OUTCOME OF THE EUROSTAT-ILO-IMF-OECD WORKSHOP ON PENSIONS Paul Goebel Policy Analyst National Accounts Division, OECD Advisory Expert Group on National Accounts Paris, France, April 13-15, 2016

Introduction Pension workshop held in Paris on March 9-11, 2016 Discussion topics: –Pensions from a policy perspective –Pension models and methodologies –Actuarial guidelines and public sector accounting standards –Recording of pensions according to statistical standards –Preliminary results of countries’ analysis –Experiences in the recording/communication of pensions Purpose of this presentation is to outline the discussions of each of these topics and the conclusions of the workshop, and to seek the Expert Group’s guidance on two items stemming from the discussions 2

Pensions from a Policy Perspective European Commission’s Ageing Report –Effects of ageing on pensions, health care, long-term care, education, unemployment benefits –Uses data based on a harmonised reporting framework for public pension expenditures, benefit ratios and replacement rates OECD’s Pensions at a Glance –Prospects of pension entitlements at different earnings levels –Gaps in data available for share of pension assets in total wealth, breakdown of public/private pensions, average age of first pension claims, number of people covered by private pension plans 3

Pension Models and Methodologies Czech Republic, Norway – dynamic microsimulation models supported by actuarial software Germany – standardized model supported by Visual Basic for Applications All models relied on detailed data on age-specific probabilities of key life events Canada – methodological overview of compiling an actuarial balance sheet ILO presentation on linking pension reporting to actuarial sustainability, national accounting and government finance statistics 4

Actuarial Guidelines and Public Sector Accounting Standards International Public Sector Accounting Standards Board (IPSASB) consultations on how to account for social benefits International Actuarial Association commented on the importance of the sustainability of a pension scheme and emphasised guidance of selecting a valuation approach parallel to the financing approach Differences between IPSAS 25 and Government Finance Statistics –Considerable overlap between the SNA, GFSM and IPSAS –Similar terminology used with different meanings (e.g. past service costs and interest costs) 5

Recording of Pensions According to Statistical Standards Recording of pension entitlements –Options to determine whether pension entitlements should be recorded in the core accounts versus the supplementary table Recording of property income in the case of liabilities between a pension manager and a DB pension fund –Options to classify the imputed property income on the claim towards the pension manager as: investment income payable on pension entitlements, or as interest –Considerations about the recording of the various events/transactions affecting the claim of a pension funds towards the pension manager more generally 6

Country Experiences Switzerland –Ability to withdraw retirement benefits in order to purchase a house; how such a withdrawal is treated in the national accounts Mexico –Actuarial estimates from various sources; need to evaluate effects of different methods and assumptions Netherlands –Preliminary results under four scenarios with different retirement ages –Estimates a price-volume breakdown for changes in pension entitlements 7

Recording/Communication of Pensions Canada – Various reports on the Canada Pension Plan –Perspective of partially-funded scheme as part of a social contract –Cooperation between actuaries, accountants and auditors in order to conduct effective disclosure United States –Bringing actuarial measures of DB pensions into the US national accounts –Pension liabilities in the US financial accounts –Results for the supplementary table 8

Conclusions National accounts facing increasing user demands Supplementary table on pensions: still issues to be resolved with regard to the implementation, both in conceptual terms and in practical terms Need for greater cooperation across all domains involved in pension statistics Consistency is a common challenge in compiling data and reporting on multiple pension schemes One number does not fit all purposes, e.g. (business) accounting versus sustainability 9

For Discussion The AEG is requested to: –Provide guidance on the next steps for addressing the issue of differing assumptions in the estimation of pension entitlements –Provide ideas and suggestions (on the need) to further increase cooperation with the actuarial and public sector accounting domains 10

Thank you for your attention! 11