The Company maintains a passive pension plan (the “Swiss Plan”) covering employees of its Swiss subsidiary, which is accounted for as a defined benefit plan.

In Switzerland employers are required to provide a minimum pension plan for their staff. Contributions of both the employees and employer finance the Swiss Plan. The amount of the contributions is defined by the plan regulations and cannot be decreased without amending the plan regulations. It is required that the employer contribute an amount equal to or greater than the employee contribution.

The following table shows the changes in the benefit obligation and plan assets and the Swiss Plan’s funded status as of January 3, 2020 and December 28, 2018 (in thousands):

	2019			2018
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	8,794		$	7,445
Service cost		739			474
Interest cost		77			56
Participant contributions		458			361
Benefits deposited (paid)		492			189
Actuarial loss		2,429			269
Prior service credit		(125	)		—
Projected benefit obligation, end of period	$	12,864		$	8,794
Change in Plan Assets:
Plan assets at fair value, beginning of period	$	5,130		$	4,144
Actual return on plan assets (including foreign currency impact)		152			3
Employer contributions		542			433
Participant contributions		458			361
Benefits deposited (paid)		492			189
Plan assets at fair value, end of period	$	6,774		$	5,130
Funded status (pension liability), end of year⁽¹⁾	$	(6,090	)	$	(3,664	)
Amount Recognized in Accumulated Other Comprehensive Income (Loss), net of tax:
Actuarial loss on plan assets	$	(1,031	)	$	(1,035	)
Actuarial loss on benefit obligation		(4,317	)		(2,145	)
Actuarial gain recognized in current year		744			630
Prior service credit		258			165
Effect of curtailments		609			609
Accumulated other comprehensive loss	$	(3,737	)	$	(1,776	)
Accumulated benefit obligation at year end	$	(12,043	)	$	(8,230	)

Net periodic pension cost associated with the Swiss Plan included the following components (in thousands):

	Years Ended
	2019			2018			2017
Service cost⁽¹⁾	$	739		$	474		$	381
Interest cost⁽²⁾		77			56			53
Expected return on plan assets⁽²⁾		(147	)		(116	)		(94	)
Prior service credit^(2),(3)		(21	)		(21	)		(7	)
Actuarial loss recognized in current period^(2),(3)		129			113			72
Net periodic pension cost	$	777		$	506		$	405

Changes in other comprehensive income (loss), net of tax, associated with the Swiss included the following components (in thousands):

	Years Ended
	2019			2018			2017
Current year actuarial gain (loss) on plan assets	$	4		$	(101	)	$	98
Current year actuarial loss on benefit obligation		(2,172	)		(243	)		(644	)
Actuarial gain recorded in current year		114			103			65
Prior service credit		93			(19	)		126
Change in other comprehensive loss	$	(1,961	)	$	(260	)	$	(355	)

The amount in accumulated other comprehensive income (loss) as of January 3, 2020 that is expected to be recognized as a component of the net periodic pension costs during fiscal year 2020 is $318,000.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Swiss Plan were calculated on January 3, 2020 and December 28, 2018 using the following assumptions:

The discount rates are based on an assumed duration of the pension obligations and estimated using the rates of returns for AAA and AA-rated Swiss and foreign CHF-denominated corporate bonds listed on the SIX Swiss Exchange. The salary increase rate was based on the Company’s best estimate of future increases over time. The expected long-term rate of return on plan assets is based on the expected asset allocation and assumptions concerning long-term interest rates, inflation rates, and risk premiums for equities above the risk-free rates of return. These assumptions take into consideration historical long-term rates of return for relevant asset categories.

Under Swiss law, pension funds are legally independent from the employer and all the contributions are invested with regulated entities. The Company has a contract with Allianz Suisse Life Insurance Company’s BVG Collective Foundation (the “Foundation”) to manage its Swiss pension fund. Multiple employers contract with the Foundation to manage the employers’ respective pension plans. The Foundation manages the pension plans of its contracted employers as a collective entity. The investment strategy is determined by the Foundation and applies to all members of the collective Foundation. There are no separate financial statements for each employer contract. The pension plan assets of all the employers that contract with the Foundation are comingled. They are considered multiple-employer plans under ASC 715-30-35-70 and therefore accounted for as single-employer plans.

As there are no separate financial statements for each employer contract, there are no individual investments that can be directly attributed to the Company’s pension plan assets. However, the funds contributed by an employer are specifically earmarked for its employees and the total assets of the plan allocable to Company’s employees are separately tracked by the Foundation. The lack of visibility into the specific investments of the plan assets and how they are valued is a significant unobservable input, therefore, the Company considers the plan assets collectively to be Level 3 assets under the fair value hierarchy (see Note 1).

