Changes for unfunded accounting
The way unfunded pension schemes are treated in national accounts is set to be resolved at a meeting in Frankfurt later this month.
On the table is a proposal to treat schemes for government employees in the same way as corporate funded schemes. If approved it could result in what one official has termed a “new order of magnitude” of public debt and deficit for some European countries.
The proposal was put forward by a group moderated by the IMF’s Statistics Department in a 2004 paper.
The matter is due to be debated at a meeting of the Advisory Expert Group on National Accounts, which is set to meet at the European Central Bank from January 30 to February 9.
European institutions have sought an alternative approach. A joint paper by the European Central Bank and the Bank of England suggested disclosing unfunded liabilities in “supplementary” - not core - accounts. The ECB and BOE cited “intractable” issues such as discount rates.
EU statistical body Eurostat said it was a “matter of concern” that unfunded pension obligations of employer schemes would be recognised as liabilities whereas social security schemes would not be.