A Decade of Actuarial Accountingfor the NDC Scheme in Sweden:Quantifying Change in the FinancialPosition of a PAYG Pension Plan

Settergren, Ole

doi:10.1596/9780821394786_ch21

Cited by 7 publications

(14 citation statements)

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“…The value of the change in contribution revenue is the monetary value in terms of how much more (or less) liability can be financed by a higher (or lower) level of contributions relative to the preceding year [27].…”

Section: The Income Statement: Exploring the Reasons For The Change Imentioning

confidence: 99%

“…This item is coherent with the accounting principle of updating the main data on an annual basis. Increased life expectancy not only adds to the pension liability; it also changes the pension liability's structure (the time profile of payments) in a way that does not need to be fully financed in a PAYG pension system [27]. The net effect of increases in life expectancy in an NDC scheme is an increased pension liability minus the increased value of the contribution flow that results from a higher turnover duration [13,22,31,77].…”

Section: The Income Statement: Exploring the Reasons For The Change Imentioning

confidence: 99%

“…In line with the reference model [10], our proposed way of measuring the pension system's assets and liabilities has several advantages-it has a high degree of transparency and needs no complicated projections of economic, financial or demographic variables, which could easily have a bias effect on the sustainability and solvency indicators [27]. Anyone with any knowledge of financial matters can understand the ABS and the way it expresses the pension system's financial situation [28].…”

Section: Summary Conclusion and Future Researchmentioning

confidence: 99%

“…This paper builds on previous work carried out in the field of actuarial balances [11,[20][21][22][23][24][25][26][27][28][29][30][31][32][33]. All of these have dealt with the Swedish-type ABS, which has been compiled for various countries including Sweden [10,24,27,28], Spain [24,31], Japan [21], Canada [6,30], New Zealand [25], Germany [33] and Switzerland [11].…”

Section: Introductionmentioning

confidence: 99%

“…All of these have dealt with the Swedish-type ABS, which has been compiled for various countries including Sweden [10,24,27,28], Spain [24,31], Japan [21], Canada [6,30], New Zealand [25], Germany [33] and Switzerland [11].…”

Section: Introductionmentioning

confidence: 99%

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Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

2018

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This paper develops a social insurance accounting model for a notional defined contribution (NDC) scheme combining retirement and long-term care (LTC) contingencies. The procedure relies on standard double-entry bookkeeping and enables us to compile a "Swedish" type actuarial balance sheet (ABS) following a framework equivalent to an open group approach. This methodology is suitable for reporting the system's solvency status and can show periodical changes in the system's financial position by means of an income statement. The information underpinning the actuarial valuation is based on events and transactions that are verifiable at the valuation date, without considering expected future trends. The paper also contains an illustrative example to make it easier for policymakers to understand the main advantages and difficulties of our proposal. The policy conclusions stress the need to properly report social insurance benefits to enhance transparency and sustainability and to improve decision-making because it is in the public interest to do so.

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Section: The Income Statement: Exploring the Reasons For The Change Imentioning

confidence: 99%

Section: The Income Statement: Exploring the Reasons For The Change Imentioning

confidence: 99%

Section: Summary Conclusion and Future Researchmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

2018

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Continuous time model for notional defined contribution pension schemes: Liquidity and solvency

Alonso-García

Devolder

2019

Insurance: Mathematics and Economics

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Increasing life expectancy and NDC pension systems

Knell

2016

Journal of Pension Economics and Finance

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In this paper, I study how pay-as-you-go pension systems of the notional defined contribution type can be designed such that they remain financially stable in the presence of increasing life expectancy. For this to happen three crucial parameters must be set in an appropriate way: the notional interest rate, the adjustment rate and the annuity conversion factor. I show that there exist two main approaches to implement a stable system. The first uses period-specific annuitization and indexation rates that correct for labor force increases, which are only due to rises in the retirement age which are necessary to ‘neutralize’ the increase in life expectancy. The second approach uses cohort-specific annuitization and indexation rates that are larger than in a stationary situation. This is due to the fact that a continuously increasing life expectancy leads to higher internal rates of return that can be passed on via the indexation.

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A Decade of Actuarial Accountingfor the NDC Scheme in Sweden:Quantifying Change in the FinancialPosition of a PAYG Pension Plan

Cited by 7 publications

References 0 publications

Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

Continuous time model for notional defined contribution pension schemes: Liquidity and solvency

Increasing life expectancy and NDC pension systems

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