The table below sets forth the fair value of Plan assets at December 28, 2018 and January 3, 2020, and the related activity in years ended 2018 and 2019, in accordance with ASC 715-20-50-1(d) (in thousands):

During fiscal year 2020, the Company expects to make cash contributions totaling approximately $631,000 to the Swiss Plan.

The estimated future benefit payments for the Swiss Plan are as follows (in thousands):

STAAR Japan maintains a noncontributory defined benefit pension plan (“Japan Plan”) substantially covering all the employees of STAAR Japan. Benefits under the Japan Plan are earned, vested, and accumulated based on a point-system, primarily based on the combination of years of service, actual and expected future grades (management or non-management) and actual and future zone (performance) levels of the employees. Each point earned is worth a fixed monetary value, 1,000 Yen per point, regardless of the level grade or zone of the employee. Gross benefits are calculated based on the cumulative number of points earned over the service period multiplied by 1,000 Yen. The mandatory retirement age limit is 60 years old.

STAAR Japan administers the pension plan and funds the obligations of the Japan Plan from STAAR Japan’s operating cash flows. STAAR Japan is not required, and does not intend, to provide contributions to the Plan to meet benefit obligations and therefore does not have any plan assets. Benefit payments are made to beneficiaries as they become due.

The funded status of the benefit plan at January 3, 2020 and December 28, 2018 was as follows (in thousands):

	2019			2018
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	1,646		$	1,352
Service cost		185			153
Interest cost		7			4
Actuarial gain		(58	)		119
Benefits paid		(66	)		(9	)
Foreign exchange adjustment		36			27
Projected benefit obligation, end of period	$	1,750		$	1,646
Change in Plan Assets:
Plan assets at fair value, beginning of period	$	—		$	—
Actual return on plan assets		—			—
Employer contributions		—			—
Benefits paid		—			—
Distribution of plan assets		—			—
Foreign exchange adjustment		—			—
Plan assets at fair value, end of period	$	—		$	—
Funded status (pension liability), end of year⁽¹⁾	$	(1,750	)	$	(1,646	)
Amount Recognized in Accumulated Other Comprehensive Income (Loss), net of tax:
Transition obligation	$	—		$	—
Actuarial loss		(37	)		(36	)
Prior service cost		7			8
Net gain		68			38
Accumulated other comprehensive income	$	38		$	10
Accumulated benefit obligation at year end	$	(1,599	)	$	(1,416	)

Net periodic pension cost associated with the Japan Plan included the following components (in thousands):

	Years Ended
	2019			2018			2017
Service cost⁽¹⁾	$	185		$	153		$	147
Interest cost⁽²⁾		7			4			4
Net amortization of transitional obligation^(2),(3)		—			11			11
Prior service credit^(2),(3)		(1	)		(1	)		(1	)
Actuarial loss recognized in current period^(2),(3)		—			—			(3	)
Net periodic pension cost	$	191		$	167		$	158

Changes in other comprehensive income (loss), net of tax, associated with the Japan Plan include the following components (in thousands):

	Years Ended
	2019			2018			2017
Amortization of net transition obligation	$	—		$	7		$	8
Amortization of actuarial loss		(1	)		(1	)		—
Prior service cost		(1	)		—			—
Actuarial income (loss) recorded in current year		30			(84	)		(22	)
Change in other comprehensive income (loss)	$	28		$	(78	)	$	(14	)

The amount in accumulated other comprehensive income (loss) as of January 3, 2020 that is expected to be recognized as a component of the net periodic pension cost in fiscal year 2020 is approximately $1,000.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Japan Plan were calculated on January 3, 2020 and December 28, 2018 using the following assumptions:

The discount rates are based on the yield curve of corporate bonds rated AA or higher. The salary increase average rate was based on the Company’s best estimate of future increases over time.

The estimated future benefit payments for the Japan Plan are as follows (in thousands):

The Company has a 401(k) profit sharing plan (“401(k) Plan”) for the benefit of qualified employees in the U.S. During the year ended January 3, 2020 employees who participate may elect to make salary deferral contributions to the 401(k) Plan up to $19,000 of the employees’ eligible payroll subject to annual Internal Revenue Code maximum limitations (with a $6,000 annual catch-up contribution permitted for those over 50 years old). The Company’s contribution percentage is 80% of the employee’s contribution up to the first 6% of the employee’s compensation. In addition, STAAR may make a discretionary contribution to qualified employees, in accordance with the 401(k) Plan. The Company’s contributions, net of forfeitures, to the 401(k) Plan were as follows (in thousands):