NETHERLANDS - The Dutch Accounting Standards Board (RJ) has adjusted its guidelines for pension accounting at non-listed companies, in a bid to slow down the trend of firms changing to defined contributions (DC) plans.

The RJ has demanded since 2005 all pension assets and liabilities be reported in accordance with the International Financial Reporting Standards (IFRS).

As a consequence, many companies have switched to DC arrangements, which transferred all risks concerning investment returns to the participants of their pension funds.

Under these new rules, however, an average-sized company with a defined benefit (DB) scheme only needs to calculate its pension liabilities once every three years, unless significant changes happen to its pool of participants or pension arrangements.

The RJ has also made it clear that companies with average-salary schemes no longer have to take estimated future salary rises into account.

Pension schemes carried out by insurers are in principle to be classified as DC plans, while the way contributions are agreed is decisive for the classification of collective DC arrangements, according to the RJ.

Furthermore, a limited actuarial risk still allows companies to classify their pension arrangements as defined contribution, the accounting board has stated.

The RJ's adjustments apply to reporting of pension accounts as of 1 January 2009, and come ahead of a future new reporting standard on pensions.

The new RJ directive - to be published shortly - will focus on the specific set-up of  the Dutch pension system, according to Cardi van Capelle, project manager of the RJ.
In the RJ's opinion, the risk assessment base of the present guidelines - which derives from international reporting standard IAS19 - is not properly applicable in the Dutch context.

"The present guidelines distinguish clearly between DB and DC arrangements. But because in the Netherlands the risks are widely shared between the participants involved, it is impossible to attribute the risk to one of the players," the RJ pointed out.

Representatives of the Foundation for Company Pension Funds (OPF) and the employers' lobbying body VNO-NCW were not available for comment.

Last year, Gerard Verheij, pensions secretary of VNO-NCW, argued all pension risks should be removed from companies.