286 Government Finance Statistics Manual 2014
receive benefi ts for themselves or their dependents.
Th e primary receipts of social security schemes are
social security contributions. As shown in Table 5.1 in
Chapter 5, social security contributions are classifi ed
according to their source, which may be employers or
households. Participation in social security schemes
can be compulsory or voluntary. Further breakdown
in the classifi cation of these social contributions would
allow a distinction between contributions receivable
in cash and in kind, and between compulsory and vol-
untary contributions. In addition to social contribu-
tions, social security schemes may receive grants from
general government resources and may earn property
income from the investment of their assets.
A2.37 Social security benefi ts [GFS] (271) payable
are current transfers and are classifi ed as one of the so-
cial benefi ts categories. Th ese can further be classifi ed
as being payable in cash or in kind (see Table 6.1). So-
cial security benefi ts in kind can be provided to ben-
efi ciaries in the same ways as social assistance benefi ts
in kind (see paragraphs A2.27–A2.28). Ta ble A2.2 il-
lustrates the recording of some of the fl ows related to
social security schemes.
A2.38 Social security schemes are characterized
by a degree of contingent reciprocity. Social security
contributions secure entitlements to benefi ts that are
contingent on the event underlying the social risk oc-
curring. Nonetheless, the amount and timing of re-
ceipts of benefi ts by benefi ciaries (if any) are subject to
various eligibility criteria without necessarily a direct
relationship between the amount of the contribution
payable by an individual and the benefi ts receivable.
Th erefore, the link between benefi ts and contribu-
tions is not considered suffi ciently strong to give rise
to a fi nancial claim on the part of contributors. Th e
potential individual claims of contributors (and there-
fore the corresponding government obligations) are
regarded as contingent. Also, because social security
benefi ts can be changed at will by the government or
legislature as part of its overall economic policy, there
is uncertainty about the eventual payment or level of
payment of these social benefi ts.^11 As a result, in GFS,(^11) Th e amounts of social security contributions receivable and
benefi ts payable may be deliberately changed in order to achieve
objectives of government policy. Th e change may have no direct
connection with the functions of social security. For example,
the contributions and benefi ts may be raised or lowered in order
to infl uence the level of aggregate demand in the economy, or to
ensure fi scal sustainability.
no liabilities are associated with the potential future
claims on social security schemes. An expense is re-
corded only when payment of the benefi ts is due.
A2.39 However, a high expectation exists that so-
cial security benefi ts earned according to the exist-
ing laws will be payable in the future. Th erefore, an
estimate equal to the net implicit obligations for fu-
ture social security benefi ts should be presented as
a memorandum item to the Balance Sheet, and de-
tails of it presented as a supplementary statement, the
Summary Statement of Explicit Contingent Liabilities
and Net Implicit Obligations for Future Social Security
Benefi ts (see paragraphs 4.47 and 7.261).
Other employment-related social insurance schemes
A2.40 Other employment-related social insur-
ance schemes derive from an employer-employee
relationship in the provision of pension entitle-
ment and other social benefi t to employees as part
of the conditions of employment. By defi nition, these
schemes are contributory and, for government or
public sector units, protect only their own employ-
ees and dependents. Th e provision of social insur-
ance benefi ts by government to its own employees
is considered to be part of an actual or implicit con-
tract between the government, as employer, and the
employees, to compensate them for the provision of
their labor services. Th erefore, employment-related
social insurance schemes give rise to requited ex-
pense transactions for government when the social
contributions became payable. To accurately refl ect
the accrued costs of employment, the actual and im-
puted social insurance contributions should be re-
corded as employers’ social contributions (212) in the
expense category for compensation of employees (21)
(see Table 6.1).Employment-related pensions and other retirement benefi t schemes
A2.41 Employment-related social insurance schemes
that provide pensions and other retirement benefi ts
can be organized as a funded or unfunded social in-
surance scheme. Table A2.3 illustrates the recording
of some of the fl ows of employment-related pensions.
A2.42 Th ere are three types of employment-related
pension schemes:- A nonautonomous pension scheme that is there-
fore regarded as an integral part of the employer