1993 SNA Update Information - AEG recommendations for issue:
Retained earnings of mutual funds, insurance companies, and pension funds
|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
|Number of AEG recommendations for selected issue:||2|
| Corresponding meeting||Date posted||Recommendation|
| Jan-Feb 2006||4/7/2006||The AEG noted these recommendations were agreed to in the e-discussion.|
| July 2005||9/12/2005||The 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.