Published: November 01, 2009
Lettre du Trésorier
Emmanuel Laurent
Acoss is a public agency which was formed in 1967 to manage the joint treasury of the general account of the Social Security system on behalf of the sickness, industrial accident, family and old-age funds covering approximately 300 social security bodies. Acoss has since the mid-1980s also been the national body for URSSAF (Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales) whose 95 bodies, plus four general social security funds operating in French overseas regions, are in contact with more than six million contributors. In terms of treasury, Acoss is therefore similar to a central treasury unit and has more than forty years’ experience. It needs to optimise cash management to ensure that at all times - and regardless of the circumstances - all the funds are supplied with cash. It needs to steer and control the treasury operations at URSSAF and in order to do so draws upon a sectoral body made up of representatives from URSSAF. It also has to manage direct financial relations with more than a thousand external institutions outside the scheme, including one hundred principal institutions including the government. The key development areas of these treasury activities are set out every four years in a master agreement with the state.
EL: In 2008, receipts amounted to €360bn, including €254bn recovered by URSSAF and €106bn sent directly to Acoss by third parties, the government accounting for €40bn. These receipts are transferred on the same day they are received to the funds that pay the benefits. Expenditure, meanwhile amounted to €367bn, €308bn via the social security funds and €59bn to third parties. The difficulty for Acoss lies in the scale and the volatility of the financing requirements which create time differences between the inflows and the outflows of cash. These originate firstly from the fact that the receipts are linked to the economic climate – essentially employment and salaries – whereas the benefits are not, or only to a very limited extent. Secondly, the due dates of the contributions are not the same as the due dates of the benefits, thus creating a strong volatility in the treasury profile, which regularly exceeds €10bn in 24 hours. These treasury timing differences generate financial needs which have to be covered by non-permanent resources, with an annual ceiling which is set by parliament. This amounted to €36bn in 2008 and €18.9bn in 2009.
EL: In 2008, average treasury requirements amounted to €18.7bn reaching an historical record of €31bn in November. Acoss is not meant to support massive cash requirements on a lasting basis as the Social Security Financial Law for 2009 set a new transfer of this debt to the Caisse d’Amortissement de la Dette Sociale (CADES) in an amount of €27bn from the first quarter of 2009. For infra-annual finance, Acoss has a long-standing key bank – Caisse des Depôts et Consignations – with which it signs a master agreement every four years on its account terms and finance. In addition to the loans granted by CDC, it calls upon the financial markets through a programme of treasury notes, rated F1/P1 by Fitch and Moody’s, set at a maximum of €11.5bn. [[[PAGE]]]
EL: The role of the banks is crucial to the circulation of cash in the general fund, including within the group. A word on the treasury circuit – to move one euro from the contributor to the beneficiary involves four banking transactions and up to five banks. These transactions are carried out in less than 24 hours. Therefore, the beneficiary funds and the URSSAF each year manage around €1,200bn of incoming and outgoing funds. The cash flows are managed using the zero-balance account principle. There are no placings and no borrowings. In order to hold their accounts and manage the flows, they need to have one or more banking partners who are selected by means of invitations to tender subject to public sector procurement rules. For URSSAF, the selected banks manage the treasury flows which affect six million contributors on behalf of 22 million employees and require between 20 and 30 million transactions per year using all means of payment – cheque, electronic payment, bank transfer etc, and on the benefits side 630 million transactions per year, of which 98% are bank transfers. Overall, for all 400 general account bodies, this represents around twenty banks and seven hundred sales contracts, with Acoss providing banking expertise to local or national funds.
To move one euro from the contributor to the beneficiary involves four banking transactions and up to five banks.
EL: It seems that the SEPA project is generating immediate and definite costs for future yet uncertain gains. In view of the scale of our financial flows and the banking relationship, we considered at a very early stage the consequences that a project such as SEPA might have. We have benefited in this process from the expertise of our two supervisory ministries and from professional associations, the leading one being AFTE. In 2007, we conducted an impact analysis for the whole of the general account. The project was launched in 2008, including notably the planning of the switch to BIC-IBAN of around 80 million RIB codes without involving the beneficiaries or the contributors, and tests on the exchanges of information between the banks and the general account – while the steering committee of the social sphere which reports directly to the inter-ministerial committee on means of payment, was being set up. The principal adjustments to the IT systems will need to be completed by the end of the current year which will allow the various divisions gradually to make transfers under the SEPA system in 2010. The issue of direct debits affects almost exclusively the recovery sector. The planned changes to the IT systems should allow URSSAF to become part of the official planning system of the National SEPA committee for France.
EL: The Acoss finance division employs 25 people, of whom 15 cover the treasury functions of centralisation of cash flows, cash pooling, financing and placements, cash management, group treasury, local treasury operations for the 400 Social Security funds, risk management, including counterparty risk with third parties. We attach particular importance to forecasting, a crucial aspect of our treasury operations. We also have external support when we need it. I have a doctorate in economics and attended the Paris IX Dauphine University and have been the head of financial operations at Acoss since 2002.
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