Note 11. Pension Plans

The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents the contribution payable by the Company to the fund during the year. Defined contribution pension costs during the years ended March 31, 2016, 2015 and 2014 amounted to $580, $510 and $349, respectively.

In addition, the Company’s Swiss subsidiary has a fully insured pension plan managed by Swiss Life. Under this plan, annual contributions are paid for each employee as determined by Swiss Life and each employee accrues pension benefits with Swiss Life. The risks of disability, death and longevity are also fully insured by Swiss Life. Swiss Life invests the pension contributions and provides a 100% capital and interest guarantee for the pension benefits. These pension arrangements are based on a contract of affiliation between the Company’s Swiss subsidiary and the Swiss Life pension foundation, which can be terminated by either party. In the event of a termination, the Company’s Swiss subsidiary would have an obligation to find alternative pension arrangements for its employees. Because there is no guarantee that the Swiss employee pension arrangements would be continued under the same conditions, there is a risk, albeit remote, that a pension obligation may fall on the Company’s Swiss subsidiary.

These circumstances require that the Swiss employee pension arrangements be treated as a defined benefit plan under Accounting Standards Codification Topic, 715 Compensation – Retirement Benefits or ASC 715-30. Accordingly, an actuarial valuation of the pension obligation has been performed. At March 31, 2016, the accumulated pension obligation amounted to $8,957 as compared with plan assets of $4,455. Therefore, the net funded status was an obligation of $4,502, which has been recorded as a liability on the consolidated balance sheet as of March 31, 2016. The Swiss employee pension arrangements were in place at March 31, 2015, but given the limited number of plan members, the accounting provisions of ASC 715-30 were not applied. The effect on the financial statements of applying the provisions of ASC 715-30 as of March 31, 2015 would have resulted in a net funding obligation of $1,689 being recorded through other comprehensive income in the year ended March 31, 2015. This amount has been recorded in other comprehensive in the year ended March 31, 2016.

The following provides a reconciliation of the benefit obligations, the plan assets and the funded status.

	Year ended March 31, 2016
Pension benefit obligation, beginning of year	$	—
Service cost		479
Contributions paid by plan participants		2,354
Interest cost		25
Benefits paid		(267	)
Plan amendment		(159	)
Actuarial loss		6,526
Pension benefit obligation, end of year	$	8,957

	Year ended March 31, 2016
Fair value of plan assets, beginning of year	$	—
Adjustment to disclosed value		1,824
Actual return on plan assets		56
Contributions paid by employer		487
Contributions paid by plan participants		2,354
Benefits paid		(267	)
Fair value of plan assets, end of year	$	4,455

	Year ended March 31, 2016
Pension benefit obligation, end of year	$	8,957
Fair value of plan assets, end of year		4,455
Net funding obligation, end of year	$	4,502

The assumptions used to determine the pension obligation are:

	Year ended March 31, 2016
Price inflation		1.00	%
Discount rate		0.45	%
Expected return on plan assets		1.40	%
Average rate of salary increase		1.00	%

Each employee participating in the plan has an individual portfolio that is managed by Swiss Life under a collective arrangement. Plan assets comprise the surrender value of the portfolio of active insured scheme participants. The expected return on plan assets was determined after consideration of current and historical levels of return and discussions with Swiss Life. The discount rate is based on bond yields at March 31, 2016 on the Swiss bond market over a fifteen to twenty year period.

The net pension costs for the year comprises:

	Year ended March 31, 2016
Employer service cost	$	479
Interest cost		25
Expected return on plan assets		(25	)
Net pension cost for the year	$	479

The provision for pension benefit obligation recognized in other comprehensive income comprises:

	Year ended March 31, 2016
Net actuarial loss	$	6,526
Adjustment to disclosed value of plan assets		(1,824	)
Plan amendment		(159	)
Increase in assets in excess of expected amount		(41	)
	$	4,502

The following benefit payments are expected to be paid in the following periods:

2017	$	517
2018		487
2019		462
2020		441
2021		424
2022 to 2025		1,926

Expected annual employer contributions to the plan in the year ending March 31, 2017 amount to $664.