What Is a Nominal Ledger?

Nominal account system means that in the endowment insurance system, although individual contributions are also recorded in the personal account, the payment funds are still paid on a pay-as-you-go basis to pay the pensions of current retirees, and the accumulation in the personal account is only nominal of.

Nominal Account System

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Nominal account system means that in the endowment insurance system, although individual contributions are also recorded in the personal account, the payment funds are still paid on a pay-as-you-go basis to pay the pensions of current retirees, and the accumulation in the personal account is only nominal of.

Chinese name

Nominal Account System

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However, just as it is irrelevant to the depositor to which company the bank lent the deposited deposits to, the state does not have a real account and it is not related to the individual. It only needs to ensure that the individual can get the money in full and on time after retirement.

The "nominal payment determination" model or "nominal account" system has both the characteristics of "determined pay-as-you-go" system and certain characteristics of "determined payment-based accumulation system". The "nominal account" system can be called either a "determined pay-as-you-go" system or a variant of the "determined pay-as-you-go" system, which is essentially a pay-as-you-go A mixed model of pay-as-you-go and accumulation, benefit-determined, and payment-determined, that is, DC + DB = NDC.

1. From the perspective of financing, the "nominal account" system is based on

Because the "nominal account" system is a new thing, at present, in the design and operation of the "nominal account" system, some problems may not have appeared, and some may be temporary; some of these problems are The definite payment type may be an advantage, but the definite payment type is likely to be a disadvantage. In general, the reform of the "nominal account" system in the six Eurasian countries has been relatively successful.

1. It can adapt to changes in the external socio-economic situation within a certain period of time. The "nominal account" model is highly adaptable to changes in the external economic and social situation, especially to

Although the "nominal account" system has many advantages, it has some obvious limitations compared to the PAYG system and the accumulation system. We should have a clear understanding of this. To try to avoid mistakes during the transformation process.

1. Redistribution is weak. Compared with the PAYG system, the redistribution of the "nominal account" system is weak, so if there is no "minimum pension plan" as a guarantee, the transition from the PAYG system to the "nominal account" system will Large income inequality among retirees. Practices in the six Eurasian countries have proven that: (1) This limitation of the "nominal account" system leads to the phenomenon that it is easier to implement the "nominal account" system among the richer workers, and it is more difficult for the poorer workers. bigger. (2) Without the "minimum pension guarantee" mechanism, some workers' situation will become worse compared with the PAYG system. For them, it is better to not reform because the PAYG system is They are more favorable. (3) For workers over 40 years of age, the "nominal account" system can provide a good income replacement rate (for example, about 50% after tax). But for agricultural workers, women, and workers in the informal economy, their replacement rate is likely to be less than 40%.

2. No contribution to national savings. Compared with the payment-determined accumulation system, the assets in the "nominal account" account are obviously not "capital assets" but "nominal assets", so it will not make any contribution to the national savings rate. In contrast, Swedish research shows that the "nominal account" system has some negative effects on the savings rate. On the one hand, the "nominal account" system cannot have a stimulating effect on the economy; on the other hand, for many countries, the economic growth rate is an important thing. In this way, the "nominal account" system cannot be determined like a payment The type of system has a greater direct role in promoting the development of the capital market.

3 Not good for some "vulnerable groups". (1) Not good for women. Generally speaking, women who have lower wages have less consistent career records due to caring for their children, the elderly, and household chores, and their expected annuity payments are not high. Has a short career and a long life expectancy, which is equivalent to implementing a "punishment" mechanism for women, forcing them to want to stay longer in the labor market. In Latvia, women who retire at 55 under the "nominal account" receive, on average, 25% lower pensions. In Poland, women who retire early receive 50% less pensions than those who retire at 60. (2) It is not good for the widows and the elderly. For example, Latvia has eliminated benefits for all spouse survivors, while women in Latvia live an average of 8 years longer than men.

4 On the issue of automatic financial balance in the short term. The so-called "automatic financial stability" refers to the ability of pension plans to adjust financial risks without the frequent use of legislative intervention. The reason why "legislative intervention is not often used" is because legislative intervention will cause problems in many aspects. In the definition of "automatic fiscal stability," it is also necessary to distinguish between "short-term fiscal balance" and "long-term fiscal stability." "Short-term fiscal balance" refers to measures to avoid asset reduction (partial accumulation) and falling into an age crisis; "long-term fiscal stability" refers to allowing assets and debt to exist for a period of time, or even decades, but in After a certain financial shock, the balance can be restored immediately and the normal state can be entered.

Automatic fiscal balance in the short term is a very desirable goal. However, because the "nominal account" system essentially implements a DB-type pay-as-you-go system, the "lifetime annuity" is paid until the death of a retiree. The difference between the expected mortality rate and the actual mortality rate is the short-term fiscal balance Goals can only exist as an important factor in an unrealistic stable state. Therefore, the "nominal account" system is just like the traditional DB-type pay-as-you-go system, which requires other fiscal adjustment measures, such as government guarantees and uninterrupted legislation to formulate some mandatory measures (such as The Reserve Fund also needs to intervene without interruption). From the perspective of financing and payment, because the DB system is difficult to achieve short-term automatic financial balance, the DB system requires the country as a guarantor to bear certain risks; while the DC system theoretically has the function of short-term automatic financial stability, so basically No guarantor is required to guarantee it.