Francisco Navarro Lara
CORTES DE SONIDO
REAAL NV staff is contractually employed by SNS REAAL NV and REAAL NV is charged for its share in current year’s staff expenses, including employee benefits. SNS REAAL NV’s employee benefits accounting principles are as follows:
15.5.13.1 Short-term remunerations for employees
Short-term remunerations for employees include, inter alia, salaries, short paid leave, profit sharing and bonus schemes. These short-term remunerations are accounted for in the income statement over the period in which the services are rendered. In the event that employees have not made use of their entitlements at the end of the period, a liability is formed for the nominal amount.
15.5.13.2 Pension benefits
GeneralREAAL NV has pension liabilities from defined contributions scheme, where the employer has no actuarial and investment risks and there is no risk that the employer must pay for accrued rights, as well as defined benefit plans, where these risks do exist.
The main pension scheme is a defined contribution scheme at Stichting Pensioenfonds SNS REAAL. New staff is included in this scheme. In addition, for the staff of SNS REAAL NV there is a number of defined benefit pension plans of insurance companies acquired in the past. These are no longer open to new entrants.
Defined contribution schemes
A defined contribution plan is a pension plan in which fixed contributions are paid to a separate entity, of which the main entity is the independent Stichting Pensioenfonds SNS REAAL (the pension fund). SNS REAAL NV has no legally enforceable or actual obligation to pay if this fund has insufficient assets to make all the benefit payments related to employment in the current period or in prior periods. The regular contributions in the defined contribution plans are considered to be net periodic costs for the year in which they are due, and are recognised as such in the staff costs. Employee contributions are deducted from the net periodic costs.
Defined benefit schemes
SNS REAAL NV also has a number of defined benefit pension plans relating to acquisitions. This relates to the pension rights on account and risk of SNS REAAL NV of (former) employees continuing under the old acquired pension schemes of AXA, Winterthur, Zwitserleven, Zürich, NHL and DBV. Only so called dormant participants and retirees participate in these old schemes.
Net liability (or asset) from defined benefit pension schemes
This is the sum of gross pension entitlements from defined benefit pension schemes less the for deduction qualifying assets of these schemes. Netted an asset can arise, which then is deducted from the sum of liabilities insofar this exceeds the by IFRS determined limit (see hereafter). The net commitment arising from defined benefit pension plans is calculated separately for each plan. Qualifying assets are investments from pension funds or insurance contracts at insurance companies outside the SNS REAAL group.
Gross pension entitlements from defined benefit pension schemes
The present value of gross liability arising from pension entitlements is calculated yearly by an independent actuary based on the ‘projected unit credit’-method. In principal this method evenly distributes the pension costs over the period
in which an employee performs services for SNS REAAL NV.
The present value of the pension liability is determined by discounting the expected pension payments with the yield of highly rated corporate bonds (‘AA’-rating) which have an equal maturity to the date of payment.
Self-administered pension schemes
Entitlements from self-administered defined benefit pension schemes are insured within the SNS REAAL group at SRLEV NV (Business Unit Zwitserleven). The investments which Zwitserleven holds for these contracts, do not qualify as pension investments and are therefore included in investments (for own account).
Income statement General
The costs of defined contributions schemes are recognised when the contribution are due. For defined benefit schemes the following is recognised in the income statement:
•
the periodic pension costs of the participants of this scheme who are still employed by SNS REAAL NV;•
costs of improvement (or from the costs deducted value of brought back entitlements) of these pension schemes, insofar these are related to employment in the past;•
results from definitive settlements of pension entitlements and•
the net interest of the net defined benefit pension liability (or asset).Net interest defined benefit pension schemes
The net interest is calculated with the actuarial discount rate for the determination of the present value of the gross pension entitlements. This net liability (or asset) is determined at the start of the yearly reporting period, taken into account possible changes as a consequence of contributions from SNS REAAL NV or employees and pension payments during the year.
Interest costs exist of the actuarial interest costs of the gross liability of defined benefit pension entitlements, the fixed result of qualifying investments (calculated with the discount rate of the gross defined benefit entitlements); and the interest on the excess of the limit which was determined, when netted an asset exists. The interest on the amount with which an arisen asset exceeds the set limit is part of the total change from the effect of not recognising the asset as a consequence of this limit. This interest is determined by multiplying the amount with which the limit is exceeded with the actuarial discount rate. This negative amount is part of the determination of the net interest on one side, on the other side it is part of the revaluation.
Revaluation liabilities from defined benefit pension schemes
In shareholders' equity (Other comprehensive income) the following revaluations of the net pension liability (or asset) are recorded:
•
actuarial gains and losses;•
the during the year actually realised gains on qualifying investments of defined benefit pension schemes, after deduction of the fixed result based on the actuarial discount rate which is included in the net interest from defined benefit pension schemes and•
the effect of limit, if applicable, for assets.Revaluations are not reclassified in the next reporting period to the income statement, but can be transferred to another component within shareholders' equity, for example to settlement of pension entitlements.
Asset ceiling defined benefit schemes
the investments in the pension fund exceeds the pension liability the sum is presented as an asset up to the amount that can flow back to the company in the future (the ceiling) in the form of refunds or through lower contributions.
The amount which exceeds the ceiling is deducted from the asset through the income statement. The interest on this excess amount is taken up as a negative component in the determination of the net interest on a possible remaining asset.
The excess value can arise from investment or actuarial gains or from contributions from the employer based on the financing agreement with the pension fund, which, amongst others, is based on the pension liability which the pension fund calculates themselves based on the parameters set by the supervisor, DNB.
15.5.13.3 Other employee commitments
The other employee commitments refer mostly to discounts granted for bank and insurance products to (former) employees after the date of their retirement. The size of the obligation is based on the present value of the discounts offered after the retirement date, taking into account actuarial assumptions about mortality and interest. Furthermore, an obligation has been recognised for reimbursement of medical expenses.
To qualify for these benefits, the employment contract of the employee should normally have continued until the retirement age, and it should have lasted for a specified minimum period. A liability is taken for the estimated costs of these benefits during the term of employment using a method that corresponds with that used for defined benefit pension plans.
15.5.13.4 Share-based remunerations
2012 schemeSNS REAAL NV has a share based remuneration plan in which a number of employees of SNS REAAL NV and its group entities may participate. This share-based remuneration is denominated in SNS REAAL shares. When the share-based remuneration is settled in shares this results in an increase of shareholders’ equity. If the share-based remuneration is settled in cash, a liability is taken into account.
The costs of share-based remunerations are accounted for over the period in which the services are rendered for the part that is unconditionally granted. As for the part granted on the condition of continuation of employment during a number of years (the loyalty period) the costs are taken into account in the service period. If the employment is terminated before the end of the loyalty period and the entitlement to the remuneration expires, the costs already expensed are reversed to profit and loss.
The fair value of the share-based remuneration that will be settled in shares is determined on the grant date. The number of shares to be granted is adjusted on each balance sheet date.
The costs of the shares related to the share-based remuneration of staff of group entities are charged by SNS REAAL NV to these entities.
2013 scheme
As a consequence of the nationalisation the shares of SNS REAAL NV are expropriated and no longer listed. Under the new scheme, which came into effect as of 1 January 2013, several employees of SNS REAAL NV and related entities have been provided phantom shares. The change in the value of a phantom share is based on the development of SNS REAAL NV’s result, excluding any possible incidental income and expenses. The value of the phantom share is paid out at maturity date.
The value of the phantom share is recognised as cost in the period in which the services have been delivered. In the subsequent periods the change in value is recorded in the results until the date of payment.