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Retirement benefit plan
 12 Months Ended
Dec. 31, 2021
Retirement benefit plan [Abstract]  
Retirement benefit plan
17.
Retirement benefit plan


The Company participates in a collective foundation covering all of its employees including its executive officers. In addition to retirement benefits, the plan provides death or long-term disability benefits.


Contributions paid to the plan are computed as a percentage of salary, adjusted for the age of the employee and shared approximately 47% and 53% by employee and employer, respectively.


This plan is governed by the Swiss Law on Occupational Retirement, Survivors and Disability Pension Plans (BVG), which requires contributions to be made to a separately administered fund. The fund has the legal form of a foundation and it is governed by a board of trustees, which consists of an equal number of employer and employee representatives of its members. The board of trustees is responsible for the administration of the plan assets and for the definition of the investment strategy. The Company has no direct influence on the investment strategy of the foundation board.


The assets are invested by the pension plan, to which many companies contribute, in a diversified portfolio that respects the requirements of the Swiss BVG. Therefore, disaggregation of the pension assets and presentation of plan assets in classes that distinguish the nature and risks of those assets is not possible. Under the plan, both the Company and the employee share the costs equally. The structure of the plan and the legal provisions of the BVG mean that the employer is exposed to actuarial risks. The main risks are investment risk, interest risk, disability risk and the life expectancy of pensioners. Through our affiliation with the pension plan, the Company has minimized these risks, as they are shared between a much greater number of participants. On leaving the Company, a departing employee’s retirement savings are transferred to the pension institution of the new employer or to a vested benefits institution. This transfer mechanism may result in pension payments varying considerably from year to year.


The pension plan is exposed to Swiss inflation, interest rate risks and changes in the life expectancy for pensioners. For accounting purposes under IFRS, the plan is treated as a defined benefit plan in accordance with IAS 19.


As of January 1, 2019, the Company changed from a fully insured plan to a plan for which the Company now bears investment and old age risks. The new plan has a higher statutory coverage ratio, which led to an increase in plan assets of 10% (CHF 1.2 million) for the year ended December 31, 2019. The increase is presented in Table B as part of the line “Return on plan assets excluding interest income.”


The following table sets forth the status of the defined benefit pension plan and the amount that is recognized in the consolidated balance sheets:

   
As of
December 31,
  
In CHF thousands
  
2021
    
2020
    
2019
  
Defined benefit obligation
    
(33,889
)
    
(30,213
)
    
(26,624
)
Fair value of plan assets
    
26,791
      
22,749
      
19,139
  
Total liability
    
(7,098
)
    
(7,464
)
    
(7,485
)


The following amounts have been recorded as net pension cost in the consolidated statements of income/(loss):

   
For the Years Ended
December 31,
  
In CHF thousands
  
2021
    
2020
    
2019
  
Service cost
    
1,648
      
1,626
      
1,313
  
Interest cost
    
79
      
71
      
195
  
Interest income
    
(48
)
    
(42
)
    
(133
)
Net pension cost
    
1,679
      
1,655
      
1,375
  


The changes in defined benefit obligation, fair value of plan assets and unrecognized gains/(losses) are as follows.

A.
Change in defined benefit obligation

   
For the Years Ended
December 31,
  
In CHF thousands
  
2021
    
2020
    
2019
  
Defined benefit obligation as of January 1
    
(30,213
)
    
(26,624
)
    
(17,942
)
Service cost
    
(1,648
)
    
(1,626
)
    
(1,313
)
Interest cost
    
(79
)
    
(71
)
    
(195
)
Change in demographic assumptions
    
—
      
1,428
      
1,138
  
Change in financial assumptions
    
156
      
(71
)
    
(2,171
)
Change in experience assumptions
    
(252
)
    
(931
)
    
(2,003
)
Benefits deposited
    
(894
)
    
(1,467
)
    
(3,382
)
Employees’ contributions
    
(959
)
    
(851
)
    
(756
)
Defined benefit obligation as of December 31
    
(33,889
)
    
(30,213
)
    
(26,624
)

B.
Change in fair value of plan assets

   
For the Years Ended
December 31,
  
In CHF thousands
  
2021
    
2020
    
2019
  
Fair value of plan assets as of January 1
    
22,749
      
19,139
      
12,277
  
Interest income
    
48
      
42
      
133
  
Employees’ contributions
    
959
      
851
      
756
  
Employer’s contributions
    
1,089
      
950
      
859
  
Benefits deposited
    
894
      
1,467
      
3,382
  
Return on plan assets excluding interest income
    
1,052
      
300
      
1,732
Fair value of plan assets as of December 31
    
26,791
      
22,749
      
19,139
  


Expected contributions by the employer to be paid to the post-employment benefit plans during the annual period beginning after the end of the reporting period amount to approximately CHF 1.0 million.

