20 Defined benefit liabilities

Defined benefit plans

The group’s retirement plans include defined benefit pension plans in Switzerland, Belgium, Germany, Austria, India, Mexico, Ecuador, France, Italy, Turkey, Costa Rica and Indonesia. These plans, excluding those in Switzerland, Belgium and Germany, are unfunded and all determined by local regulations using independent actuarial valuations according to IAS 19. The group’s major defined benefit plan in Switzerland accounts for TCHF 6,528 or 48.9% (prior year: TCHF 14,900 or 68.7%) of the group’s net defined benefit liability.

Pension plans in Switzerland

The current pension arrangement for employees in Switzerland is made through a plan governed by the Swiss Federal Occupational Old Age, Survivors and Disability Pension Act (BVG). The plan of SoftwareONE’s Swiss company is administered by a separate legal foundation, which is funded by regular employer and employee contributions defined in the pension fund rules. The Swiss pension plan contains a cash balance benefit which is in essence contribution-based with certain minimum guarantees. Due to these minimum guarantees, the Swiss plan is treated as a defined benefit plan under IFRS. The plan is invested in a diversified range of assets in accordance with the investment strategy and the common criteria of an asset and liability management. A potential underfunding may be remedied by various measures such as increasing employer and employee contributions or reducing future benefits.

As at 31 December 2021, 252 employees (prior year: 229 employees) and no retiree (prior year: one retiree) are insured under the Swiss plan. The defined benefit obligation has a duration of 19 years (prior year: 21 years).

Amounts recognized in the balance sheet:

in CHF 1,000	Swiss plan	Other plans	2021	2020

Present value of funded obligations	68,261	8,565	76,826	67,463
Fair value of plan assets	–61,733	–6,802	–68,535	–50,677
Present value of unfunded obligations	–	5,070	5,070	4,917

Total defined benefit liabilities	6,528	6,833	13,361	21,703

Reconciliation of the present value of the defined benefit obligation (DBO):

in CHF 1,000	Swiss plan	Other plans	2021	2020

At 1 January	59,962	12,418	72,380	58,320
Business acquisitions	1,668	–	1,668	24
Service costs	4,196	1,607	5,803	4,366
Employee contribution	1,605	1,488	3,093	1,463
Interest cost	125	141	266	264
Actuarial losses/(gains)	–2,480	–707	–3,187	2,749
Benefits paid/transferred	3,185	–736	2,449	5,168
Currency translation adjustments	–	–576	–576	26

As at 31 December	68,261	13,635	81,896	72,380

Reconciliation of fair value of plan assets:

in CHF 1,000	Swiss plan	Other plans	2021	2020

At 1 January	45,065	5,612	50,677	41,321
Business acquisitions	1,188	–	1,188	–
Interest income	97	81	178	96
Return on plan assets (excluding interest income)	8,472	–276	8,196	–67
Employer contributions	2,121	394	2,515	2,317
Employee contributions	1,605	1,488	3,093	1,463
Benefits paid/transferred	3,185	–182	3,003	5,516
Currency translation adjustments	–	–315	–315	31

As at 31 December	61,733	6,802	68,535	50,677

Pension costs:

in CHF 1,000	Swiss plan	Other plans	2021	2020

Current service cost	4,196	1,449	5,645	4,366
Interest cost on defined benefit obligation	125	141	266	264
Interest on plan assets	–97	–81	–178	–96

Total defined benefit cost recognized in income statement	4,224	1,509	5,733	4,534
Thereof finance expense	28	60	88	168
Thereof personnel expense	4,196	1,449	5,645	4,366

Actuarial (gain)/loss arising from demographic assumptions	–1,876	–109	–1,985	–199
Actuarial (gain)/loss arising from changes in financial assumptions	–1,277	–448	–1,725	3,114
Actuarial (gain)/loss arising from experience	672	–149	523	–166
Return on plan assets excluding interest income	–8,472	276	–8,196	67

Total remeasurements cost recognized in OCI	–10,953	–430	–11,383	2,816

Total defined benefit cost	–6,729	1,079	–5,650	7,350

In the Swiss plan the new post-retirement mortality tables (BVG 2020 GT) were implemented in 2021. The change caused a reduction in defined benefit liabilities of TCHF 1,876.

Split of plan assets in %:

	Swiss plan	Other plans	2021	2020

Cash and cash equivalents	0.6 %	–	0.3 %	1.0 %
Equity instruments	31.2 %	–	17.8 %	22.9 %
Debt instruments	38.3 %	–	21.9 %	32.7 %
Real estate	17.6 %	–	10.0 %	13.7 %
Other	12.3 %	100.0 %	50.0 %	29.7 %

Total	100.0 %	100.0 %	100.0 %	100.0 %

The actual return on plan assets amounted to TCHF 8,374 (prior year: TCHF 29).

Significant actuarial assumptions:

	Swiss plan	Other plans	2021	2020

Discount rate	0.3 %	0.9 %	0.6 %	0.3 %
Salary growth rate	1.0 %	1.6 %	1.2 %	1.1 %

Pension liability – Sensitivity analysis for Swiss plans:

	Change in assumption	Change in DBO 2021	Change in DBO 2020

Discount rate	+/– 0.25bps	–/+ 4.9 %	–/+ 5.4 %
Salary growth rate	+/– 0.25bps	+/– 0.9 %	+/– 1.1 %

The above sensitivity analyses are based on a change in one assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognized within the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

Expected employer contributions to post-employment benefit plans for the period ended 31 December 2022 amounts to TCHF 2,560 (prior year: TCHF 2,089).

The group also operates defined contribution plans for its employees under which the relevant contributions are expensed as they occur. The aggregate cost of these plans in 2021 amounted to TCHF 8,409 (prior year: TCHF 5,828).