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Public pensions in the national accounts and public finance targets

  • HEIKKI OKSANEN (a1)

Abstract

Preparations are underway to revise national accounting to implement actuarial recording of pension liabilities for corporations and government as an employer. This paper extends this to unfunded public pensions with the help of ‘implicit tax’ in pension contributions. The clearest advantages of the revision appear in situations where pension liabilities are shifted from the corporate sector to government, and where part of the public pension system is privatized. The proposed revision raises public debt and deficit to new orders of magnitude. The paper provides a framework for setting the debt and deficit targets under both current and proposed definitions.

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This Issues & Policy article was written by Mr Heikki Oksanen, Directorate-General for Economic and Financial Affairs, European Commission. The information and views expressed in this article are those of the author and do not necessarily reflect the official opinion of the European Commission.
I would like to thank Philippe de Rougemont, François Lequiller, Joao Nogueira Martins and an anonymous referee for useful comments on earlier drafts. Cecilia Mulligan (text) and Karel Havik (tables) deserve my warmest thanks for their careful editing work. – I am grateful to CESifo, Munich, for hosting me as a visiting scholar in April/May, 2004, which gave me an excellent opportunity to work on this and other related topics – I am solely responsible for remaining errors and omissions.

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Public pensions in the national accounts and public finance targets

  • HEIKKI OKSANEN (a1)

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