The Case for Local Fair Value Discount Rates Under IFRS

14 Pages Posted: 15 Feb 2011

See all articles by Laurens Swinkels

Laurens Swinkels

Erasmus University Rotterdam (EUR); Robeco Quantitative Investments

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Date Written: February 15, 2011


In the Netherlands, listed companies and their pension funds have to apply the principle of fair value accounting with respect to valuation of pension liabilities for their financial statements. Both entities have to implement fair value accounting somewhat differently, as companies have to apply IFRS (IAS 19) and pension funds are required to follow Dutch financial reporting standards (RJ 271). During the financial crisis it appeared that the pension funding status for companies improved substantially, while at the same time their pension funds reported huge solvency problems. This lead to the surprising situation that several companies were required to make additional cash contributions to their pension fund, while their own annual report showed a large pension surplus. To avoid such inconsistencies in the future, we propose that IFRS adopts local fair value discount rates for nominal accrued pension liabilities.

Keywords: Accounting, Discount Rate, Fair Value, IFRS, Pension Accounting, Pension Fund

JEL Classification: G23, G28, M41

Suggested Citation

Swinkels, Laurens, The Case for Local Fair Value Discount Rates Under IFRS (February 15, 2011). Available at SSRN: or

Laurens Swinkels (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA

Robeco Quantitative Investments ( email )

Rotterdam, 3000
+31 10 224 2470 (Phone)
+31 10 224 2110 (Fax)

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