Adding Actuarial Estimates of Defined-Benefit Pension Plans to National Accounts
Chapter in NBER book Measuring Wealth and Financial Intermediation and Their Links to the Real Economy (2015), Charles R. Hulten and Marshall B. Reinsdorf, editors (p. 151 - 203)
Cash accounting has traditionally been used in national accounts to measure defined benefit (DB) pension plans, but actuarial measures would provide a full picture of household saving and wealth from participation in these plans and of employers' pension expense. In addition, to make meaningful international comparisons of households' retirement wealth, actuarial measures of social security are needed. In some countries employer-sponsored DB pension plans are very important, while in other countries retirement income comes almost entirely from social security and similar government-sponsored pension plans. Recent changes to international guidelines for national accounts call for these sorts of actuarial measures.
This chapter develops methods for incorporating actuarial measures of DB pension plans and social security in national accounts that are consistent with the goals of the international guidelines. It then illustrates the usefulness of the new estimates by making an international comparison of the US with France. The actuarial measures of the DB pension plans of the US significantly raise estimates of household saving for recent years, and help to close the large gap between the very low saving rate of households that had been reported in the US national accounts and the relatively high saving rate of French households. However when actuarial measures of social security are considered, households in France still have substantially higher ratios of wealth to income than American ones.
Document Object Identifier (DOI): 10.7208/chicago/9780226204437.003.0006
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