CHAPTER 17
SOCIAL INSURANCE INCLUDING PENSIONS
INTRODUCTION
- the first consists of social security schemes covering the entire community, or large sections of the community, that are imposed, controlled and financed by government units. Pensions payable under such schemes may or may not be related to levels of salary of the beneficiary or history of employment. Non-pension benefits are less frequently linked to salary levels;
- the second type consists of other employment related schemes. Such schemes derive from an employer-employee relationship in the provision of pension, and possibly other, entitlements that are part of the conditions of employment and where responsibility for the provision of benefits does not devolve to general government under social security provisions.
- general government obliges all employees to participate in a social security scheme;
- employers make it a condition of employment that employees participate in an insurance scheme specified by the employer;
- an employer encourages employees to join a scheme by making contributions on behalf of the employee;
- a trade union arranges advantageous insurance cover available only to the members of the trade union; or
- the schemes other than social security may be arranged with an insurance corporation as a group policy or series of policies, or they may be managed by an insurance corporation in return for a fee. Alternatively, the schemes may be managed by an employer directly on his own behalf or by employers on behalf of their employees and their dependants or by others on behalf of a specified group.
Type of insurance |
Characteristics |
Form of organisation |
Sector/subsector |
---|---|---|---|
Social security |
The participants are obliged by general government to insure against certain social risks |
Organised by general government via social security funds |
Social security funds (S.1314) |
Employment-related social insurance schemes other than social security |
Employers can make it a condition of employment that employees insure against certain social risks |
Organised by employers on behalf of their employees and their dependents or by others on behalf of a specified group |
Sector or subsector of employer, insurance corporations and pension funds or non-profit institutions serving households |
Social insurance schemes, social assistance and individual insurance policies
- participation in the scheme is obligatory either by law or under the terms and conditions of employment of an employee, or group of employees;
- the scheme is collective and is operated for the benefit of a designated group of workers, whether employees, self-employed or non-employed, participation being restricted to members of that group;
- an employer makes a contribution (actual or imputed) to the scheme on behalf of an employee, whether or not the employee also makes a contribution.
Social benefits
- the beneficiaries, or their dependants, require medical, dental or other treatment, or hospital, convalescent or long-term care, as a result of sickness, injuries, maternity, chronic invalidity, old age, etc. The social benefits may be provided in kind in the form of treatments or care provided free or at prices that are not economically significant, or by reimbursing expenditures made by households. Social benefits in cash may also be payable to beneficiaries needing health care;
- the beneficiaries have to support dependants of various kinds: spouses, children, elderly relatives, invalids, etc. The social benefits are usually paid in cash in the form of regular dependants' or family allowances;
- the beneficiaries suffer a reduction in income as a result of not being able to work full-time or work at all. The social benefits are usually paid regularly, in cash, and for the duration of the condition. In some instances a lump sum may be provided additionally or instead of the regular payment. Examples of why people may be prevented from working are as follows:
- voluntary or compulsory retirement;
- involuntary unemployment, including temporary lay-offs and short-time working;
- sickness, accidental injury, the birth of a child, etc., that prevents a person from working, or working full time;
- the beneficiaries receive payments to compensate for suffering a reduction in income because of the death of the main income earner;
- the beneficiaries are provided with housing either for free or at prices that are not economically significant or by reimbursing expenditure made by households. Such items are social benefits in kind;
- the beneficiaries are provided with allowances to cover education expenses incurred on behalf of themselves or their dependants. Education services may be provided as social benefits in kind.
Social benefits provided by general government
Social benefits provided by other institutional units
Pensions and other forms of benefit
SOCIAL INSURANCE BENEFITS OTHER THAN PENSIONS
Excluding income in retirement, a number of other contingencies may be covered such as health insurance, unemployment insurance and long-term care insurance benefits.
Social security schemes other than pension schemes
Other employment-related social insurance schemes
Recording of stocks and flows by type of non-pension social insurance scheme
Social security schemes
Other employment-related non-pension social insurance schemes
PENSIONS
The most important pension benefit of social insurance schemes is income in retirement, but a number of other cases may also occur. For example, pensions may be payable to widows and widowers or to people who suffer an industrial injury and are no longer able to work. All events that give rise to payments because the income earner is no longer able, through death or incapacity, to provide an income for himself or herself and dependants are treated as pensions.
