Implementation of the new pension satellite account in Spain by Alfredo Cristobal
30
Implementation of the new pension satellite account in Spain by Alfredo Cristobal [email protected] Director of National Accounts and Employment OECD. Paris, 24-27 October 2011 Workshop on the implementation of the 2008 SNA
description
Workshop on the implementation of the 2008 SNA. Implementation of the new pension satellite account in Spain by Alfredo Cristobal [email protected] Director of National Accounts and Employment OECD. Paris, 24-27 October 2011. Contents. Motivation - PowerPoint PPT Presentation
Transcript of Implementation of the new pension satellite account in Spain by Alfredo Cristobal
Implementation of the new pension satellite account in Spain
by Alfredo [email protected]
Director of National Accounts and EmploymentOECD. Paris, 24-27 October 2011
Workshop on the implementation of the 2008
SNA
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011 2
Contents
Motivation
Pension Schemes sponsored by General Government in Spain
Model for estimating household future pension entitlements
I mplementation of the new pension satellite account in Spain
3
Contents
Motivation
Pension Schemes sponsored by General Government in Spain
Model for estimating household future pension entitlements
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
4
Increase of the population longevity (+ or – 6 years till 2048) Moderate birth rates Gradual ageing in the demographic structure
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
76
78
80
82
84
86
88
90
76
78
80
82
84
86
88
90
2009 2014 2019 2024 2029 2034 2039 2044
Source: INE Spain. Long-term projections of the population: 2009-2048
Life expectancy at birth in Spain
female
male
5
Same case for people over 65
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
8283848586878889909192
8283848586878889909192
2009 2014 2019 2024 2029 2034 2039 2044
Source: INE Spain. Long-term projections of the population: 2009-2048
Life expectancy at 65 years old in Spain
female
male
6
Population aged over 65: Is set to double in 40 years32% of the total population
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
0123456789
10
2009 2048
mill
ion
of p
erso
ns
Source: INE Spain. Long-term projections of the population: 2009-2048
Population projected over 65 years old in Spain
male
female
7
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Population projected in Spain by age in 2009
malefemale
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Population projected in Spain by age in 2048
female male
8
Accrued-to-date liabilities To estimate the impact of these liabilities in Pay-As-You-Go
(unfunded) schemes
In principle, should not be included in core accounts (implicit, no real liability) supplementary table Table 29 of the ESA2010 Transmission Program
Narrow measure. By themselves, they are not an indicator of sustainability of public finance To add flows Assets? To estimate the expected expenditure of government (AWG)
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
9
Accrued-to-date liabilities Substantial amount (two-times GDP or even more)
Capacity of government to meet this cost. Government decides … Retirement age Period to be considered for pension calculations Formula to calculate pensions Others …
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
10
Milestones CMFB Task Force (Spain attended: NSI and Central Bank) Working group at domestic level chaired by NSI National model Supplementary table Data for 2005 (flows and stocks) Check with data provided by Freiburg University Contact group New estimates for 2006 to 2009
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
11
Contents
Motivation
Pension Schemes sponsored by General Government in Spain
Model for estimating household future pension entitlements
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
12
Spain: two pension schemes managed by General Government
Government Employer social security scheme for officials belonging to the so called Administracion General del Estado (Clases Pasivas)
Social security scheme for the rest of workers
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
13
Clases Pasivas Officials from …
Central Government Army, Justice, Law Courts Public universities related to the State
Those officials initially belonging to Central Government and currently working in the State Government (Regional) after transferring powers
Ex-presidents, vice-presidents and ministers
+- 0,9 million active individuals and +- 0,5 million pensioners (2009)
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
14
Social Security scheme Rest of workers
Pay-As-You-Go system
+- 20,6 million active (employed or unemployed) individuals and +- 8,6 million pensioners (2009)
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
15
Similarities People obliged by law to participate. No personal election Risk exposure Legal framework Funding (both unfunded) Ability of Government to change the conditions or the benefit
formula No duplicity: if pension entitlements for both schemes have
been accumulated, only one must be chosen
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
16
Contents
Motivation
Pension Schemes sponsored by General Government in Spain
Model for estimating household future pension entitlements
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
17
Domestic Working Group
