KPMG has surveyed the assumptions used by Swiss companies to measure their defined benefit pension liabilities under IFRS and US GAAP. The survey indicates that the IFRS/US GAAP funding level of a typical plan might have improved by around 5-10% over FY2013.
KPMG’s Swiss pensions team has completed its annual survey of the assumptions used to measure the pension liabilities of Swiss companies reporting under IFRS or US GAAP as at 31 December 2013.
The survey indicates that the IFRS/US GAAP funding level of a typical Swiss plan has improved over 2013.
The main positive aspects of this movement are:
- median discount increasing by around 50bps over the year, reducing measured liabilities by around 5-10% for a typical plan; and
- plan assets generally performing well (average return of 5-6%; per Credit Suisse Schweizer Pensionskassen Index).
These positive effects were partially offset by many companies increasing their assumed rate of future interest credits to reflect the increase in the BVG minimum rate for 2014.
Finally, substantially all companies surveyed used BVG2010 Generational mortality to measure their pension liabilities, i.e. allowing for anticipated future improvements in longevity appears to now be widely accepted for IFRS and US GAAP.