Types of pension schemes
- social insurance pension schemes;
- social assistance; and
- individual insurance policies related to pensions.
Social security pension schemes
Other employment-related pension schemes
Defined contribution schemes
Defined benefit schemes
Notional defined contribution schemes and hybrid schemes
Defined benefit schemes as compared to defined contribution schemes
Pension administrator, pension manager, pension fund and multi-employer pension scheme
Recording of stocks and flows by type of pension scheme in social insurance
Transactions for social security pension schemes
Uses |
|
Resources |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Employer |
Social security fund |
Households |
Other sectors |
Total economy |
Employer |
Social security fund |
Households |
Other sectors |
Total economy |
|
Generation of income account |
||||||||||
139,0 |
|
|
|
139,0 |
Employers' actual pension contributions (D.1211) |
|
|
|
|
|
Allocation of primary income account |
||||||||||
|
|
|
|
|
Employers' actual pension contributions (D.1211) |
|
|
139,0 |
|
139,0 |
Secondary distribution of income account |
||||||||||
|
|
226,0 |
|
226,0 |
Social security contributions (pensions) |
|
226,0 |
|
|
226,0 |
|
|
139,0 |
|
139,0 |
Employers' actual pension contributions (D.6111) |
|
139,0 |
|
|
139,0 |
|
|
87,0 |
|
87,0 |
Households' actual pension contributions (D.6131) |
|
87,0 |
|
|
87,0 |
|
210,0 |
|
|
210,0 |
Social security pension benefits in cash (D.6211) |
|
|
210,0 |
|
210,0 |
Transactions for other employment-related pension schemes
Transactions for defined contribution pension schemes
Uses |
Type of account |
Resources |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Employer |
Pension fund |
Households |
Other sectors |
Total economy |
Employer |
Pension fund |
Households |
Other sectors |
Total economy |
||
Production account |
|||||||||||
|
|
|
|
|
Output (P.1) |
|
1,4 |
|
|
1,4 |
|
Generation of income account |
|||||||||||
11,0 |
|
|
|
11,0 |
Employers' actual pension contributions (D.1211) |
|
|
|
|
|
|
Distribution of primary income |
|
||||||||||
|
|
|
|
|
Employers' actual pension contributions (D.1211) |
|
|
11,0 |
|
11,0 |
|
|
|
|
3,0 |
3,0 |
Property income (D.4) |
|
3,0 |
|
|
3,0 |
|
|
16,2 |
|
|
16,2 |
Investment income payable on pension entitlements (D.442) |
|
|
16,2 |
|
16,2 |
|
Secondary distribution of income account |
|||||||||||
|
|
37,3 |
|
37,3 |
Household total pension contributions |
|
37,3 |
|
|
37,3 |
|
|
|
11,0 |
|
11,0 |
Employers' actual pension contributions (D.6111) |
|
11,0 |
|
|
11,0 |
|
|
|
11,5 |
|
11,5 |
Households' actual pension contributions (D.6131) |
|
11,5 |
|
|
11,5 |
|
|
|
16,2 |
|
16,2 |
Households' pension contribution supplements (D.6141) |
|
16,2 |
|
|
16,2 |
|
|
|
-1,4 |
|
-1,4 |
Social insurance scheme service charges (D.61SC) |
|
-1,4 |
|
|
-1,4 |
|
|
26,0 |
|
|
26,0 |
Other social insurance pension benefits (D.6221) |
|
|
26,0 |
|
26,0 |
|
Use of income account |
|||||||||||
|
|
1,4 |
|
1,4 |
Final consumption expenditure (P.3) |
|
|
|
|
|
|
|
11,3 |
|
|
11,3 |
Adjustment for the change in pension entitlements (D.8) |
|
|
11,3 |
|
11,3 |
|
-11,0 |
-11,8 |
25,8 |
-3,0 |
0 |
Saving |
|
|
|
|
|
|
Changes in assets |
Financial account |
Changes in liabilities |
|
||||||||
|
|
|
|
|
Net borrowing/lending (B.9) |
-11,0 |
-11,8 |
25,8 |
-3,0 |
0,0 |
|
|
|
11,3 |
|
11,3 |
Pension entitlements (F.63) |
|
11,3 |
|
|
11,3 |
|
-11,0 |
-0,5 |
14,5 |
-3,0 |
0,0 |
Other financial assets |
|
|
|
|
|
|
Other flows related to defined contribution pension schemes
Transactions for defined benefit pension schemes
Uses |
Type of account |
Resources |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Employer |
