Actuarial balance sheets as a tool to assess the sustainability of social security pension systems

Abstract

The choice of the methodology used to produce a social security pension system's balance sheet is mainly determined by the system's financing approach. In this article, it is shown using the example of the Canada Pension Plan that if the assessment of the financial sustainability of a pay‐as‐you‐go or partially funded system is done through the means of an actuarial balance sheet, then the methodology used should take into account future contributions of current and future participants. The balance sheets produced using the open group approach, as well as methodologies used in United States and Sweden, are discussed.

Assessing the Financial Sustainability of China’s Rural Pension System

“…Financial sustainability is a core principle of social security [10,11]. Drawing on the available literature [12][13][14], we define the financial sustainability of China's rural pension system simply as a positive financial state in which fund revenues exceed fund expenditures.…”

Optimal strategies for pay-as-you-go pension finance: A sustainability framework

“…In our case, this is related to the Sustainability mechanism defined in Section 4.1. In the same line, 6 Boado-Penas and Vidal-Meliá (2013) and Billig and Ménard (2013) describe the different types of actuarial balance for the pay-as-you-go pension systems.…”

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

“…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].…”

“…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].…”

“…However, all papers cited limit themselves to the retirement contingency. With the aim of making a comparison with the official actuarial valuation report on the Canadian Pension Plan (CPP), OSFIC [6] and Billig and Ménard [30] made a practical adaptation of the methodology used to compile the Swedish balance sheet. They drew up a modified ABS for the CPP that included retirement pensions, disability and survivor benefits.…”