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Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

Author

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  • Carlos Vidal-Meliá

    (Department of Financial Economics and Actuarial Science, University of Valencia, 46010 Valencia, Spain
    Instituto Complutense de Análisis Económico (ICAE), Complutense University of Madrid, 28040 Madrid, Spain
    Centre of Excellence in Population Ageing Research (CEPAR), UNSW, Sydney, NSW 2052, Australia)

  • Manuel Ventura-Marco

    (Department of Financial Economics and Actuarial Science, University of Valencia, 46010 Valencia, Spain)

  • Juan Manuel Pérez-Salamero González

    (Department of Financial Economics and Actuarial Science, University of Valencia, 46010 Valencia, Spain)

Abstract

This paper develops a social insurance accounting model for a notional defined contribution (NDC) scheme combining retirement and long-term care (LTC) contingencies. The procedure relies on standard double-entry bookkeeping and enables us to compile a “Swedish” type actuarial balance sheet (ABS) following a framework equivalent to an open group approach. This methodology is suitable for reporting the system’s solvency status and can show periodical changes in the system’s financial position by means of an income statement. The information underpinning the actuarial valuation is based on events and transactions that are verifiable at the valuation date, without considering expected future trends. The paper also contains an illustrative example to make it easier for policymakers to understand the main advantages and difficulties of our proposal. The policy conclusions stress the need to properly report social insurance benefits to enhance transparency and sustainability and to improve decision-making because it is in the public interest to do so.

Suggested Citation

  • Carlos Vidal-Meliá & Manuel Ventura-Marco & Juan Manuel Pérez-Salamero González, 2018. "Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits," Sustainability, MDPI, vol. 10(8), pages 1-36, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2832-:d:162929
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    Cited by:

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    3. Chung Shin Fung, 2022. "The impact of Socio-Demographic variables on the Retirement Environment ," GATR Journals gjbssr625, Global Academy of Training and Research (GATR) Enterprise.
    4. Xiaoyu Deng & Jing Tian & Rong Chen, 2019. "Effect of Social Security System on Consumption through Income and Uncertainty: Evidence from China," Sustainability, MDPI, vol. 11(7), pages 1-16, March.
    5. Huan Wang & Jianyuan Huang & Shuangyue Sun, 2019. "Assessment of the Financial Sustainability of China’s New Rural Pension Plan: Does the Demographic Policy Reform Matter?," Sustainability, MDPI, vol. 11(18), pages 1-22, September.
    6. Xiaocang Xu & Linhong Chen, 2019. "Projection of Long-Term Care Costs in China, 2020–2050: Based on the Bayesian Quantile Regression Method," Sustainability, MDPI, vol. 11(13), pages 1-13, June.
    7. Anne M. Garvey & Juan Manuel Pérez-Salamero González & Manuel Ventura-Marco & Carlos Vidal-Meliá, 2021. "From “Table 29” to the actuarial balance sheet: is it really that big a leap?," Documentos de Trabajo del ICAE 2021-05, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.

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