105 ANNUAL REPORT 2010 Onerous contracts NOTE 2.22 ASSETS AND LIABILITIES RELATING TO  EMPLOYEE BENEFITS A. SHORT-TERM EMPLOYEE BENEFITS B. POST-EMPLOYMENT BENEFITS  Defined contribution plans Defi ned benefi t plans C. SHARE-BASED PAYMENTS The amount recognized as a provision is the best estimate of  the expenditure required to settle the present obligation at  the balance sheet date, considering all its inherent risks  and uncertainties, as well as the time value of money. The  unwinding of the effect of discounting is recorded in the income  statement as an interest expense. based on the market yields for high-quality corporate bonds  on the balance sheet date. Plan assets are qualifying insurance policies and assets held  by long-term employee benefit funds that can only be used to  pay the employee benefits under the plan and are not available  to the Group’s creditors. They are measured at fair value and  are deducted in determining the amount recognized on the  balance sheet. With the exception of insurance contracts and investment  contracts with discretionary participation features for which  potential future losses are already considered in establishing  the liability, a provision is recognized for onerous contracts in  which the unavoidable costs of meeting the resulting  obligations exceed the expected future economic benefits.  The cost of the plans is determined at the beginning of the year,  based on the prevalent actuarial assumptions, discount rate  and expected return on plan assets. Changes in assumptions,  discount rate and experience adjustments are not charged to  the income statement in the period in which they occur, but are  deferred.  A liability is recognized for the undiscounted amount of short- term employee absences benefits expected to be paid within  one year after the end of the period in which the service was  rendered. Accumulating short-term absences are recognized  over the period in which the service is provided. Benefits that  are not service-related are recognized when the event that  gives rise to the obligation occurs.  The unrecognized actuarial gains and losses are amortized in a  straight line over the average remaining working life of the  employees covered by the plan, to the extent that the gains or  losses exceed the corridor limits. The corridor is defined as ten  percent of the greater of the defined benefit obligation or the  plan assets. The amortization charge is reassessed at the  beginning of each year. The corridor approach described above  was not applied retrospectively to periods prior to the transition  to IFRS (January 1, 2004). The Group has issued defined contribution plans and defined  benefit plans. A plan is classified as a defined contribution plan  when the Group has no further obligation than the payment  of a fixed contribution. All other plans are classified as defined  benefit plans. The contribution payable to a defined contribution plan for  services provided is recognized as an expense in the income  statement. An asset is recognized to the extent that the  contribution paid exceeds the amount due for services provided. The defined benefit obligation is based on the terms and  conditions of the plan applicable on the balance sheet date.  Plan improvements are charged directly to the income  statement, unless they are conditional on the continuation  of employment. In this case the related cost is deducted from  the liability as past service cost and amortized over the vesting  period. In measuring the defined benefit obligation the Group  uses the projected unit credit method and actuarial  assumptions that represent the best estimate of future  variables. The benefits are discounted using an interest rate  The Group has issued share-based plans that entitle employees  to receive equity instruments issued by the Group or cash  payments based on the price of AEGON N.V. common shares.  Some plans provide employees of the Group with the choice  of settlement. For share option plans that are equity-settled, the expense  recognized is based on the fair value on the grant date of  the share options, which does not reflect any performance  conditions other than conditions linked to the price of the  Group’s shares. The cost is recognized in the income statement,  together with a corresponding increase in shareholders’  equity, as the services are rendered. During this period the  cumulative expense recognized at the reporting date reflects  management’s best estimate of the number of shares expected  to vest ultimately. Share appreciation right plans are initially recognized at fair  value at the grant date, taking into account the terms and  conditions on which the instruments were granted. The fair  value is expensed over the period until vesting, with recognition  of a corresponding liability. The liability is remeasured at each  SHARPENING OUR FOCUS