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Background to European system of accounts 2010 (ESA2010) pension methods

When countries need to implement changes to the national accounts because of new international standards and guidance, such as those that will be required this autumn under the new ESA, they are often supported by discussions at international working groups that discuss implementation of particular aspects in great detail. Such groups discuss the relevant concepts and methods and agree recommended approaches. There are 2 overarching benefits to this procedure: (1) adoption of the most appropriate methods; and (2) enhanced international comparability.

Detailed international discussions of this kind preceded the new pension concepts and methods as outlined in the article published on 28 April 2014.

In particular:

  • the Eurostat Pensions Task Force recommended that member states should use a projected benefits obligations (PBO) approach, rather than the accumulated benefits obligations (ABO) approach

  • the Task Force concluded that “A PBO is a more prudent measure of what the eventual level of entitlement is likely to be”; it preferred this over the alternative ABO approach, which has a more partial coverage

  • the PBO approach is currently used in the pensions supplementary table, which has been transmitted to Eurostat since 2012

For these reasons, ONS accepted the Task Force's recommendation of best practice, as did most other member states. This approach will therefore also maximise comparability across European member states.

 

Content from the Office for National Statistics.
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