NETHERLANDS - Dutch umbrella organisations for pension funds and employers are mounting a joint effort to prevent the accounting rules of the International Financial Reporting Standards (IFRS) from undermining the Dutch pension system.

The Association of Industry-wide Pension Funds (VB), the Foundation for Company Pension Funds (OPF) and the Confederation of the Netherlands Industry and Employers (VNO-NCW) will try to convince the International Accounting Standards Board (IASB) the new rules must make a provision for the Dutch situation.

IFRS rules prescribe companies to include their pension funds' results, as well as the schemes' financial prospects, in their balance sheets. As a consequence, some companies have already shifted the financial risks to pension funds' participants, by switching from a defined benefit system to a defined contribution scheme.

"We don't want to be forced by international accounting rules to abandon our solid pension system," said Leny van der Heiden, acting director of VB.

According to Van der Heiden, accountants are now also putting pressure on companies who are associated with an industry-wide scheme to fulfil their IFRS obligations. "Because of their very nature, industry-wide pension funds just can't produce these figures," she pointed out.

"In our opinion, the designers of IFRS rules have not made the right assessment of the Dutch situation. The Dutch legislation and additional steering instruments prevent the financial problems that have occurred elsewhere."

"The proof is that not a single company had to make extra financial contributions to their pension fund during the market crisis earlier in this century," Van der Heiden continued.

"The risks are mainly theoretical. A study by us has found it has happened only once in the past that a company had to make an extra payment, because of financial problems at its scheme," agreed Martin Noordzij, VNO-NWC's economic affairs' secretary.

VB, OPF and VNO-NCW will promote their view through a representative in the working committee of the IASB, which is looking into the issue.

In addition, they will mobilise all the relevant Dutch players in the Council for Annual Reporting (RJ) to fight their cause.

The organisations also expect to see support from the European Financial Reporting Advisory Group, which will publish a document on the issue soon, Noordzij made clear.

The Dutch pensions supervisor De Nederlandsche Bank and the €215bn civil service pension fund ABP also support local thinking concerning the need for IFRS provision, he added.

We'd like to know what the pensions industry thinks on this subject , whether the prospect of winning a reprieve is feasible and whether the IFRS situation in The Netherlands could be applied to pensions regimes elsewhere. So if you have any comments you would like to add to this story, contact Julie Henderson on +44 (0)20 7261 4602 or email julie.henderson@ipe.com