Full text: Capital Gains, Pension Funds and

Postscript 1988. 
A considerable part of the household saving takes the form 
of contributions of employers to the pension funds and of 
premium payments of employees to life insurance companies . 
From the point of view of effective demand this should,in 
general, make no difference.lt is in any case 
saving,invested in financial assets,only the household does 
not have full and direct control over it all the time. From 
a statistical point of view,however,a few complications 
arise.The U.S. National Income and Product Accounts 
(briefly NIPA) as well as the Flow of Funds (FF) of the 
Federal Reserve credit the assets of the pension funds as a 
whole as well as the policy reserves of the life insurance 
companies to the households. The implication is that the 
funds do not make any 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.

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