Pension schemes in the updated SNA Anne Harrison Editor

Range of pensions Employer’s schemes –Private employer –Public employer Social security Private pension provision

Social insurance scheme No change to SNA Must be a requirement imposed by a third party (by government or as a condition of employment) Deal only with private employers’schemes

Alternatives Schemes may be contributory on the part of the employee or non-contributory Schemes may be defined contribution (money purchase) or defined benefit (defined by a formula)

Less relevant alternatives Funded or unfunded Autonomous, non-autonomous but segregated, non-autonomous and non- segregated Concentrate on entitlements of pensioners not assets of the scheme

Defined contribution schemes No change from 1993 SNA Employer and or employee make contributions Excess of contributions over cost of running the schemes become assets of the scheme Entitlements are exactly equal to assets

DC schemes cont Property income from the management of the assets is distributed to future pensioners and treated as contribution supplements Holding gains and losses add to assets of fund manager and an equal amount is added to the entitlement via the revaluation account

Defined benefit schemes May or may not be actual contributions by employer and or employee May be imputed contribution by employer Sum of actual and imputed contributions must exactly equal the increase in pension entitlement coming form the current period’s service plus service charge

Change Focus on entitlement not assets May have imputed contribution in addition to actual contribution if actual contributions insufficient to meet current period entitlements May have imputed contribution even when employer takes a “contribution holiday”

Property income Increase in net present value of start of period pension entitlement due to lapse of time and the fact that fewer discount factors apply How this is to be funded is irrelevant; the amount is predetermined and increases the entitlement by a known amount. Full amount treated as property income

Estimates Actuarially based Assume most likely that business accounts will provide Investigating use of pension modelling software

Other change in volume of entitlements Life expectancy Promotion Change in pension scheme

Other change in value of entitlements Change in discount rate Inflation protection clause

Service charge If no other valuation available is sum of costs Paid by future beneficiaries By convention out of current contributions (matches DC case)

If employer has full responsibility for pensions Employer must make up any difference between entitlements and assets available Employer may be entitled to keep any excess of assets over entitlements But some jurisdictions may forbid this

If employer lays off responsibility Via insurance company Via multi-employer scheme Then insurance company or multi- employer scheme is responsibility for any shortfall but keeps any excess

Change in unit holding liability for entitlement Shows as transaction in financial account

Public employee schemes Eurostat task force looking at possible compromise Supplementary table containing all estimates for all schemes, private, public and social security Criteria given for which entries carry forward to core accounts and which not Gives flexibility to compilers and users