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Private funded social insurance schemes 15. Schemes financed by autonomous funds are treated differently from schemes financed by non-autonomous funds. For autonomous funds, a service charge is calculated as (A): 16. All four items are recorded exclusive of holding gains or losses. Total contribution supplements are identical to property income attributed to policyholders, which is income earned by private social insurance funds by investing their technical and pension reserves. The ESA regards these reserves as owned by the policyholders, who therefore receive the income generated by these reserves. The service charge is recorded as output (P.1) for the autonomous funds and as final consumption expenditure (P.3) for the household sector. For non-autonomous funds no service charge is calculated. The costs of managing these funds are included with the other elements of costs in the employers' production account.

20. As a consequence of the entry in the financial account, F.612 and F.62 appear in the balance sheets of the household sector (as an asset) and the fund's sector (as a liability). In the use of disposable income account, an adjustment for change in net equity of households in pension funds reserves (D.8) is recorded as receivable by households and payable by funds. This entry equals the second element of the entry in the financial account. Employers and general government occasionally make extraordinary payments to private social insurance funds in order to increase the reserves of these funds. Such payments are recorded in the capital account as other capital transfers (D.99), payable by the employer's sector or the government sector and receivable by the fund's sector. As social insurance funds' reserves are treated as if owned by the household sector, an accompanying adjustment between the fund's sector and the household sector is required. This adjustment is recorded as other capital transfers (D.99), payable by the fund's sector and receivable by the household sector.

21. If a resident employee works for a non-resident employer, the employer's actual contributions (D.121) are recorded as part of compensation of employees, payable by the rest of the world and receivable by households. When the employer is non-resident, any non-autonomous social insurance fund will also be non-resident, while an autonomous fund may be resident or non-resident. If the employee is covered by a non-resident fund, all flows between the household sector and the fund's sector are shown as transactions between the household sector and the rest of the world. The service charge (in the case of autonomous, on-resident funds) is shown as imports of services (P.72). The change in net equity of insurance technical reserves (F.6) is shown in the financial account of the rest of the world, while the remaining flows are shown in the external account of primary incomes and current transfers.

22. If a non-resident employee works for a resident employer, the employer's actual contributions (D.121) are part of compensation of employees, payable by the employer's sector and receivable by the rest of the world. If the non-resident employee is covered by a resident social insurance fund, any service charge is recorded as exports of services (P.62). All other flows between fund and employee are shown as between the fund's sector and the rest of the world. Especially when non-resident units are involved, all the requisite data are not always available. The calculations of some of the items to be recorded sometimes have to be based on assumptions. An example of the flows recorded for private funded social insurance schemes is shown in Table A.III.2. Unfunded social insurance schemes operated by employers

23. Similar 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 to 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. 2 ◄ 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. Other insurance 27. The output of other insurance services, both life and non-life, is calculated as (B):

28. Actual premiums earned are the actual premiums that cover the risks incurred during the current period. Actual premiums earned are usually not equal to actual premiums receivable, as the latter often cover risks incurring in both the current and subsequent periods. Premium supplements are identical to property income attributed to policyholders, which is the entire income earned by insurance enterprises by investing their insurance technical reserves, excluding any income from insurance enterprises' own funds. Insurance technical reserves contain two elements:

(a) prepayments of insurance premiums and reserves for outstanding claims, arising from the difference between premiums earned and premiums receivable and between claims payable and claims due, and (b) technical provisions against outstanding risks and technical provisions for with-profits insurance. The latter element applies only to life insurance. Insurance technical reserves are usually invested in financial assets which yield income in the form of interest or dividends. However, these reserves may also be invested in real estate, for example, in which case income is earned as operating surplus.

29. Claims due cover events that occur within the current period. Frequently, claims do not become payable until a later period than when the event giving rise to them occurred. Claims due are therefore not equal to claims payable. Changes in technical provisions against outstanding risks and technical provisions for with-profits insurance consist of allocations to technical provisions against outstanding risks and provisions for with-profits insurance policies to build up the capital sums guaranteed under these policies. These provisions relate to life insurance only. All four items in equation (B) should be measured excluding holding gains and losses. Other life insurance

33. When a resident life insurance enterprise provides services to non-resident households, the service charge is recorded as exports of services (P.62). Property income attributed to policyholders is shown as payable by the insurance sector and receivable by the rest of the world in the external account of primary incomes and current transfers. The change in net equity of non-resident households on life insurance reserves is shown in the financial account of the rest of the world as a change in the rest of the world's assets and the insurance sector's liabilities. When resident households purchase cover from non-resident life insurers, the procedure is in principle straightforward: the service charge is recorded as imports of services (P.72), attributed property income is shown in the external account of primary incomes and current transfers as payable by the rest of the world and receivable by households, and change in net equity is shown as a change in households' assets and the rest of the world's liabilities. However, the data required to calculate these items are normally not available; usually only premiums payable are known. Assumptions are therefore necessary, for example applying the ratios of service charge to premiums and attributed property income to premiums for resident life insurers to the premiums paid by resident households to non-resident life insurers. An example of the flows recorded for other life insurance is shown in Table A.III.4.