NETHERLANDS - The new IAS19 accounting rules are likely to increase Dutch companies' pensions liabilities even further, a survey by consultant LCP Netherlands has warned.
Jeroen Koopmans, partner at LCP Netherlands, said: "Moreover, its unlikely that these new stands will signal the end of changes in the way companies account for their pensions obligations.
"If, within five or 10 years, companies were required to value their pensions liabilities on a minimum-risk basis, the value of liabilities disclosed on the balance sheets of companies listed on the Amsterdam Stock Exchange (AEX) and the Amsterdam Midcap Index (AMX), could triple to €75bn."
In its first Pensions Accounting Briefing in the Netherlands, LCP said it found that the combined employee benefit deficits of 44 AEX and AMX companies had grown by €1bn to €25bn in 2010.
The companies' combined liabilities increased from €179bn to €200bn last year, according to LCP.
Its report compared the different practices adopted by the largest companies and highlighted the financial implications.
According to LCP, the new accounting rules - to be introduced in 2013 - will have a significant impact on companies' reported profits and would have lowered profits by €1.5bn if applied for 2011.
Furthermore, the removal of the so-called 'smoothing mechanism' under IAS19 would have increased companies' liabilities by €17bn, based on 2010 figures, it said.
Because the new rules are likely to increase pensions disclosure, the Netherlands' new Pensions Agreement will lead to further de-risking into defined contribution or collective DC schemes, as well as the elimination of IAS19 liabilities from the balance sheet, LCP said.
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