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An exemption for the Dutch pension system will not be considered as part of the revision of the IFRS, according to project manager Anne McGeachin of the IASB.
“The IFRS must be applicable worldwide, and we therefore cannot go around exempting jurisdictions,” McGeachin - who is preparing the review of the pension standard IAS19 - told IPE.
In a recently published discussion paper, the IASB indicated it wants to abolish the present option for companies to show the results of their pension funds in a buffered way on their balance sheets, the so-called ‘corridor approach’ adopted by Dutch firms.
The large employers’ organisation VNO-NCW fears lack of an exemption will force many more companies to switch to defined contribution plans, in which all financial risks are with the workers.
However, in McGeachin’s opinion, the interpretation body IFRIC might be able to provide a solution for companies which are taking part in an industry-wide pension fund. Under IFRS, they need to make proportional provisions for their pension promises, while they only have to pay the scheme a costs-covering contribution.
“The IAS19 rules are not crystal clear on multi-employer plans. Therefore, the IFRIC could indicate when benefits accounting is necessary and when not,” McGeachin suggested.
McGeachin is clear in her views regarding the IFRS obligation to financially anticipate a full indexation, while present national legislation allows Dutch pension funds to decide inflation corrections for themselves.
“The IFRS is principle-based. If we base the rules on judgement, we get a lot of rules. Specific rules for the Netherlands will set a precedent for all other jurisdictions,” she stated.
NIVRA, the Dutch accountants’ umbrella organisation, is not optimistic about McGeaching’s suggestion to involve IFRIC. “We have already tried to go down this route, but the EU roundtable turned down our request because it was ‘a local issue’,” said Henk Verhoek, coordinator for external reporting at NIVRA.
According to Verhoek, the Dutch Accounting Standards Board (RJ) will approach the IASB to get the specific Dutch position recognised.
Meanwhile, Dutch MEP Ieke van den Burg has announced an initiative against the proposed rules which, in her opinion, will seriously damage the Dutch pension system.
As monitor for the economic and monetary select committee, she recently reported to the employment and social affairs’ committee she was worried about the present shift from DB to DC arrangements and the subsequent sharp decline of employers’ contributions.
Van den Burg stressed the planned review of IAS19 should not be allowed to increase this trend through abolition of the corridor approach.
In the MEP’s opinion, changes to IAS19 must be made subject to the approval of the European Parliament.