of households
▫ “Resources” of pension fund
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Employment-related social insurance schemes other than
social security – non-pension
Recording of transactions (unfunded non-pension)
 Social insurance non-pension benefits
• Secondary distribution of income account
 Service charge (output)
• Use of disposable income account (final consumption)
• Rest of the world account (Exports of goods and services)
• Secondary distribution of income account
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Employment-related social insurance schemes other than
social security – non-pension
Funded
 May be carried out by insurance corporations or employees
on behalf of present and past employees (for example,
health cover)
 Liabilities are recorded only when and to the extent that they
exist in the employer’s accounts
 Output is calculated in the same way as output of non-life
insurance
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Employment-related social insurance schemes other than social
security – non-pension
Recording of transactions (funded non-pension)
 Value of output
• Production account
 Employers’ and employees’ non-pension contributions
• Generation of income account
▫ “Uses” of employers
• Allocation of primary income account
▫ “Resources” of households
• Secondary distribution of income account
▫ “Uses” of households
▫ “Resources” of non-pension fund
 Investment income payable on non-pension entitlements
• Allocation of primary income account
• Contribution supplements in secondary distribution of income
account
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Employment-related social insurance schemes other than social
security – non-pension
Recording of transactions (funded non-pension)
 Social insurance non-pension benefits
• Secondary distribution of income account
• Financial account
 Changes in non-pension entitlements
• Secondary distribution of income account
• Financial account
 Service charge (output)
• Use of disposable income account (final consumption)
• Rest of the world account (Exports of goods and services)
• Secondary distribution of income account
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Key references
 2008 SNA, Chapter 17, Part 2 (Social insurance schemes),
 Handbook on Financial Production, Flows and Stocks in the System of
National Accounts
• Joint UNSD/ECB publication
• UNSD responsible for Chapters 1-3; ECB responsible for Chapters 410
• Chapter 3 discusses calculation and allocation of output of various
types of financial services including explicit fees, FISIM, money
lending, central bank output, dealers’ margins, insurance and social
insurance
• Volume measures
• Draft on http://unstats.un.org/unsd/nationalaccount/consultationDocs/draftFinHBJune-2013.pdf circulated for global review in Jun-Jul 2013
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Thank You
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