From “Table 29” to the actuarial balance sheet: is it really that big a leap?

Anne M. Garvey (), Juan Manuel Pérez-Salamero González (), Manuel Ventura-Marco () and Carlos Vidal-Melia
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Anne M. Garvey: Department of Economics and Management Sciences, University of Alcalá, Madrid (Spain).
Juan Manuel Pérez-Salamero González: Department of Financial Economics and Actuarial Science, University of Valencia, Valencia. (Spain).
Manuel Ventura-Marco: Department of Financial Economics and Actuarial Science, University of Valencia, Valencia. (Spain).

No 2021-05, Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: EU regulations since 2017 have required all Member States to disclose their accrued-to-date pension liabilities (ADL) using a standard actuarial cost method and some common assumptions. This applies to both Social Security (SS) schemes and unfunded defined benefit (DB) schemes covering civil servants. These pension liabilities have to be disclosed in a supplementary table referred to as Table 29. An actuarial balance sheet (ABS) can be defined as a financial statement that lists a pension system's obligations to contributors and pensioners at a particular date, together with the amounts of the assets (financial and in particular those from contributions) that underwrite those commitments. The ABS can be used to assess the solvency of SS schemes, whereas Table 29 cannot. This paper develops a methodology to (easily) transform Table 29 into an ABS and compile its associated income statement (IS). To enable policymakers to better understand how the model would function, the paper also contains a country case study based on data from the most recently published Table 29 for Spain. According to our best estimate assumptions, it can be said that the Spanish pension system is partially insolvent because only part of the pension entitlements is backed up by assets, and that the system's sustainability has markedly deteriorated over the period 2015-2018.

Keywords: Accountability; Actuarial Balance Sheet; Pension Liabilities; Social Security; Spain; Table 29; Useful Information. (search for similar items in EconPapers)
JEL-codes: G22 H55 H83 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2021-03
New Economics Papers: this item is included in nep-acc and nep-age
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