Full text: Capital Gains, Pension Funds and the Low Savings Ratio in the United States

saving,all accumulation is credited to the household. In 
accordance with this approach the employers contributions to 
pension funds and the life insurance premia are defined as labour 
income (supplement to wages and salaries) and since they are not 
deducted when the take home wage is calculated they are also 
included in disposable income. A subsidiary feature of the 
approach is that the benefits paid out by the pension funds and 
life insurance companies are not credited to disposible income,but 
instead the investment income (interest) of the funds and life 
insurance companies is so credited.If the two are not equal the 
balance goes to the households disposable income. 
As already mentioned in this paper the two systems of data, the 
NIPA and the Flow of Funds, give different estimates for the 
household saving. The difference was formerly relatively 
modest,but in the 1980s the estimates diverged very strongly. 
The divergence is identical with the statistical discrepancy given 
in the Flow of Funds which amounted to $40 to $90 billions per 
year in 1980 to 1986 (Table 5).One reason for the divergence is 
the difference between benefits (pensions) and investment income 
of pension funds and life insurance companies which amounted to 
$20 billion in 1984 and rose to $35 billion in 1986.This excess of 
benefits reduced the disposable income and saving in NIPA but it 
did not affect the Flow of Funds data,so that saving there is 
correspondingly larger than in NIPA. Another reason for the 
discrepancy may be that NIPA does not take account of realised 
capital gains (they are not income) while the Flow of Funds does. 
Realised capital gains accruing to the personal sector have 
attained an increasing importance in the "casino society" of the 
1980s.As the Survey of Current Business (July 1988,Table 8.15) 
shows they rose from roughly $30 billion in 1981 to $137 in

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