The term “pension benefit obligations” includes all plans, schemes and arrangements that provide benefits for retirement, death or disability.
495
The economic impacts of pension schemes (and employer sponsored funds) on the bank or financial group are considered as either economic benefits or economic obligations. Econom- ic benefits and economic obligations are to be calculated at the balance sheet date and are to be treated equally. Economic benefits and economic obligations for the bank or financial group result directly from contractual, regulatory or legal bases (e.g. contributions paid in ad- vance or due). Economic benefits and economic obligations also exist in the bank’s or finan- cial group’s ability to exercise a positive impact on future cash flows due to pension schemes being overfunded (e.g. lowering of contributions) or exercising a negative impact on future cash flows due to pension schemes being underfunded, by the bank or financial group want- ing or having to contribute to the pension schemes’ financing (e.g. restructuring contribu- tions).
496
Determination of the economic impact is in principle based on the financial position of each pension scheme as of its most recent annual financial statements, whose reporting date may not be more than twelve months previously. Where there are indications of material devel-
opments (e.g. value fluctuations, partial liquidations) since the last annual financial state- ments, their impact must be taken into account.
Where a pension scheme is underfunded, an economic obligation arises where the condi- tions exist for the creation of a provision.
498
Where a pension scheme is overfunded, an economic benefit exists where it is permissible and intended to use the surplus for lowering employer contributions, reimburse it to the em- ployer as provided for in local laws, or utilise it for the employer’s economic benefit outside of the benefits as provided for in the scheme’s rules. The value fluctuation reserves reported by the pension scheme on the basis of its consistent practice may not form part of the bank’s or financial group’s economic benefit.
499
The following applies with regard to the recognition of the economic impact of pension schemes:
500
The contributions accrued during the current accounting period are to be presented as personnel expenses in the income statement. The respective accrued assets or liabilities, or receivables and obligations, that result from contractual, regulatory or legal bases are to be recognised in the balance sheet.
501
It is to be annually assessed whether, from the point of view of the bank or financial group, an economic benefit or an economic obligation exists from a pension scheme (and an employer sponsored fund). The basis for assessment is contracts, annual finan- cial statements of pension schemes prepared in accordance with Swiss GAAP FER 26 for Swiss pension schemes Accounting of pension plans, and other calculations showing the financial position and existing overfunding or underfunding for each pension scheme in accordance with actual circumstances. On this basis, the economic benefit or econom- ic obligation is determined and recorded in the balance sheet for each pension scheme. In the case of overfunding, an economic benefit exists only where it is permissible and in- tended to use the surplus for lowering employer contributions, reimburse it to the em- ployer as provided for in local laws, or utilise it for the employer‘s economic benefit out- side of the benefits as provided for in the scheme’s rules. In the case of an economic ob- ligation, the conditions for creating a provision must be satisfied. The difference to the re- spective value of the previous period is recognised in the income statement (together with the expenses accrued to the period) for each pension scheme in the item Personnel expenses.
502
Recognition in the balance sheet and disclosure of the economic impact of pension schemes on the bank or financial group may also be carried out using a dynamic method, with the rea- sons being explained in the notes. Bookings with no income effect are excluded. To this end, an international standard recognised by FINMA is to be applied in its entirety.
503
Employer contribution reserves and other economic benefits may be recognised as assets. Where the bank or financial group has granted the pension scheme a conditional waiver of use, or is planning to do so shortly after the balance sheet date, the asset from the employer contribution reserve is to be value-adjusted. The portion of underfunding that has already been recognised in the bank’s or financial group’s balance sheet by the value adjustment of the employer contribution reserve no longer needs to be included as an economic obligation
from underfunding.
The economic benefit is to be disclosed in the notes (including a statement as to whether or not it has been recognised as an asset) (margin no. 210).
505
Provisions for pension benefit obligations that are no longer necessary must in all cases be released to the income statement. The use and release of provisions for pension benefit obli- gations are to be reported in the item Personnel expenses.
506
True and fair view single-entity financial statements and consolidated financial statements The future economic benefit (including the employer contribution reserves) must be recog- nised as an asset.
507