Cash & Liquidity Management
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Interview: Emmanuel Laurent, Head of Financial Operations at Acoss

“The branches will gradually start to issue SEPA transfers in 2010”

Head of Financial Operations, Acoss

Lettre du Trésorier

Acoss is the central agency for social security bodies: can you tell us more about its activities?

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.

What amounts do you deal with?

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.

What are these resources?

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.