7.2Employee benefit plans
Defined contribution plans
The expense for defined contribution plans amounted to CHF 3.6 million in 2025 (2024: CHF 3.9 million).
Defined benefit plans
Defined benefit plans in accordance with IAS 19 exist mainly in Switzerland and Germany.
In Switzerland, the Group contributes to several pension plans, all of which are funded. One of these is a collective fund that administrates the pension plans of Group companies and unrelated companies. Plan participants are insured against the financial consequences of old age, disability, and death. The amount of risk benefits provided by the plans in the event of disability or death depends on the insured salary of the employee. Life-long retirement benefits are calculated by multiplying the individual retirement savings capital at the date of retirement by the conversion rate defined and guaranteed in the plan’s regulations.
The plans are administered by independent and legally autonomous foundations under government supervision. The pension plans’ most senior governing body (board of trustees) comprises an equal number of employee and employer representatives.
All material risks (financial and actuarial risks) are borne by the foundations. These risks are monitored on an ongoing basis and addressed by the board of trustees. If a plan is underfunded, the board of trustees has to perform an overall assessment of the financial situation, identify the reasons for the deficit, and decide on appropriate measures to eliminate the shortfall.
Pursuant to the Swiss Federal Law on Occupational Retirement, Survivors’, and Disability Pension Plans (BVG), the trustees of the foundations are responsible for the definition and the execution of the investment strategy. The investment strategy defined by the trustees aims at aligning the plan assets and liabilities in the medium and long term.
In Germany, the Group operates several pension plans, thereof three funded and six unfunded. German pension arrangements are governed by the German Occupational Pensions Act (BetrAVG). The employer is required by German law to increase pension payments every three years according to price inflation, as measured by the Consumer Price Index (“Verbraucherpreisindex – VPI”) or according to comparable pay grades. In the case of unfunded pension plans, the Group pays the pensions of retired employees directly from its own financial resources. Funded pension plans are administered through a Contractual Trust Agreement (CTA), where the assets are outsourced to an independent entity (e.g. a trust), that has the sole purpose of financing, paying out and ensuring benefits. The transferred assets are completely segregated from the employer’s assets to protect these assets against risk of employer insolvency. The employer is free to determine the scope and kind of assets that are transferred to the trust and used to fund the pension liabilities. No minimum funding requirements or regular funding obligations apply to a CTA. Based on a special trust agreement between the employer and the trust, the trust acquires legal title in the transferred assets, while the economic ownership rests with the employer. Through creation of a CTA, the employer ensures additional insolvency protection for the beneficiaries.
The status of defined benefit plans was as follows:
December 31, 2025 | ||||
|---|---|---|---|---|
CHF million | Funded plans (Switzerland) | Funded plans (mainly Germany) | Unfunded plans (mainly Germany) | Total |
Actuarial present value of defined benefit plan obligations (funded plans) | – 842.2 | – 16.1 | – | – 858.3 |
Fair value of defined benefit plan assets (funded plans) | 1 366.0 | 10.9 | – | 1 376.9 |
Impact of asset ceiling | – 464.7 | 0.0 | – | – 464.7 |
Overfunding (+)/Underfunding (-) | 59.1 | – 5.2 | – | 53.9 |
Actuarial present value of defined benefit plan obligations (unfunded plans) | – | – | – 19.5 | – 19.5 |
