Presentation on theme: "Pensions in ESA 2010 WORKSHOP ON PENSIONS Canberra April 2013"— Presentation transcript:
1 Pensions in ESA 2010 WORKSHOP ON PENSIONS Canberra 22-24 April 2013 Jens GrützEurostat
2 Outline The new SNA 2008 Recognition of pension entitlements More specific: ESA 2010/Pension compilation guideCore / Non core recordingRecommendations for actuarial issuesFuture activities in EuropeWorkshopsTransmission program
3 Increasing information needs Pension entitlements should be recognized as financial assets/liabilities in macroeconomic statisticsPension entitlements represent a future benefit that contributes to the net wealth of householdsOmitted benefits / liabilities may lead to comparability problems in national/international analysisAccounting practice increasingly recognises pension entitlements
4 ESA 95: Current recording of pension entitlements Distinguish social insurancePension schemes in social insurance treated according to their features:Private funded social insurance schemes - insurance technical reserves, actuarial treatmentUnfunded private social insurance schemes - no insurance technical reservesSocial security pension - no reserves, no actuarial treatmentPossible different treatment across sectors/countries
5 IMF-led Electronic Discussion Group 2002-2004 Towards SNA2008IMF-led Electronic Discussion GroupDiscussions at the AEGIn principle record pension obligations, on an actuarial basis, for all employer schemes (funded/unfunded)but recording of social security remains unchangedRecognition of issues in EuropeDifficulty to distinguish unfunded government employer schemes from social security worldwide compromiseSNA Chapter 17 (part 2)Adopted by UNSC in August 2008Some further issues left for the research agendaCriteria for core/non-core classification, treatment of property income
6 2008 SNA: Scope of pension entitlements in National Accounts Accrued-to-date pension entitlementsFocussing on old age pensionsCovering the entitlements already accrued in the pastTaking on board new entitlements accrued in the respective periodIgnoring the impact of work to be done in future periods on individual pension entitlementsFor db schemes actuarial techniques are required:Discounting the future benefits to present value
7 ESA 2010: Core / Non-core allocation of schemes 2008 SNA: Examples for criteriaCloseness to social securityStrength of the contribution-benefit-linkAbility of government to change the scheme rulesESA 2010: Pragmatic solutionPay-as-you-go schemes of general government are, like social security, allocated to the non-core accounts. However, reporting on all schemes is provided in the supplementary table.
8 ESA 2010: Recommendations on actuarial issues Demographic assumptions: Longevity assumptions should include the increase of longevity over time; persons receiving disability pensions should be modelled separatelyWage effects: The choice of an ABO or PBO approach should depend on the underlying benefit formula. Formulas including implicitly or explicitly a factor for wage increases should follow the PBO approach.Discount rate: The discount rate should be a risk-free rate. Some criteria are given in ESA 2010 further guidance is provided in the technical compilation guide.
9 Compilation guide: Recommendations on actuarial issues Technical compilation guide for Pension data in National Accounts / Ageing working groupDiscount rate = 3% in real terms; 5 % nominalWage growth = 1.7 % in the (very) long runLife expectancy= Eurostat projection(Europop)Comparability of assumptions/results
10 ESA 2010 Transmission program Compulsory Table:Accrued-to-date pension entitlements in social insurancethree yearly2015 onwards (2012 on a voluntary basis)t+24The data should comprise three datasets based on the actuarial calculations.
11 ESA 2010 Transmission program Clear and comprehensive communication on pensionsOutcome of pension reformsInterpretation of pension dataIn particular:Accrued-to-date pension entitlements are not as such an indicator for sustainability of public finances
12 Sustainability analysis: The 2012 Ageing Report
14 Past & Future activities on pensions ECB/Eurostat Task ForceFinal reportESA 2010 Training course – November 2012Implementation of new ESA rulesSoftware presentations & exercisesEurostat country visits – Identification of best practiceData sourcesInstitutional set-upModellingPension workshops 2009/2010/2013
15 Past & Future activities on pensions - cont. Eurostat Contact GroupElectronic discussion forum on issues related to the calculation of pension entitlementsQuestions to be sent to EurostatPension compilation guide/Update of the compilation guideComments are welcome!
16 Thank you for your kind attention! Jens GruetzEurostat-C1 National Accounts methodology