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Does the pension system’s income statement really matter? A proposal for an NDC scheme with disability and minimum pension benefits

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  • Anne M. Garvey
  • Manuel Ventura-Marco
  • Carlos Vidal-Meliá

Abstract

This paper develops an accounting model for monitoring the solvency of a notional defined contribution (NDC) pension scheme with disability and minimum pension benefits. Using the annual report of the Swedish pension system as a benchmark, the “Swedish” actuarial balance is extended by adding an income statement fully explaining the reasons behind the changes in the system’s solvency by type of benefit. In line with the reference model, assets and liabilities are measured at present value at each reporting date, and in each period, included as income or expenses on the Income statement. This accounting framework integrates both contributory and social aspects of public pensions and discloses the real cost of the disability contingency and the redistribution through minimum pensions. Apart from Sweden, this proposal could be especially interesting for improving the reporting of public pensions in countries such as Poland, Italy, Latvia and Norway.

Suggested Citation

  • Anne M. Garvey & Manuel Ventura-Marco & Carlos Vidal-Meliá, 2021. "Does the pension system’s income statement really matter? A proposal for an NDC scheme with disability and minimum pension benefits," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 292-310, January.
    • Handle: RePEc:taf:reroxx:v:34:y:2021:i:1:p:292-310
    DOI: 10.1080/1331677X.2020.1782246
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    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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