Pension fund |
Households |
Other sectors |
Total economy |
Employer |
Pension fund |
Households |
Other sectors |
Total economy |
|
Production account |
||||||||||
|
|
|
|
|
Output (P.1) |
|
0,6 |
|
|
0,6 |
Generation of income account |
||||||||||
10,0 |
|
|
|
10,0 |
Employers' actual pension contributions (D.1211) |
|
|
|
|
|
4,1 |
|
|
|
4,1 |
Employers' imputed pension contributions (D.1221) |
|
|
|
|
|
Allocation of primary income account |
||||||||||
|
|
|
|
|
Employers' actual pension contributions (D.1211) |
|
|
10,0 |
|
10,0 |
|
|
|
|
|
Employers' imputed pension contributions (D.1221) |
|
|
4,1 |
|
4,1 |
|
|
|
2,2 |
2,2 |
Property income (D.4) |
|
2,2 |
|
|
2,2 |
|
4,0 |
|
|
4,0 |
Investment income payable on pension entitlements (D.442) |
|
|
4,0 |
|
4,0 |
Secondary distribution of income account |
||||||||||
|
|
19,0 |
|
19,0 |
Household total pension contributions |
|
19,0 |
|
|
19,0 |
|
|
10,0 |
|
10,0 |
Employers' actual pension contributions (D.6111) |
|
10,0 |
|
|
10,0 |
|
|
4,1 |
|
4,1 |
Employers' imputed pension contributions (D.6121) |
|
4,1 |
|
|
4,1 |
|
|
1,5 |
|
1,5 |
Households' actual pension contributions (D.6131) |
|
1,5 |
|
|
1,5 |
|
|
4,0 |
|
4,0 |
Households' pension contribution supplements (D.6141) |
|
4,0 |
|
|
4,0 |
|
|
-0,6 |
|
-0,6 |
Social insurance scheme service charges (D.61SC) |
|
-0,6 |
|
|
-0,6 |
|
16,0 |
|
|
16,0 |
Other social insurance pension benefits (D.6221) |
|
|
16,0 |
|
16,0 |
Use of income account |
||||||||||
|
|
0,6 |
|
0,6 |
Final consumption expenditure (P.3) |
|
|
|
|
|
|
3 |
|
|
3 |
Adjustment for the change in pension entitlements (D.8) |
|
|
3 |
|
3 |
-14,1 |
-1,2 |
17,5 |
-2,2 |
0 |
Saving |
|
|
|
|
|
Changes in assets |
Financial account |
Changes in liabilities |
||||||||
|
|
|
|
|
Net borrowing/lending (B.9) |
-14,1 |
-1,2 |
17,5 |
-2,2 |
0 |
|
|
3 |
|
3 |
Pension entitlements (F.63) |
|
3 |
|
|
3 |
|
4,1 |
|
|
4,1 |
Claims of pension funds on pension managers (F.64) |
4,1 |
|
|
|
4,1 |
-10,0 |
-2,3 |
14,5 |
-2,2 |
0 |
Other financial assets |
|
|
|
|
|
SUPPLEMENTARY TABLE FOR ACCRUED-TO-DATE PENSION ENTITLEMENTS IN SOCIAL INSURANCE
Design of the supplementary table
Relations |
Row No |
Recording |
Core national accounts |
Not in the core national accounts |
Total pension schemes |
Counterparts: |
||||||||||
Pension manager |
Non-general government |
General government |
|
|
||||||||||||
|
Defined contribution schemes |
Defined benefit schemes and other [1] non-defined contribution schemes |
Total |
Defined contribution schemes |
Defined benefit schemes for general government employees [2] |
Social security pension schemes |
|
|
||||||||
Classified in financial corporations |
Classified in general government [3] |
Classified in general government |
|
|
||||||||||||
Column number |
A |
B |
C |
D |
E |
F |
G |
H |
I |
J |
||||||
|
|
Opening balance sheet |
||||||||||||||
|
1 |
Pension entitlements |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Changes in pension entitlements due to transactions |
||||||||||||||
Σ 2.1 to 2.4 – 2.5 |
2 |
Increase in pension entitlements due to social contributions |
|
|
|
|
|
|
|
|
|
|
||||
|
2.1 |
Employer actual social contributions |
|
|
|
|
|
|
|
|
|
|
||||
|
2.2 |
Employer imputed social contributions |
|
|
|
|
|
|
|
|
|
|
||||
|
2.3 |
Household actual social contributions |
|
|
|
|
|
|
|
|
|
|
||||
|
2.4 |
Household social contribution supplements [5] |
|
|
|
|
|
|
|
|
|
|
||||
|
2.5 |
Less: pension scheme service charges |
|
|
|
|
|
|
|
|
|
|
||||
|
3 |
Other (actuarial) change of pension entitlements in social security pension schemes |
|
|
|
|
|
|
|
|
|
|
||||
|
4 |
