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Pension Liability

12 Months Ended

Dec. 31, 2021

Note 13

Pension Liability:

The Company joined a collective pension plan operated by an insurance company as of 2016 which covers the employees in Switzerland.

Both the Company and the participants provide monthly contributions to the pension plan which are based on the covered salary. The respective saving parts of premiums are credited to employees’ accounts. In addition, interest is credited to employees’ accounts at the rate provided in the plan. The pension plan provides for retirement benefits as well as benefits on long-term disability and death.

The following table provides information on the pension plan for the years ended December 31, 2021, 2020 and 2019:

	2021			2020			2019
Service cost	$	48,641		$	24,875		$	25,206
Interest cost		732			832			2,992
Expected return on assets		(6,314	)		(1,713	)		(4,249	)
Effect of settlement		-			(28,754	)		(5,810	)
Actuarial loss outside corridor recognized		983			-			-
Administrative expenses		3,141			1,185			1,946

Net periodic pension cost	$	47,183		($	3,575	)	$	20,085

The reconciliation of the projected benefit obligation and the changes to the fair value of the plan assets of the pension plan are shown in the following table:

	2021			2020
Projected benefit obligation, beginning of period	$	273,675		$	386,064
Service cost		48,641			24,875
Interest cost		732			832
Transfers-in and (-out), net		442,557			(169,942	)
Actuarial (gain)/ loss		167,864			3,561
Currency conversion adjustments		(6,100	)		28,285
Projected benefit obligation, end of period	$	927,369		$	273,675

Plan assets, beginning of period	$	95,406		$	205,816
Actual return on plan assets		70,634			(620	)
Employer contributions		34,062			15,207
Participant contributions		20,738			6,954
Transfers-in and (-out), net		392,021			(142,931	)
Administration expenses		(3,141	)		(1,185	)
Currency conversion adjustments		(1,242	)		12,165
Plan assets, end of period	$	608,478		$	95,406

Accrued pension liability	$	318,891		$	178,269

As of December 31, 2021 and 2020, the Company recorded an accrued pension liability of $318,891 and $178,269, respectively, as non-current liabilities.

The pension assets are measured at fair value and are invested in a collective pension foundation with pooled investments. Plan assets mainly consist of cash and cash equivalents, equity funds, equity securities, corporate bonds, government bonds, and real estate funds classified as Level 1 and Level 2 under the fair value hierarchy.

The Company records net gains/losses, consisting of actuarial gains/losses, curtailment gains/losses and differences between expected and actual returns on plan assets, in other comprehensive income/loss. Such net gains/losses are amortized to the statements of operations to the extent that they exceed 10% of the greater of projected benefit obligations or pension assets. The Company further records prior service costs/credits from plan amendments in other comprehensive income/loss in the period of the respective plan amendment and amortizes such amounts to the statement of operations over the future service period of the plan participants. For the years ended December 31, 2021 and 2020, the amortization was $0. As of December 31, 2021 and 2020, the accumulated other comprehensive loss includes unrecognized pension costs of $151,739 and $19,381, respectively, consisting of net losses.

The following table shows the components of unrecognized pension cost in accumulated other comprehensive income/loss that have not yet been recognized as components of net periodic pension cost:

	2021			2020
Net loss, beginning of period	$	19,381		$	18,698
Other gain/loss during the period		103,544			5,895
Other prior year gain/loss recognized in period		(983	)
Effect of settlement		-			(5,212	)
Amortization of pension related net loss		-			-
Net loss, end of period		121,942			19,381

Prior service cost, beginning of period		-			-
Amortization of prior service cost		29,797			-
Prior service cost end of period		29,797			-

Total unrecognized pension cost, end of period	$	151,739		$	19,381

The weighted average of the key assumptions used to compute the benefit obligations were as follows:

	2021			2020
Discount rate		0.30	%		0.15	%
Rate of increase in compensation level		0.00	%		0.00	%
Interest credit rate on savings accounts		1.00	%		1.00	%
Expected long-term rate of return on plan assets		2.00	%		2.00	%
Inflation rate		0.60	%		0.60	%

The assumption of the expected long-term rate of return on plan assets was based on the long-term historical rates of returns for the different investment categories which were adjusted, where appropriate, to reflect financial market developments.

The accumulated benefit obligation as of December 31, 2021 and 2020 amounted to $927,369 and $273,675, respectively.

The investment risk is borne by the insurer and the reinsurer respectively, and the investment decision is taken by the board of trustees of the collective insurance.