Unfunded social insurance schemes operated by employers

23. Similarly to schemes financed by non-autonomous funds, the costs of managing unfunded social insurance schemes are included with the other elements of costs on the employer's production account. Thus, no service charge is calculated.

As unfunded social insurance schemes do not form separate institutional units from the employers operating them, all transactions are between the employer's sector and the household sector.

24. The ESA regards an employer operating an unfunded scheme as making an imputed contribution to the scheme on behalf of his employees. This imputed social contribution (D.122) is part of compensation of employees and is shown as payable by the employer in the generation of income account and receivable by households in the allocation of primary income account. The employer's imputed contribution is shown again in the secondary distribution of income account as item D.612, payable by households and receivable by the employer. The amount of this contribution should be determined by reference to the employer's future obligations to provide benefits. In practice, however, the contribution is usually set equal to benefits payable in the current period (less employees' social contributions).

25. Actual contributions by employees, if any, are shown as part of D.6112, payable by households and receivable by the employer's sector. The secondary distribution of income account also shows pensions and other benefits as part of D.62, receivable by households and payable by the employer.

Unfunded social insurance schemes obviously belong to the same institutional sector as the employer in question. NACE rev. 1 regards them as an ancillary activity.

26. If a resident works for a non-resident employer operating an unfunded social insurance scheme, all transactions are between the household sector and the rest of the world, recorded in the external account of primary incomes and current transfers. If a non-resident works for a resident employer operating such a scheme, all transactions are between the rest of the world and the employer's sector, shown in the external account of primary incomes and current transfers.

An example of the flows recorded for unfunded social insurance schemes operated by employers is shown in Table A.III.3.