Reduction in pension entitlements due to payment of pension benefits |
|
|
|
|
|
|
|
|
|
|
||||
2 + 3 – 4 |
5 |
Changes in pension entitlements due to social contributions and pension benefits |
|
|
|
|
|
|
|
|
|
|
||||
|
6 |
Transfers of pension entitlements between schemes |
|
|
|
|
|
|
|
|
|
|
||||
|
7 |
Change in entitlements due to negotiated changes in scheme structure |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Changes in pension entitlements due to other flows |
||||||||||||||
|
8 |
Changes in entitlements due to revaluations [6] |
|
|
|
|
|
|
|
|
|
|
||||
|
9 |
Changes in entitlements due to other changes in volume [2] |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Closing balance sheet |
||||||||||||||
1 + Σ 5 to 9 |
10 |
Pension entitlements |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Related indicators |
||||||||||||||
|
11 |
Output |
|
|
|
|
|
|
|
|
|
|
The columns of the table
- by type of recording into pension schemes completely recorded in the core national accounts (columns A to F) and those whose entitlements are only recorded in the supplementary table (columns G and H);
- by type of pension manager into non-general government (columns A to C) and general government pension schemes (columns D to H); pension schemes including social security classified in general government are shown in columns D, F, G and H; and
- by type of pension scheme into defined contribution schemes (columns A and D) and defined benefit schemes (columns B and E to G).
The rows of the table
Row No |
Opening balance sheet |
---|---|
1 |
Pension entitlements |
|
Changes in pension entitlements due to transactions |
2 |
Increase in pension entitlements due to social contributions |
2.1 |
Employer actual social contributions |
2.2 |
Employer imputed social contributions |
2.3 |
Household actual social contributions |
2.4 |
Household social contribution supplements [1] |
2.5 |
Less: pension scheme service charges |
3 |
Other (actuarial) increase of pension entitlements in social security pension schemes |
4 |
Reduction in pension entitlements due to payment of pension benefits |
5 |
Changes in pension entitlements due to social contributions and pension benefits |
6 |
Transfers of pension entitlements between schemes |
7 |
Change in entitlements due to negotiated changes in scheme structure |
|
Changes in pension entitlements due to other economic flows |
8 |
Changes in entitlements due to revaluations [2] |
9 |
Changes in entitlements due to other changes in volume [2] |
|
Closing balance sheet |
10 |
Pension entitlements |
|
Related indicators |
11 |
Output |
Opening and closing balance sheets
Changes in pension entitlements due to transactions
- on the basis of a reasonable percentage of wages and salaries paid to current employees; or
- as equal to the difference between current benefits payable and actual contributions payable (by both employees and government as employer).
- if the entitlements of a pension scheme are included in the core national accounts, and the employer agrees to a change in the terms of pension entitlements via negotiation with the affected employee, this change is recorded as a transaction in the core national accounts (under imputed employer social contributions);
- if the entitlements of a pension scheme are not recorded in the core national accounts, and the employer agrees a change in the terms of pension entitlements via negotiation with the affected employees, this change is recorded as a transaction in the supplementary table;
- in the case of social security, if changes in pension entitlements are agreed by the parliamentary authorities, this is recorded in the supplementary table as if it were negotiated.
