ING Direct 2015 Annual Report Download - page 50

Contents
Who we are
Report of the
Management
Board
Corporate
Governance
Consolidated
annual accounts
Parent company
annual accounts
Other
information
Additional
information
Notes to the Consolidated annual accounts of ING Bank - continued
Other liabilities
Defined benefit plans
The net defined benefit asset or liability recognised in the balance sheet in respect of defined benefit pension plans is the fair value of
the plan assets less the present value of the defined benefit obligation at the balance sheet date.
Plan assets are measured at fair value at the balance sheet date. For determining the pension expense, the return on plan assets is
determined using a high quality corporate bond rate identical to the discount rate used in determining the defined benefit obligation.
Changes in plan assets that effect Shareholders’ equity and/or Net result, include mainly:
• return on plan assets using a high quality corporate bond rate at the start of the reporting period which are recognised as staff
costs in the profit and loss account; and
• remeasurements which are recognised in Other comprehensive income (equity).
The defined benefit obligation is calculated by internal and external actuaries through actuarial models and calculations using the
projected unit credit method. This method considers expected future payments required to settle the obligation resulting from
employee service in the current and prior periods, discounted using a high quality corporate bond rate. Inherent in these actuarial
models are assumptions including discount rates, rates of increase in future salary and benefit levels, mortality rates, trend rates in
health care costs, consumer price index and the expected level of indexation. The assumptions are based on available market data as
well as management expectations and are updated regularly. The actuarial assumptions may differ significantly from the actual
results due to changes in market conditions, economic and mortality trends, and other assumptions. Any changes in these
assumptions could have a significant impact on the defined benefit plan obligation and future pension costs.
Changes in the defined benefit obligation that effects Shareholders’ equity and/or Net result, include mainly:
• service cost which are recognised as staff costs in the profit and loss account;
• interest expenses using a high quality corporate bond rate at the start of the period which are recognised as staff costs in the
profit and loss account; and
• remeasurements which are recognised in Other comprehensive income (equity).
Remeasurements recognised in other comprehensive income are not recycled to profit and loss. Any past service cost relating to a
plan amendment is recognised in profit or loss in the period of the plan amendment. Gains and losses on curtailments and
settlements are recognised in the profit and loss account when the curtailment or settlement occurs.
The recognition of a net defined benefit asset in the consolidated balance sheet is limited to the present value of any economic
benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Defined contribution plans
For defined contribution plans, ING Bank pays contributions to publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. ING Bank has no further payment obligations once the contributions have been paid. The
contributions are recognised as staff expenses in the profit and loss when they are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future payments is available.
Other post-employment obligations
Some ING Bank companies provide post-employment healthcare and other benefits to certain employees and former employees. The
entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of
a minimum service period. The expected costs of these benefits are accrued over the period of employment using an accounting
methodology similar to that for defined benefit pension plans.
Other provisions
A provision involves a present obligation arising from past events, the settlement of which is expected to result in an outflow from the
company of resources embodying economic benefits, however the timing or the amount is uncertain. Provisions are discounted when
the effect of the time value of money is significant using a before tax discount rate. The determination of provisions is an inherently
uncertain process involving estimates regarding amounts and timing of cash flows.
Reorganisation provisions include employee termination benefits when ING Bank is demonstrably committed to either terminating the
employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing termination
benefits as a result of an offer made to encourage voluntary redundancy.
A liability is recognised for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy
that is triggered upon reaching a minimum threshold, the liability is recognised only upon reaching the specified minimum threshold.
ING Bank Annual Report 2015 48