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Sustainability 2018, 10(8), 2832; https://doi.org/10.3390/su10082832

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

1
Department of Financial Economics and Actuarial Science, University of Valencia, 46010 Valencia, Spain
2
Instituto Complutense de Análisis Económico (ICAE), Complutense University of Madrid, 28040 Madrid, Spain
3
Centre of Excellence in Population Ageing Research (CEPAR), UNSW, Sydney, NSW 2052, Australia
*
Author to whom correspondence should be addressed.
Received: 12 June 2018 / Revised: 25 July 2018 / Accepted: 7 August 2018 / Published: 9 August 2018
(This article belongs to the Special Issue Sustainability and Social Policy)
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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. View Full-Text
Keywords: life care annuities; long-term care insurance; notional defined contribution; pay-as-you-go; pension accounting; retirement; social security; sustainability life care annuities; long-term care insurance; notional defined contribution; pay-as-you-go; pension accounting; retirement; social security; sustainability
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Vidal-Meliá, C.; Ventura-Marco, M.; Pérez-Salamero González, J.M. Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits. Sustainability 2018, 10, 2832.

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