Changes to pension entitlements due to other economic flows
Revaluations |
---|
Changes in assumed discount rate |
Changes in assumed wage developments |
Changes in assumed price developments |
Other changes in the volume of assets |
Changes in demographic assumptions |
Other changes |
Related indicators
As output is recorded for all employer pension schemes, which the scheme's members consume, row 11 shows the output by type of scheme.
|
Contributions (actual, imputed of which: property income) (rows 2 and 3) |
Pension benefits (row 4) |
|
Financial services |
|||
Other flows (revaluations,
other changes in volume) |
|||
Changes in |
Pension entitlements at the end of the period (row 10) |
||
Pension entitlements at the beginning of the period (row 1) |
|
||
Stock at t0 |
Transactions and other flows between t0 and t1 |
Stock at t1 |
Actuarial assumptions
Accrued-to-date entitlements
Discount rate
- net acquisitions of liabilities, such as loans and debt securities;
- net sales of assets; and
- government revenue.
Wage growth
Demographic assumptions
List of abbreviations and acronyms
ABO | accrued benefit obligation |
ABS | asset-backed security |
BPM6 | Balance of payments manual, sixth edition |
CCP | central counterparty clearing house |
CDS | credit default swap |
CIF | cost, insurance and freight |
COFOG | Classification of the Functions of Government |
COICOP | Classification of Individual Consumption by Purpose |
COPNI | Classification of the Purposes of Non-Profit Institutions Serving Households |
COPP | Classification of Outlays of Producers by Purpose |
CPA | Classification of Products by Activity |
EAA | economic accounts for agriculture |
EAFRD | European Agricultural Fund for Rural Development |
EAGF | European Agricultural Guarantee Fund |
EC | European Commission |
ECB | European Central Bank |
EMU | economic and monetary union |
ESA | European System of Accounts |
ESO | employee stock option |
ESSPROS | European System of Integrated Social Protection Statistics |
EU | European Union |
EURIBOR | European interbank offered rate |
EUROSTAT | the statistical office of the European Union |
FDI | foreign direct investment |
FISIM | financial intermediation services indirectly measured |
FOB | free on board |
FRA | forward rate agreement |
FVC | financial vehicle corporation |
GAB | general arrangements to borrow |
GDP | gross domestic product |
GFS | government finance statistics |
GNI | gross national income |
GVA | gross value added |
IAS | international accounting standards |
IASB | International Accounting Standards Board |
IASC | International Accounting Standards Committee |
IC | insurance corporations |
ICLS | International Conference of Labour Statisticians |
ICPF | insurance corporations and pension funds |
ICT | information, communications and telecommunications |
IFRS | International Financial Reporting Standards |
IIP | international investment position |
ILO | International Labour Organisation |
IMF | International Monetary Fund |
IMTS | international merchandise trade statistics |
INTRASTAT | statistical collection system |
I-O | input-output |
IPO | initial public offering |
IPSASB | International Public Sector Accounting Standards Board |
ISIC | International Standard Industrial Classification of all Economic Activities |
ISIN | international securities identification number |
KAU | kind-of-activity unit |
KLEMS | capital, labour, energy, materials and services |
LIBOR | London interbank offered rate |
MFI | monetary financial institution |
MMF | money market fund |
MSITS | Manual on statistics of international trade in services |
N.E.C. | not elsewhere classified |
NAB | new arrangements to borrow |
NACE | general industrial classification of economic activities within the European Union |
NDP | net domestic product |
NOS | net operating surplus |
NPI | non-profit institution |
NPISH | non-profit institution serving households |
NUTS | nomenclature of territorial units for statistics |
OECD | Organisation for Economic Cooperation and Development |
OMFI | other monetary financial institution |
OTC | over the counter |
PAYE | pay as you earn |
PBO | projected benefit obligation |
PF | pension funds |
PIM | perpetual inventory method |
PPP | purchasing power parity |
PPP | public-private partnership |
PPS | purchasing power standard |
PRGF | Poverty Reduction and Growth Facility |
R & D | research and development |
ROW | rest of the world |
SAM | social accounting matrix |
SDR | special drawing right |
SEEA | System of Environmental-Economic Accounts |
SNA | System of National Accounts |
SOCX | Social Expenditure Database |
SPE | special-purpose entity |
SPV | special-purpose vehicle |
STRIPS | Separate Trading of Registered Interest and Principal Securities |
UCITS | undertakings for collective investment in transferable securities |
UN | United Nations |
VAT | value added tax |
![Eurostat](https://ec.europa.eu/eurostat/esa2010/img/bottom_right_bkg2.png)