Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
Other provisions
This item includes provisions for onerous contracts, credit
guarantees and obligations under the terms of the deposit
guarantee scheme.
2.21 Employee benefits
Rabobank has various pension plans in place based on the local
conditions and practices of the countries in which it operates.
In general, the plans are financed by payments to insurance
companies or trustee administered funds as determined by
periodic actuarial calculations. A defined benefit pension
plan is one that incorporates a promise to pay an amount of
pension benefit, which is usually based on several factors such
as age, number of years in service and remuneration. A defined
contribution plan is one in the context of which Rabobank
pays fixed contributions to a separate entity (a pension fund)
and acquires no legal or constructive obligation if the fund has
insufficient assets to pay all the benefits to employee-members
of the plan in respect of service in current and past periods.
Pension obligations
The obligation under the defined benefit pension plans is the
present value of the defined benefit pension obligation in
the reporting period afterthe deduction of the fair value of
fund investments. The defined benefit obligation is calculated
annually by independent actuaries based on the projected
unit credit method. The present value of the defined benefit
obligation is determined by the estimated future outflow of
cash funds based on the interest rates of high-quality corporate
bonds with terms which approach that of the corresponding
obligation.The majority of pension plans are career-average
schemes. The costs of these plans i.e. the net pension charges
for the period less employee contributions and interest, are
included under'Staff costs'. Net interest expenses or income
are calculated by applying the discount rate at the beginning
of the year for the asset or liability based on the defined benefit
pension plan.
Actuarial gains and losses arising from actual developments
or actuarial assumptions are recognised in the consolidated
statement of comprehensive income.
Defined contribution plans
Under defined contribution plans, Rabobank pays contributions
into publicly or privately managed pension insurance schemes
on a compulsory, contractual or voluntary basis. Once the
contributions have been made, Rabobank has no further
payment obligations.The regular contributions are costs for the
year in which they are due and are included on this basis under
'Staff costs'.
Other post-employment obligations
Some Rabobank business units provide other post-employment
allowances.To become eligible for such benefits, the usual
requirement is that the employee remains in service until
retirement and has been with the company a minimum number
of years. The expected costs of these benefits are accrued
during the years of service, based on a system similar to that for
defined benefit pension plans.The obligations are valued each
year by independent actuaries.
Variable remuneration
The costs of variable remuneration paid unconditionally and
in cash are recognised in the year in which the employee
renders the services. The costs of conditional payments in
cash are included in staff costs in the profit and loss account
in the period during which the employee's services are
received, which equals the vesting period of the cash payment.
The liability is recognised in other liabilities.The accounting
treatment of equity instrument-based payments is disclosed in
Paragraph 2.22.
2.22 Equity instrument-based payments
Remuneration for services rendered by identified staff is made
in the form of cash payments based on equity instruments that
are similar to, and have the same characteristics as, Rabobank
Certificates. The costs of the services received are based on the
awarded equity instruments'fair value on the award date and
are recalculated annually at the value applicable at the time.
The costs of the awarded equity instruments are included in
staff costs in the profit and loss account in the period during
which the employee's services are received, which equals
the vesting period of the equity instruments. The liability is
recognised in other liabilities.
2.23 Tax
Current tax receivables and payables are offset if there
is a legally enforceable right to offset such items and if
simultaneous treatment or settlement is intended. Deferred tax
assets and liabilities are offset if there is a legally enforceable
right to offset such items and if they relate to the same tax
authority and arise from the same tax group.
Provisions are formed in full for deferred tax liabilities, using
the liability method, arising from temporary differences on
the reporting date between the tax bases of the assets and
liabilities and their carrying amounts for financial reporting
purposes.
The main temporary differences relate to the depreciation of
tangible fixed assets, the revaluation of certain financial assets
and liabilities, including derivatives, provisions for pensions
267 Notes to the financial statements of Rabobank
