Social contributions (D.61)

4.92 Actual social contributions include:

1. employers' actual social contributions (D.6111). These correspond to flow D.121.

   Employers' actual social contributions are paid by employers to social security funds, insurance enterprises or autonomous as well as non autonomous pension funds administering social insurance schemes to secure social benefits for their employees.

   As employers' actual social contributions are made for the benefit of their employees, their value is recorded as one of the components of compensation of employees together with wages and salaries in cash and in kind. The social contributions are then recorded as being paid by the employees as current transfers to the social security funds, insurance enterprises or autonomous as well as non autonomous pension funds;

2. employees' social contributions (D.6112): these are social contributions payable by employees to social security, private funded and unfunded schemes. Employees' social contributions consist of the actual contributions payable plus, in the case of private funded schemes, the contribution supplements payable out of the property income attributed to insurance policy holders received by employees participating in the schemes, minus the service charges. All the service charges are treated as charges against the employees' contributions and not the employers';
3. social contributions by self-employed and non-employed persons (D.6113): these are social contributions payable for their own benefit by persons who are not employees – namely, self-employed persons (employers or own-account workers), or non-employed persons. They also include the value of the contribution supplements payable out of the property income attributed to insurance policy holders received by participating individuals that they are recorded as paying back to the insurance enterprises in addition to their other contributions.

Social contributions payable to the general government sector recorded in the accounts may be derived from two sources: amounts evidenced by assessments and declarations or cash receipts.

1. If assessments and declarations are used, the amounts shall be adjusted by a coefficient reflecting assessed and declared amounts never collected. As an alternative treatment, a capital transfer to the relevant sectors could be recorded equal to the same adjustment. The coefficients shall be estimated on the basis of past experience and current expectations in respect of assessed and declared amounts never collected. They shall be specific to different types of social contributions.
2. If cash receipts are used, they shall be time-adjusted so that the cash is attributed when the activity took place to generate the social contribution liability (or when the liability is created). This adjustment may be based on the average time difference between the activity (or the creation of the liability) and cash receipt.

When retained at source by the employer, social contributions payable to the general government sector should be included in wages and salaries even if the employer did not in fact pass them on to the general government. The households sector is then shown as paying the full amount on to the general government sector. The amounts actually unpaid have to be neutralised under D.995 as a capital transfer from general government to the employers' sectors.’

4.93 Payments of actual social contributions may be compulsory by virtue of a statute or regulation, or they may be paid as a result of collective agreements in a particular industry or agreements between employer and employees in a particular enterprise, or because they are written into the contract of employment itself. In certain cases, the contributions may be voluntary.

The voluntary contributions referred to here cover:

1. social contributions which persons who are not, or who are no longer, legally obliged to contribute pay or continue to pay to a social security fund;
2. social contributions paid to insurance enterprises (or friendly societies and pension funds classified in the same sector) as part of supplementary insurance schemes organised by enterprises for the benefit of their employees and which the latter join voluntarily;
3. contributions to friendly societies with membership open to employees or self-employed workers.

1. compulsory employers' actual social contributions (D.61111);
2. voluntary employers' actual social contributions (D.61112);
3. compulsory employees' social contributions (D.61121);
4. voluntary employees' social contributions (D.61122);
5. compulsory social contributions by self and non-employed persons (D.61131);
6. voluntary social contributions by self and non-employed persons (D.61132).

4.95 Actual social contributions to social security funds or other government agencies are recorded gross as distributive transactions.

On the other hand, social contributions paid under private funded schemes to insurance enterprises, and to friendly societies and autonomous pension funds included in the same sector, are recorded net, i.e. after deducting that part of the contribution which represents the value of the insurance service provided to (resident and non-resident) households. Under the conventions adopted, this part of the contribution represents, in effect, the payment for a market service which forms part of the final consumption of households or, in the case of contributions paid by non-resident households, part of exports of services.

In the case of non-autonomous private funded social insurance schemes, where employers maintain their own segregated reserves, no service charge is deducted from contributions paid by the employees. As such schemes do not constitute separate institutional units from the employers, the costs of managing and administering the funds are assimilated with the employers' general production costs.

4.96 Time of recording: Employers' actual social contributions (D.6111) and employees' social contributions (D.6112) are recorded at the time when the work that gives rise to the liability to pay the contributions is carried out. Social contributions by self-employed and non-employed persons (D.6113) are recorded when the liabilities to pay are created.

4.97 In the system of accounts, actual social contributions are recorded:

1. among uses in the secondary distribution of income account of households;
2. among uses in the external account of primary incomes and current transfers (in the case of non-resident households);
3. among resources in the secondary distribution of income account of resident insurers or employers;
4. among resources in the external account of primary incomes and current transfers (in the case of non-resident insurers or employers).