1. Defined benefit pensions in Australian economic accounts Carl Obst - ABS

2. Australian Bureau of Statistics Australian political context Non-contentious issue in Australia –Governments recognise a legal and contractual obligation to employees –Households undertake financial planning on the existence of the asset –Trend towards funding of unfunded schemes indicating the acceptance of a liability –Possible charge of “cooking the books” if ABS was not to recognise the liability : i.e. inaccurate statement of government financial position Proper accounting for these obligations always given as a major benefit of move to accruals in government's own reporting

3. Australian Bureau of Statistics Nature of the liability Funding of the liability not the key issue Focus on nature of the liability itself –What obligations exist? –What are the differences from a fully funded situation All government liabilities could potentially be changed by government

4. Australian Bureau of Statistics Measurement issues Well accepted methods exist –Same as methods used for funded schemes –Methods applied by accountants / insurers –In Australia, methods accepted by governments Reported data can be used –In Australia, national accounts estimates are not based on national accounts models but on reported data from governments –Consistency with changes to international accounting standards

5. Australian Bureau of Statistics Key points Unfunded pension schemes are recognised as a liability by Australian employers, particularly by Australian governments Methods for estimating the liabilities and flows are well established and undertaken by experts in this area. Incorporation within the accounts based on the reported data is quite straightforward