Abstract
This paper deals with the pension system’s income statement and reporting budgeted variances in a fair and sustainable scheme. We highlight the importance of income statement presentation for monitoring the changes of solvency in 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 (TSPS, 2019), we extend it by adding the changes for disability pensions, the value of change in the discount rate and the explicit recognition of non-contributory rights (NCRs). Our proposal integrates both contributory and social aspects of public pensions and discloses the real cost of the disability contingency and the redistribution through minimum pensions. The inclusion of information relating to deviations from budget provide useful information to users for future decision making.
Funding: Manuel Ventura-Marco and Carlos Vidal-Meliá are grateful for the financial assistance received from the Spanish Ministry of the Economy and Competitiveness (Ministerio de Economía y Competitividad) projects ECO2015-65826-P, RTI2018-097087-B-100 and Generalidad Valenciana (Valencian Government), project AICO/2019/075. Carlos Vidal-Meliá also acknowledges the financial support from the Basque Government (Project IT1336-19). Anne M. Garvey is grateful for the financial assistance received from the Spanish Ministry of Science, Innovation and Universities (MICINN) PID2019-105570GB-I00, also from the Autonomous Community of Madrid project CM/JIM/2019-044 and from the University of Alcalá projects CCG19/CCJJ-042 and UAHEV/1090. Acknowledgements: We would like to thank the seminar participants at the Complutense University of Madrid, the University of Alcalá and the Santander (XXVII Jornadas de ASEPUMA—XV Encuentro Internacional) and Peter Hall for his help with the English text.
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Notes
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The value of the system’s contribution asset is the product of the system’s turnover duration and the value of the NDC system’s contributions made in that period for the retirement and disability contingencies. The interested reader can consult the paper by Garvey et al. [4].
References
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Garvey, A.M., Ventura-Marco, M., Vidal-Meliá, C. (2021). The Importance of Reporting a Pension System’s Income Statement and Budgeted Variances in a Fair and Sustainable Scheme. In: Corazza, M., Gilli, M., Perna, C., Pizzi, C., Sibillo, M. (eds) Mathematical and Statistical Methods for Actuarial Sciences and Finance. Springer, Cham. https://doi.org/10.1007/978-3-030-78965-7_34
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