Ministry of Labour and Social Affairs Social Security Treasury Ministry of Finance Audit Office of the General Government Central Bank National Statistical Institute (leader)
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
18
2 similar models
Social Security
Government employer pension scheme
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
19
Model for Social Security Just contributory pensions
Retirement pensions Retirement by disability Disability allowance Widowhood Orphanage
Social contributions are not fully related with pensions
Individuals Active population (currently paying social contributions not having
generated a pension yet) Current pensioners
Total of pension entitlements = + Pensions of existing pensioners (case 1) + Future pensions of current active population (case 2)
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
20
Case 1: Already existing pensions Number of pensions * average amount of contributory
pension Type of pension, sex, age of birth
Actuarial techniques Assumptions on
Revaluations Life expectancy Discount rate
Present value of the pension entitlements
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
21
Case 2: Future pensions of active population Continuous sample of working lives (+/- 800.000 individuals)
Stochastic model + assumptions
Pension generated by each individual in the sample (type, date, amount)
Grossing up
Pensions generated by whole active population
Discount rate: present value of pension entitlements
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
22
Continuous sample of working lives
Sample: representative of all individuals with relations with Social Security in one year
Continuous: is yearly updated
Working lives: with historic data kept in Social Security records
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
23
Continuous sample of working lives Target population (universe): more than 29 million individuals Sample size: almost 1,2 million (4%, grossing up factor: 25)
Of these, 835 th active individuals (last year)
Distribution (random draw) 607 th will receive a retirement pension with different ages from 50 to
99 154 th will receive a disability pension with different ages from 18 to 66 63 th will receive a widowhood pension by decease of the partner
included both in the sample with different ages from 15 to 73 11 th will not receive any benefit by decease without partner
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
24
Sample of working lives. For each individual
Number of days paying social contributions to Social Security Average contributions base (salaries)
Simulation process (stochastic model and assumptions) Future salaries Frequency of death, invalidity and retirement estimated by age and sex
Unit Credit Method: Time individual paying contributions / total expected working life Future pension
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
25
Assumptions related to the benefits No retirement under the age of 50 Retirement by disability: All people at 65 Disability: No cases under 16 Widowhood: No cases under 16 Orphanage: All cases from 0 to 21
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
26
Assumptions related to the valuation Demographic tables (men, women) till 100 years (NSI) Social security records invalidity pensioners Salary increase: +1,8% real terms Pseudo PBO Discount rate: 3% real terms (same used in AWG works) Inflation rate: 2% Age difference between married couples: 3 years Marriage rate of pensioners: 92% Instalments: 12 payments Reversion in case of widowhood: 60% pension Orphan income until age of 22
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
27
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
G H
1 Pension entitlements 237,6 2.723,3
2 Increase in pension entitlements due to social contributions 21,9 229,42,1 Employer actual social contributions 0,0 69,92,2 Employer imputed social contributions 8,82,3 Household actual social contributions 1,1 23,32,4 Household social contribution supplements5) 12,0 136,2
3 Other (actuarial) change of pension entitlements in social security pension schemes26,8
4 Reduction in pension entitlements due to payment of pension benefits 9,6 90,0
5 Changes in pension entitlements due to social contributions and pension benefits12,3 166,2
6 Transfers of pension entitlements between schemes7 Change in entitlements due to negotiated changes in scheme structure
8 Changes in entitlements due to revaluations6)
9 Changes in entitlements due to other changes in volume 6) 71,5
10 Pension entitlements 249,9 2.961,0Gross Domestic Product 1.047,8 1.047,8
10 Pension entitlements (% / GDP) 23,9 282,6
Year 2009 (data in billion euro)
Classified in general government
Opening balance sheet
Changes in pension entitlements due to transactions
Changes in pension entitlements due to other flows
Closing balance sheet
Social security pension schemes
Not in the standard accounts
28
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
0
50
100
150
200
250
300
350
2005 2006 2007 2008 2009
% /
GDP
Accrued-to-date liabilities
Social Security Clases pasivas
29
Thank you for your attention !
I mplementation of the new pension satellite account in Spain
Workshop on the implementation of the 2008 SNA. OECD. Paris, October 2011
Implementation of the new pension satellite account in Spain
by Alfredo [email protected]
Director of National Accounts and Employment (INE)OECD. Paris, 24-27 October 2011
Workshop on the implementation of the 2008
SNA
