Social Protection 289
segregated reserves, but the organization and op-
erations of the scheme do not meet the criteria to be
an institutional unit (see paragraph 2.22). Th e eco-
nomic fl ows and stock positions of nonautonomous
employment-related pension funds are integrated with
those of the controlling employer. All of the assets, lia-
bilities, transactions, and other economic events of the
pension fund are combined with the corresponding
items of the employer operating the scheme, which may
be a general government unit or a public corporation.
Th e treatment of the assets, liabilities, transactions, and
other economic events related to the nonautonomous
pension fund is similar to that of an autonomous pen-
sion fund. However, in this case, the contributions pay-
able as a component of compensation of employees,
the receipt of the contributions by the pension scheme,
and the associated liabilities are recorded by the same
level of government. Th ese fl ows are not eliminated in
consolidation because households are regarded as, re-
spectively, the recipient and payer. Th ese fl ows should
be rerouted as described in paragraph 3.28.
A2.46 In accordance with the accrual basis of re-
cording, the amount that would be required to cover
the accrual of the social benefi ts must be imputed.
Th is will also ensure that the full cost of employment
is accounted for by recording the imputed social con-
tributions, with a counterpart entry that creates the
associated liability for these pension benefi ts. Th is
imputation recognizes the economic fl ows during the
period in which the underlying economic event takes
place. It also improves transparency because it records
the cost of providing the social benefi ts to its employees
and fl ags the risks associated with the future demands
on resources. When these pension benefi ts are paid,
the payment is recorded as a reduction in liabilities.^12
Autonomous employment-related pension schemes
A2.47 To be regarded as autonomous, the entity re-
sponsible for the employment-related pension scheme
must have the characteristics of an institutional unit
(see paragraph 2.22). Th ese institutional units are con-
sidered to provide fi nancial services (i.e., insurance/
pensions) to the household sector, and are therefore
(^12) When using the cash basis of recording, the only fl ow recorded
for these unfunded pension schemes is the employment-related
social benefi ts expense, with a counterpart entry as a decrease in
currency and deposits. Th e expense is recorded when cash pay-
ments are made.
classifi ed in the fi nancial corporations sector. Th ey are
classifi ed as either private or public fi nancial corpo-
rations, depending on whether they are controlled by
the private or public sectors (see Box 2.2).
A2.48 An employer may contract with a third party
to administer the pension funds for its employees. Th e
employment-related pension scheme is then managed
through an insurance enterprise or an autonomous
pension fund. Th e employer’s primary responsibility
with respect to the scheme is to pay the social contri-
butions on behalf of its employees. Th e government
unit records the payment as part of compensation
of employees, under actual social contributions (see
Table 6.1 and paragraph 6.21). No other transactions
are recorded by the government unit as employer, as
it has no direct liability for future provision of social
benefi ts.
A2.49 However, in cases where the employer con-
tinues to determine the terms of the pension schemes
and retains the responsibility for any defi cit in fund-
ing, as well as the right to retain any excess funding,
the employer is described as the pension manager and
the unit working under the direction of the pension
manager is described as the pension administrator.
If the agreement between the employer and the third
party is such that the employer passes the risks and
responsibilities for any defi cit in funding to the third
party in return for the right of the third party to retain
any excess, the third party becomes the pension man-
ager as well as the administrator.
A2.50 When the pension manager is a unit diff er-
ent from the administrator, and the responsibility for
any defi cit, or claims on any excess, rests with the pen-
sion manager, the claim of the pension fund on the
pension manager should be shown under the liability,
claims of pension funds on pension managers (63064).
By contrast, if the pension fund makes more invest-
ment income from the pension entitlements it holds
than necessary to cover the increase in entitlements,
the diff erence is payable to the pension manager of the
scheme. Th e pension manager records this claim on
the pension administrator as a fi nancial asset, claims
of pension funds on pension managers (62064).^13
(^13) Although this fi nancial asset eff ectively represents a claim of the
pension manager on the pension fund, the same line item title is
used for both the asset and liability accounts.