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Reimund Mink European Central Bank

SNA Review: Pension schemes Report of the Eurostat/ECB Task Force and implementation of the supplementary table on pensions. Reimund Mink European Central Bank. John Verrrinder Eurostat. Working Party on National Accounts, Paris, 3 to 5 October 2007. Overview. Pension schemes in Europe

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Reimund Mink European Central Bank

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  1. SNA Review: Pension schemesReport of the Eurostat/ECB Task Forceand implementation of the supplementary table on pensions Reimund Mink European Central Bank John Verrrinder Eurostat Working Party on National Accounts, Paris, 3 to 5 October 2007

  2. Overview Pension schemes in Europe Recording of general government pension obligations in the new SNA Measurement of general government pension obligations in Europe

  3. Pension schemes in Europe Predominant type of pension schemes in European countries and in the US

  4. Recording of general government pension obligations in the new SNA (i) New recording of stocks and flows of general government pension schemesin the new SNA will be formally identical to the recording of stocks and flows of non-government pension schemes Based on model estimations Opening balance sheet + incoming flows - outgoing flows = Closing balance sheet

  5. Recording of general government pension obligations in the new SNA (ii) • This new recording of general government pension obligations is based on a worldwide compromise • Recording of all pension schemes in social insurance in a supplementary table • Distinction between stocks and flows recorded in the core accounts and recorded only in the supplementary table

  6. Recording of general government pension obligations in the new SNA (iii) • Eurostat/ECB Task Force on Pensions • Methodological issues: Design of the supplementary table(part of chapter 17 of the 2009 SNA) • Distinction between • Core and non-core national accounts • Non-general government and general government sponsorship • Non-general government and general government sectors • Transactions and other economic flows

  7. Recording of general government pension obligations in the new SNA (iv) A supplementary table on pension schemes in social insurance DB – defined benefit; DC – defined contribution. 1) Such other non-DC schemes, often described as hybrid schemes, have both a defined benefit (DB) and a DC element. – 2) Schemes organised for general government employees. - 3) These are non-autonomous DB schemes recorded in the core accounts. - 4) Counterpart data for non-resident households will only be shown separately when pension relationships with the rest of the world are significant. - 5) A more detailed split of these positions should be provided for columns H and I based on the model calculations carried out for these schemes. – 6) These assets do not include pension entitlements or equity held by pension schemes towards their sponsors.

  8. Recording of general government pension obligations in the new SNA (v) Criteria to record pension schemes’ entitlements in the core national accounts or in the supplementary table(preliminary work)

  9. Measurement of general government pension obligations in Europe (i) • Modelling issues: Estimation of pension obligation data • Accrued-to-date liability concept • Models to carry out actuarial estimates (national models, Freiburg Research Center for Generational Contracts, World Bank Pension Reform Options Simulation Toolkit (PROST)) • Parameters (discount rate, wage growth rate, GDP growth; ABO (accrued benefit obligation) versus PBO (projected benefit obligation); benefit formula parameters (years of service, indexation, etc.) • Input data (demographic data (population, mortality); pension scheme data (contributors, retirees, pension payments, gross earnings of contributors)

  10. Measurement of general government pension obligations in Europe (ii) • First results will be presented in a report to the Committee on Monetary, Financial and Balance of Payments Statistics (CMFB) in January 2008. The report will cover • Methodological issues • Estimates for EU countries • Data on stocks, transactions and other flows on general government pension obligations • For general government employee defined benefit schemes and for social security pension schemes • Based on various models (national, Freiburg, World Bank) • A practical guide for compilers

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