NETHERLANDS - Accountants and actuaries will issue new criteria for companies that have changed their pension funds into collective defined contribution schemes.

“There is confusion about the rules for collective DC. Often there are still some obligations left for the employer. That’s why we don’t always sign-off,” the daily ‘Het Financieele Dagblad’ quoted Henk Verhoek, head of reporting at accountants’ umbrella Nivra as saying.

Since the introduction of the International Financial Reporting Standards, or IFRS, many companies are changing their pension schemes into collective defined contribution schemes (CDC), which doesn’t guarantee a benefit but offers a fixed contribution.

This as a way of preventing the schemes’ results affecting the company figures, because IFRS requires their pension liabilities to be accounted at market rates.

According to accountants, in many cases companies keep a connection with their pension fund. For example, workers can sometimes claim an addition to their benefit, or the company can benefit from its scheme’s investment results.

Companies who encourage false expectations in their communication with pension fund members pose the greatest problem, Verhoek indicated. Companies may talk about pension promises and claims, which do not exist in a collective DC scheme.

“Moreover, a company’s contribution isn’t allowed to contain repairs for past shortfalls,” he added.

“There is no clear definition of collective DC yet,” Roland van den Brink, the chairman of the Actuarial Society (AG), acknowledged to IPE.

“But as a an occupational body, we are not yet taking part in the discussion. We think it’s still too early. We prefer this kind of issue being solved by self-regulation instead of legislation.”

According to Verhoek, the announced criteria are being developed by the four largest accounts and four actuarial companies, and are meant as a guideline for the Dutch Accounting Standards Board.

He expects the new rules to be published early autumn.

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