292 Government Finance Statistics Manual 2014
A2.63 Even if the arrangement transforms the
pension liability, so that it is to be administered as part
of a social security fund, the initial assumption of the
pension obligation should be recorded as in the fore-
going paragraphs. Th e pension obligations absorbed
by the social security fund continue to be classifi ed as
pension entitlement liabilities. Th ese obligations are
gradually extinguished as the benefi ts are paid out.Employment-related nonpension social insurance schemes
A2.64 Employment-related nonpension social in-
surance schemes can be operated by the government or
by autonomous nongovernment entities. In either case,
the actual or imputed employers’ contributions are in-
cluded as an expense in the compensation of employ-
ees, under social contributions. For funded schemes, the
actual contributions made to the scheme are classifi ed
under actual employers’ social contributions. For un-
funded schemes, the amount that would be required to
purchase equivalent social benefi ts must be imputed by
the employer, and should be classifi ed under imputed
employers’ social contributions. Where a scheme is
operated by the government, a simultaneous transac-
tion equal to the actual or imputed social contributions
is recorded as revenue from the household sector back
to government, and classifi ed under other social con-
tributions by employees. Th e social benefi ts provided
by the government are classifi ed as an expense under
employment-related social benefi ts. Table A2.4 illustrates
the recording of some of these fl ows of employment-
related nonpension social insurance schemes.
A2.65 Some employers provide nonpension social
benefi ts directly to their employees, former employ-
ees, or dependents without involving an insurance
enterprise or autonomous pension fund, and with-out creating a special fund or segregated reserve for
the purpose. Employees may be considered as being
protected against various specifi ed social risks, even
though no reserves are built up to provide for future
entitlement to social security benefi ts. An expense
for employers’ social contributions should therefore
be imputed for such employees (see paragraph 6.22),
equal in value to the amount of social contributions
revenue needed to obtain the de facto entitlements to
the accrued social benefi ts. Th ese amounts take into
account any actual contributions made by the em-
ployer or employee. Th e amounts depend not only on
the levels of the benefi ts currently payable but also on
the impact on future employer’s liabilities of demo-
graphic and actuarial factors, such as expected changes
in the numbers, age distribution, and life expectancies
of their present and previous employees. Th erefore,
the values that should be imputed for the contribu-
tions ought, in principle, to be based on the same kind
of actuarial considerations that determine the levels of
premiums charged by insurance enterprises.
A2.66 In practice, however, it may be diffi cult to
estimate such imputed contributions. Th e govern-
ment unit may make estimates itself, perhaps on the
basis of the contributions payable into similar funded
schemes, in order to calculate its likely liabilities in the
future. Otherwise, the only practical alternative may
be to use the unfunded nonpension benefi ts payable
by government during the same reporting period as
an estimate of the imputed remuneration that would
be needed to cover the imputed contributions. Th is
is a second best option as the value of the imputed
contributions may diverge from the unfunded non-
pension benefi ts actually paid in the same period, due
to factors such as the changing composition and age
structure of the government labor force.