258 Government Finance Statistics Manual 2014
increase in assets if the actual damage falls short of the
amount covered by the allowance for losses.Life insurance and annuities entitlements (52062, 52162, 52262, 53062, 53162, 53262)
10.71 For an annuity, the relationship between
the expected net premiums and benefi ts is usually
determined when the contract is entered into, tak-
ing account of mortality data available at that time.
Any subsequent changes will aff ect the liability of the
annuity provider toward the benefi ciary, and the con-
sequences should be recorded as other changes in the
volume of assets.Pension entitlements (52063, 52163, 52263, 53063, 53163, 53263)
10.72 In defi ned-benefi t pension schemes, the
level of benefi ts promised to participating employees
is determined by a formula that is usually based on
the participants’ length of service and salary. Changes
in pension entitlements that are imposed without ne-
gotiation are recorded as other changes in the volume
of assets.^17 Th at is because such changes are assumed
to be imposed unilaterally by the employer and do
not constitute a capital transfer negotiated by mutual
agreement.
10.73 As explained in paragraph 10.38, for a de-
fi ned-benefi t pension scheme, any changes in the value
of the liability due to changes in the formula used to
determine benefi ts and due to changes in demographic
assumptions about the lifespan should be recorded as
other changes in the volume of assets. If the projected
benefi t obligation method is used to value pension en-
titlements, an adjustment in the form of other changes
in the volume of assets is needed if the enterprise
makes a structural change in the way promotion and
merit increases are awarded (see paragraph 10.40).
10.74 No such adjustments are needed for
defi ned-contribution schemes where the benefi ts are
determined solely in terms of the contributions and
investment earnings of the scheme.^18(^17) Th e cases where changes in pension entitlements are recorded
as transactions are discussed in paragraphs 9.63–9.67. Th e dis-
tinction between transactions and other changes in the volume of
assets remains theoretical, as it is recognized that the distinction
between what is negotiated and what is imposed without negotia-
tion will be diffi cult to determine in practice, with diff erent situa-
tions prevailing in diff erent countries.
(^18) Also see the 2008 SNA, Chapter 17, Part 2.
Provisions for calls under standardized
guarantee schemes (52065, 52165, 52265,
53065, 53165, 53265)
10.75 Changes to provisions for calls under stan-
dardized guarantee schemes not resulting from trans-
actions and holding gains and losses are shown as
other changes in volume of assets. For example, such
other changes in volume of assets occur whenever a
signifi cant change to the expected level of calls is rec-
ognized beyond any asset recovery (see paragraph
A4.79).
Changes in Classifi cation
10.76 Th e composition of the general government
or public sector’s balance sheet may change because
there has been a reclassifi cation of an entire institu-
tional unit, the structure of a unit, or a group of assets
and liabilities. A reclassifi cation rearranges assets and
liabilities without adding to or subtracting from total
net worth.Changes in sector classifi cation and structure
10.77 An entire unit may be reclassifi ed from the
general government sector to another sector or to
the general government sector from another sector
without a change of ownership or control, normally
because the unit either begins or ceases to sell its out-
put for economically signifi cant prices. When a unit
is reclassifi ed out of the general government sector,
all of the unit’s assets and liabilities are removed from
the general government sector’s balance sheet and the
net value of those assets and liabilities is replaced by
a fi nancial asset, equity and investment fund shares, to
refl ect the continued ownership or control of the unit
by a general government unit. Th e reverse will be true
when a unit is reclassifi ed into the general govern-
ment sector. By contrast, when a public corporation
is privatized, all of the unit’s assets, liabilities, and net
worth are reclassifi ed from being that of a public cor-
poration to a private corporation.^19
10.78 A change in the structure of units is also re-
corded as an other change in the volume of assets—for
example, when two general government units merge
into a single unit, or a single unit splits into two units.(^19) In the balance sheet of the shareholder (such as government),
the privatization transaction will lead to a reduction in the fi nan-
cial asset equity and investment fund shares.