The choice of the methodology used to produce a social security pension system's balance sheet is mainly determined by the system's financing approach. In this article, it is shown using the example of the Canada Pension Plan that if the assessment of the financial sustainability of a pay‐as‐you‐go or partially funded system is done through the means of an actuarial balance sheet, then the methodology used should take into account future contributions of current and future participants. The balance sheets produced using the open group approach, as well as methodologies used in United States and Sweden, are discussed.

Canada, Denmark, the Netherlands and Sweden have advanced multi‐pillar pension systems. Using micro‐simulations, this article presents a close examination of the interaction of pillars in these countries. The relative importance and the role of the different pension pillars vary from country to country, and according to age, income, gender and socio‐economic dimensions as well as between generations. A further area of investigation is the mitigation capacity of the four pension systems. On the one hand, adverse labour careers lead to lower life‐time earnings and lower private pension accruals. On the other hand, these effects are mitigated through the design of pillars and their interaction. Mitigation is important to income security and stability in retirement and to post‐retirement income distribution. However, mitigation mechanisms come at the cost of incentives. Moreover, in many countries, the generosity of public benefits is set to decrease – increasing the importance of private pensions. This will shift risk and uncertainty from employers and pension institutions to individuals. Thus, risks and uncertainties related to private pensions will become more important, raising questions about the division of responsibilities between public and private pensions, and about the potential of mitigating such risk through pillar interaction. These concerns are further reinforced by labour market changes. Although a pension system free of distortions is inconceivable, this article seeks to contribute to addressing how mitigation should be designed, and how mitigation and risk sharing should be balanced against incentives, challenges which are as much political as technical.

The processes used to assess the financial sustainability of the Canada Pension Plan (CPP) and the corresponding reporting are recognized internationally as “best practices”. In the context of the international and multi‐disciplinary debate about the most appropriate methodology for the measuring and reporting of social security assets and obligations, the experience and practices of Canada offer a number of important policy lessons. The article analyses the assets and obligations of the CPP using different actuarial balance sheet methodologies, i.e. open and closed group. It concludes that the balance sheets under the closed‐group with and without future benefit accruals methodologies do not reflect the nature of the partial funding approach of the CPP, whereby future contributions represent a major source of financing for future expenditures. As such, it is inappropriate to reach a conclusion regarding the Plan's financial sustainability considering only the asset shortfalls determined under the closed group with and without future accruals balance sheets. The article asserts that measuring the Plan's assets and obligations using the open‐group approach provides information that properly reflects how changing demographic and economic environments affect the long‐term sustainability of the CPP. In contrast, using the closed group without future accruals approach may provide incomplete or even misleading information. Finally, the article discusses approaches used to report the financial state of the CPP, including both actuarial and financial reporting. It highlights the comprehensive disclosures approach adopted for the purpose of CPP annual reports and the Public Accounts of Canada.

Resumen La elección del método de elaboración del balance actuarial de un sistema de pensiones de la seguridad social viene determinada principalmente por el enfoque de fi nanciación del sistema. En el presente artículo se demuestra mediante el ejemplo del R égimen de P ensiones del C anadá que si la evaluación de la sostenibilidad fi nanciera de un sistema de reparto o de capitalización parcial se realiza por medio de un balance actuarial, el método utilizado deberá tener en cuenta las cotizaciones futuras de los participantes presentes y futuros. En este artículo se analizan los balances actuariales elaborados con arreglo al enfoque de grupo abierto, así como los métodos utilizados en los E stados U nidos y en S uecia.Palabras clave régimen de seguridad social , régimen de pensión , método de fi nanciación , valuación actuarial , C anadá , S uecia , E stados U nidos Dirección para la correspondencia: Assia Billig, Ofi cina del Actuario Jefe, Ofi cina del Superintendente de Instituciones Financieras, El presente artículo se basa en un estudio actuarial reciente publicado por la Ofi cina del Actuario Jefe ( OSFI, 2012 ). Los autores de este artículo formaron parte del equipo de trabajo de este estudio actuarial. Ambos desean agradecer al personal de la Ofi cina del Actuario Jefe su ayuda en la preparación del estudio actuarial original y del presente artículo. Los autores desean también dar las gracias a Ole Settergren por sus respuestas a las preguntas sobre el sistema Inkomstpension y por sus valiosas observaciones y sugerencias, y a Alice Wade por sus respuestas a las preguntas relacionadas con el Programa de seguro de vejez, invalidez y sobrevivientes (OASDI) de los Estados Unidos.El balance actuarial como herramienta para evaluar la sostenibilidad de los sistemas de pensiones 1. Se entiende por obligación no fi nanciada la diferencia entre las obligaciones y los activos del régimen, es decir, lo opuesto a superávit o défi cit de activos.

Bureau de l ' actuaire en chef , Ottawa , CanadaRésumé La méthodologie choisie pour établir le bilan comptable d ' un régime de pensions de sécurité sociale dépend principalement du mode de fi nancement du régime. En se fondant sur l ' exemple du Régime de pensions du C anada, le présent article montre que, si la pérennité fi nancière d ' un régime par répartition ou par capitalisation partielle est évaluée au moyen d ' un bilan actuariel, la méthodologie retenue devrait tenir compte des cotisations qui seront versées à l ' avenir par les assurés actuels et futurs. Il examine les bilans établis pour un groupe ouvert, ainsi que les méthodes utilisées aux E tats-U nis et en S uède.