Transactions in Financial Assets and Liabilities 241
9.65 For a defi ned-contribution scheme, transac-
tions in pension liabilities for the pension fund are
actual contributions receivable from employers on be-
half of employees, from employees, and possibly from
other individuals (formerly participating in a scheme,
self-employed and unemployed persons, and retirees)
plus contribution adjustments (property expense for
investment income disbursement^20 ) minus benefi ts
payable. Th e same transactions in fi nancial assets
are recorded for the participants in the scheme. On a
cash basis, transactions in liabilities of the insurance
corporation are equal to social contributions and in-
vestment income received in cash minus benefi t pay-
ments in cash.
9.66 On occasion, large one-off transactions (lump
sums) may occur between a government and another
institutional unit, oft en a public corporation, linked
to pension reforms or to privatizations of public
corporations. Th e goal may be to make the public cor-
poration competitive and fi nancially more attractive
by removing existing pension liabilities from the bal-
ance sheet of the corporation. Th is goal is achieved
by government assuming the liability in question in
exchange for an asset or assets from the public cor-
poration. If the value of the assets receivable is equal
to the value of the liability assumed, the transaction is
recorded as an exchange of assets and liabilities. How-
ever, the value of the asset(s) may not be the same
value as the liability.
- If the value of the asset(s) receivable is less than
the value of the liability incurred, an expense in
the form of a capital transfer from government
to the public corporation should be recorded
for the diff erence. Th e assumer (government)
records an increase in liabilities for pension en-
titlements, an increase in the relevant fi nancial
and/or nonfi nancial assets, and an expense in the
form of capital transfer to the public corporation
(see paragraph 6.124). Th e public corporation
records a decrease in liabilities for pension en-
titlements, a decrease in fi nancial and/or non-
fi nancial assets, and revenue in the form of a
capital transfer from government.
(^20) Holding gains and losses generated by the investment of
cumulated pension entitlements are not included in investment
income.
- If the value of the asset(s) receivable is more than
the value of the liability incurred, a capital transfer
from the public corporation to the government is
recorded for the diff erence (see paragraph 5.148).
Th e public corporation records a decrease in li-
abilities for pension entitlements, a decrease in fi -
nancial and/or nonfi nancial assets, and an expense
in the form of a capital transfer to government.
9.67 Where a government unit assumes pension
liabilities, the pension obligations absorbed by the so-
cial security fund continue to be classifi ed as pension
entitlement liabilities. Th ese obligations are gradually
extinguished as the benefi ts are paid out. As noted in
paragraph 7.261, net implicit obligations for future
social security benefi ts are shown as a memorandum
item to the balance sheet.
Claims of pension fund on pension manager (32064, 32164, 32264, 33064, 33164, 33264)
9.68 As explained in paragraph 7.199, an employer
may contract with a third party to administer a pen-
sion fund for its employees. When the funding of a
defi cit of the pension fund is the responsibility of the
employer or other sponsor (pension manager), then
a claim of the pension fund on the manager accrues.
Similarly, if the employer or sponsor (pension man-
ager) has a right to claim surpluses of the pension
fund, then a claim of the manager to the pension fund
may accrue.Provision for calls under standardized
guarantee schemes (32065, 32165, 32265,
33065, 33165, 33265)
9.69 As explained in paragraphs 7.201–7.202,
standardized guarantee schemes have much in com-
mon with nonlife insurance and are thus recorded in
similar ways. Th e treatment of standardized guarantee
schemes is elaborated in paragraphs A4.78–A4.80.Financial Derivatives and Employee Stock Options (3207, 3217, 3227, 3307, 3317, 3327)
Financial derivatives (32071, 32171, 32271, 33071, 33171, 33271)
9.70 Transactions involving fi nancial derivatives
may arise at inception, on secondary markets, with
ongoing servicing (such as for margin payments), and
at settlement. Transactions in derivatives preferably