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1993 SNA Update Information - AEG recommendations for issue:
Retained earnings of mutual funds, insurance companies, and pension funds

Issue description
Issue description in [English] | [French] | [Russian] | [Spanish]
In the 1993 SNA, retained earnings of an entity are generally treated as the income and saving of the entity, rather than the owner. However, exceptions are made for life insurance companies, pension funds and foreign direct investment companies, where there is an imputed outflow to the policyholders, beneficiaries, or owners (respectively), with an equal financial account inflow from them. TheESA 95 introduces a similar treatment for mutual funds by imputing a distribution of retained earnings to the investors and a subsequent reinvestment in the fund. Should the SNA follow this treatment to have a more consistent treatment of various forms of collective investment schemes?
AEG recommendations
Number of AEG recommendations for selected issue:2
  Corresponding meetingDate postedRecommendation
 Jan-Feb 200607/04/2006The AEG noted these recommendations were agreed to in the e-discussion.
 July 200512/09/2005The AEG agreed unanimously to accept recommendation (a).
The AEG requested further clarification on the exact recording of the property income flow, the definition of retained earnings and an elaboration of the parallel with insurance transactions. This clarification should also consider the role of holding gains in the attribution of income to share holders. Some of these questions will be dealt with by e-discussion before the next AEG meeting.
The AEG considered the definition of investment funds needs to be further refined and the terminology to be adopted for the unit and the instrument to be re-examined. The e-discussion forum covering questions associated with recommendation (b) should cover these aspects also.
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