5.1 Employee benefit liabilities

Economic benefit/economic obligation and pension benefit expenses

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2019

 

2018

 

 

 

 

 

 

 

2019

 

2018

CHF million

 

Surplus/ deficit according to FER 26

 

Economic part of the Corporation

 

Economic part of the Corporation

 

Translation differences

 

Change to prior-year period or recognized in the current result of the period, respectively

 

Contri- butions concering the business period

 

Pension benefit expenses within personnel expenses

 

Pension benefit expenses within personnel expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patronage funds

 

27

 

 

 

9

 

 

 

 

 

1

 

1

 

1

Employee benefit plans w/o surplus/deficit

 

 

 

 

 

 

 

 

 

 

 

23

 

23

 

15

Employee benefit plans with surplus

 

 

 

 

 

 

 

 

 

 

 

3

 

3

 

10

Employee benefit plans with deficit

 

–21

 

–16

 

–14

 

 

 

1

 

1

 

2

 

–3

Employee benefit plans without own assets

 

 

 

–34

 

–33

 

–2

 

3

 

 

 

3

 

9

Loans from pension fund institutions

 

 

 

–1

 

–4

 

 

 

 

 

 

 

 

 

 

Total

 

6

 

–51

 

–42

 

–2

 

4

 

28

 

32

 

32

The GF Corporation maintains pension plans in various countries. The accounting for Swiss pension plans are based on the financial statements of the pension plan according to Swiss GAAP FER 26. Plans in other locations are accounted for according to their local regulations. The employee benefit plan in the USA was not closed as planned in the second half of 2019. With the exception of pension plans in Germany, the employee pension plans have their own assets in addition to the respective pension obligations.

The table shows the economic benefit and the economic obligation at the end of the year under review and for the previous year, as well as the changes in pension benefit expenses.

The economic part of the Corporation in the patronage funds amounted to CHF 0 million (previous year: CHF 9 million). The decrease is due to the decision of the Board of Trustees of the Fondazione di previdenza per il personale della Precicast to create a reserve to finance the purchase into the higher coverage ratio of the Pension Fund Georg Fischer compared to the present employee benefits foundation of GF Precicast SA. The reserve will be consummated when the employees of the GF Precicast SA are integrated into the Pension Fund Georg Fischer.

There is one pension plan with surplus with a negligible overfunded position. The Georg Fischer Pension Fund is no longer overfunded (previous year: CHF 32 million), due to changes in technical parameters.

The pension plans underfunded in the amount of CHF 21 million (previous year: CHF 20 million) are based on the defined benefit plans in Great Britain and the USA. The amount of the underfunding depends significantly on the value of the securities and on the discount rate and the expected mortality rate used in the calculation of the pension liabilities. The total economic obligation, which represents the expected cash outflow in the medium term, amounts to CHF 16 million (previous year: CHF 14 million). Due to the postponed liquidation of the pension fund in the USA, and the unfavourable trend in the discount rate in the USA and Great Britain, the economic obligation increased by CHF 2 million. The expense is included in the pension fund expenses for the period.

The recognized economic obligation from the pension plans with no assets of their own, i.e. unfunded plans, amounted to CHF 34 million (previous year: CHF 33 million) and concerns primarily the employee pension plans in Germany and Sweden. The increase in the economic obligation in the amount of CHF 3 million is included in the pension fund expenses for the period.

Loans from pension funds in the amount of CHF 1 million (previous year: CHF 4 million) are current account balances of employee benefit plans and patronage foundations at Georg Fischer AG. 

The following table summarizes the pension benefit expenses in the year under review and for the previous year:

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CHF million

 

2019

 

2018

 

 

 

 

 

Contributions to employee benefit plans from Corporate Companies

 

28

 

30

Contributions to employee benefit plans from employer contribution reserves

 

 

 

 

Total contributions

 

28

 

30

+/- Change in ECR from asset developments, value adjustments, etc.

 

 

 

 

Contributions and change in employer contribution reserves (ECR)

 

28

 

30

 

 

 

 

 

Decrease/increase in economic benefit of the Corporation from surplus

 

 

 

 

Increase/decrease in economic obligation of the Corporation from deficit

 

1

 

 

Increase/decrease in economic obligation of the Corporation (employee benefit plans without own assets)

 

3

 

2

Total change in economic effect of surplus/deficit

 

4

 

2

Pension benefit expenses within personnel expenses in the period under review

 

32

 

32

Movements in the recognized economic obligations from pension plans and the employer-paid contributions for the year under review amounted to CHF 32 million (previous year: CHF 32 million) and are included in “Personnel expenses”.

Accounting principles

The employee benefit plans of the Corporation comply with the legislation in force in each country. Employee benefit plans are mostly institutions and foundations that are independent of the Corporation. They are usually financed by both, employee and employer contributions.

The economic impact of the employee benefit plans is assessed each year. Surpluses or deficits are determined by means of the annual statements of each specific benefit plan, which are based either on Swiss GAAP FER 26 (Swiss benefit plans) or on the accepted methods in each foreign country (foreign plans). An economic benefit is capitalized if it is permitted and intended to use the surplus to reduce the employer contributions. If employer contribution reserves exist, they are also capitalized. An economic obligation is recognized as a liability if the conditions for an accrual are met. They are reported under “Employee benefit obligations”. Changes in the economic benefit or economic obligation, as well as the contributions incurred for the period, are recognized in “Personnel expenses” in the income statement.

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