C.
Change in net defined benefit liability

   
For the Years Ended
December 31,
  
In CHF thousands
  
2021
    
2020
    
2019
  
Net defined benefit liabilities as of January 1
    
7,464
      
7,485
      
5,665
  
Net pension cost through statement of income/(loss)
    
1,679
      
1,655
      
1,375
  
Remeasurement through other comprehensive income/(loss)
    
(956
)
    
(726
)
    
1,304
  
Employer’s contribution
    
(1,089
)
    
(950
)
    
(859
)
Net defined benefit liabilities as of December 31
    
7,098
      
7,464
      
7,485
  

D.
Other comprehensive gains/(losses)

   
For the Years Ended
December 31,
  
In CHF thousands
  
2021
    
2020
    
2019
  
Effect of changes in demographic assumptions
    
—
      
1,428
      
1,138
  
Effect of changes in financial assumptions
    
156
      
(71
)
    
(2,171
)
Effect of changes in experience assumptions
    
(252
)
    
(931
)
    
(2,003
)
Return on plan assets excluding interest income
    
1,052
      
300
      
1,732
  
Total other comprehensive gain/(loss)
    
956
      
726
      
(1,304
)


The fair value of the plan assets is the cash surrender value of the insurance with the insurance company (AXA). The investment strategy defined by the board of trustees follows a conservative profile.


The plan assets are primarily held within instruments with quoted market prices in an active market, with the exception of real estate and mortgages.


The weighted-average duration of the defined benefit obligation is 17.1 years and 17.6 years as of December 31, 2021 and 2020, respectively.


The actuarial assumptions used for the calculation of the pension cost and the defined benefit obligation of the defined benefit pension plan for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows:

   
For the Years Ended
December 31,
  
   
2021
    
2020
    
2019
  
Discount rate
    
0.30
%
    
0.20
%
    
0.20
%
Rate of future increase in compensations
    
1.75
%
    
1.75
%
    
1.75
%
Rate of future increase in current pensions
    
0.00
%
    
0.00
%
    
0.00
%
Interest rate on retirement savings capital
    
0.75
%
    
0.50
%
    
0.50
%
Mortality and disability rates
  
BVG 2020-CMI
    
BVG 2020-CMI
    
BVG 2015-CMI
  


In defining the benefits, the minimum requirements of the Swiss BVG and its implementing provisions must be observed. The BVG defines the minimum pensionable salary and the minimum retirement credits.



A quantitative sensitivity analysis for significant assumptions as of December 31, 2021 is shown below:

   
Discount rate
    
Future salary increase
    
Future pension cost
    
Interest rate on
savings capital
  
Assumptions
  
0.5% increase
    
0.5% decrease
    
0.5% increase
    
0.5% decrease
    
0.5% increase
    
0.5% decrease
    
0.5% increase
    
0.5% decrease
  
   
In CHF thousands
  
Potential defined benefit obligation
    
31,190
      
37,006
      
34,578
      
33,176
      
35,497
      
32,435
      
34,822
      
33,007
  
Decrease/(increase) from actual defined benefit obligation
    
2,699
      
(3,117
)
    
(689
)
    
713
      
(1,608
)
    
1,454
      
(933
)
    
882
  


A quantitative sensitivity analysis for significant assumptions as of December 31, 2020 is shown below:


   
Discount rate
    
Future salary increase
    
Future pension cost
    
Interest rate on
savings capital
  
Assumptions
  
0.5% increase
    
0.5% decrease
    
0.5% increase
    
0.5% decrease
    
0.5% increase
    
0.5% decrease
    
0.5% increase
    
0.5% decrease
  
   
in CHF thousands
  
Potential defined benefit obligation
    
27,740
      
33,080
      
30,912
      
29,519
      
31,652
      
28,916
      
31,070
      
29,405
  
Decrease/(increase) from actual defined benefit obligation
    
2,473
      
(2,867
)
    
(699
)
    
694
      
(1,439
)
    
1,297
      
(857
)
    
808
  



The sensitivity analyses above are subject to limitations and have been determined based on a method that extrapolates the impact on net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.