17.5.14.1 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.
17.5.14.2 Pension benefits
SRLEV has different pension plans, most of which are collective defined contribution plans. A defined contribution plan is a pension plan in which fixed contributions are paid to a separate entity, such as the independent Stichting
Pensioenfonds SNS REAAL (the pension fund). SRLEV has no legally enforceable or actual obligation to pay extra contributions if this fund has insufficient assets to make all the benefit payments.
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.
SRLEV also has a number of defined benefit pension plans relating to acquisitions. The pension rights of (former) employees continuing under the old acquired pension schemes of AXA, Winterthur, Zwitserleven, Zürich, NHL and DBV can be designated as defined benefit schemes. SRLEV’s net commitments arising from defined benefit pension plans are calculated separately for each plan by making an assessment of the pension entitlements that staff have accrued in exchange for their services during the reporting period and prior periods. These pension entitlements are discounted in order to determine the present value, and the fair value of the plan assets is deducted from this. The discount rate represents the return as at the balance sheet date of bonds with an AA credit rating whose maturities approach the term of SRLEV’s commitments. The present value of the pension entitlements for self-administered pension plans is included separately in the balance sheet. The investments related to these pension plans are recognised under ‘investments’. The actuarial gains and losses arising from defined benefit pension plans, insofar as any non-recognised accumulated actuarial gains and losses exceed 10% of the higher of the present value of the defined benefit obligation, or the fair value of the plan assets, are recognised in the income statement for the average expected remaining period of services rendered of the employees participating in the plan. Other actuarial gains or losses are not included in the income statement.
When the calculation results in a positive balance for SRLEV, the asset is stated at an amount no higher than the balance of any non-recognised actuarial losses and past service pension charges and the present value of any future repayments by the fund or lower future premiums.
17.5.14.3 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 provision is based on the present value of the discounts offered after the retirement date, taking into account actuarial assumptions about mortality and interest. Furthermore, a provision has been made 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.
17.5.14.4 Share-based remunerations
SNS REAAL introduced a share based payment plan in which a number of employees of SRLEV or its group entities may participate. This share-based remuneration is settled in SNS REAAL shares. The costs of share-based
remunerations are accounted for over the period in which the services are rendered as 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 cost are partly taken into account in the current service period and partly during the loyalty period up to the date of settlement, unless (in principle) the employment is ended before the end of the loyalty period. In the latter case the cost already expensed are reversed to profit an loss
The cost of these shares will be charged to SRLEV NV or its group entities.
17.5.15 Provisions
17.5.15.1 General
Provisions are made if there is a legally enforceable or present obligation arising from events in the past, the settlement of which is likely to require an outflow of assets, and a reliable estimate of the size of the obligation can be made. Provisions are measured at the present value of the expected future cash flows. Additions and any subsequent releases are recorded in the income statement.
17.5.15.2 Restructuring provision
The restructuring provision is a specific provision that consists of anticipated severance payments and other costs that are directly related to restructuring programmes. These costs are accounted for in the period in which a legally
enforceable or actual obligation to make the payment arises. No provision is formed for costs or future operating losses stemming from continuing operations.
SRLEV recognises severance payments if SRLEV has demonstrably committed itself, either through a constructive or legally enforceable obligation, to:
•
The termination of the employment contracts of current employees in accordance with a detailed formal plan without the option of the plan being withdrawn; or•
The payment of termination benefits as a result of an offer to encourage voluntary redundancy. Benefits that are due after more than twelve months after the balance sheet date are discounted.17.5.15.3 Legal provisions
SRLEV makes a provision for legal proceedings at the balance sheet date for the estimated liability with respect to ongoing legal proceedings. The provision comprises an estimate of the legal costs and payments due during the course of the legal proceedings, to the extent that it is more likely than not that an obligation exists at the balance sheet date, and a reliable estimate can be made of the obligation.