Net defined benefit plan asset/liability recognized in the balance sheet | 59.1 | – 5.2 | – 19.5 | 34.4 |
- thereof as defined benefit plan assets | 59.1 | 0.2 | – | 59.3 |
- thereof as defined benefit plan liabilities | – | – 5.4 | – 19.5 | – 24.9 |
December 31, 2024 | ||||
|---|---|---|---|---|
CHF million | Funded plans (Switzerland) | Funded plans (other countries) | Unfunded plans (mainly Germany) | Total |
Actuarial present value of defined benefit plan obligations (funded plans) | – 880.0 | – 15.9 | – | – 895.9 |
Fair value of defined benefit plan assets (funded plans) | 1 316.6 | 11.5 | – | 1 328.1 |
Impact of asset ceiling | – 361.4 | 0.0 | – | – 361.4 |
Overfunding (+)/Underfunding (-) | 75.2 | – 4.4 | – | 70.8 |
Actuarial present value of defined benefit plan obligations (unfunded plans) | – | – | – 21.5 | – 21.5 |
Net defined benefit plan asset/liability recognized in the balance sheet | 75.2 | – 4.4 | – 21.5 | 49.3 |
- thereof as defined benefit plan assets | 75.2 | – | – | 75.2 |
- thereof as defined benefit plan liabilities | – | – 4.4 | – 21.5 | – 25.9 |
The defined benefit plan obligations changed as follows:
CHF million | 2024 | 2025 |
|---|---|---|
Defined benefit plan obligations at January 1 | 885.9 | 917.4 |
Current service cost | 8.3 | 8.0 |
Interest expenses | 13.7 | 9.2 |
Employee contributions | 6.3 | 5.4 |
Actuarial gains/losses (net) | 62.9 | 6.3 |
Benefits paid | – 61.3 | – 69.0 |
Past service cost | 0.7 | 1.3 |
Currency translation differences | 0.9 | – 0.8 |
Defined benefit plan obligations at December 31 | 917.4 | 877.8 |
Past service costs are related to restructuring measures described in note 2.3. The weighted average duration of the defined benefit plan obligations is 11.0 years (2024: 11.5 years).
The fair value of defined benefit plan assets developed as follows:
CHF million | 2024 | 2025 |
|---|---|---|
Fair value of defined benefit plan assets at January 1 | 1 294.3 | 1 328.1 |
Interest income | 19.2 | 12.7 |
Return on defined benefit plan assets (excluding interest income) | 64.1 | 96.2 |
Employer contributions | 5.3 | 4.1 |
Employee contributions | 6.3 | 5.4 |
Benefits paid | – 61.3 | – 69.0 |
Currency translation differences | 0.2 | – 0.6 |
Fair value of defined benefit plan assets at December 31 | 1 328.1 | 1 376.9 |
The total result on plan assets was CHF 108.9 million in the year under review (2024: CHF 83.3 million). The Group expects employer contributions in the amount of CHF 8.0 million to its defined benefit plans in 2026.
The major categories of plan assets were as follows:
CHF million | December 31, 2024 | December 31, 2025 |
|---|---|---|
Cash and cash equivalents | 40.0 | 36.7 |
Equity instruments | 519.9 | 581.5 |
Debt instruments | 295.5 | 279.3 |
Real estate | 405.0 | 410.5 |
- thereof owner occupied | 65.8 | 65.0 |
Other | 67.7 | 68.9 |
Fair value of defined benefit plan assets | 1 328.1 | 1 376.9 |
At the end of 2025, plan assets included no Rieter Holding Ltd. bonds (December 31, 2024: none). No Rieter shares were held at the end of 2025 and 2024. Cash equivalents (e.g. money market instruments), equity instruments and 53 percent of the debt instruments have a quoted market price on an active market. Real estate and other assets, which include private equity investments, do not usually have a quoted market price.
The impact of the asset ceiling developed as follows:
CHF million | December 31, 2024 | December 31, 2025 |
|---|---|---|
Asset ceiling at January 1 | 369.4 | 361.4 |
Included in the income statement | 5.3 | 3.5 |
Included in other comprehensive income | – 13.3 | 99.8 |
Asset ceiling at December 31 | 361.4 | 464.7 |
Expenses recognized in the income statement for the defined benefit plans include:
CHF million | 2024 | 2025 |
|---|---|---|
Current service cost | – 8.3 | – 8.0 |
Net interest result | 0.2 | 0.0 |
Past service cost | – 0.7 | – 1.3 |
Expenses recognized in the income statement | – 8.8 | – 9.3 |
Remeasurements of defined benefit plans recognized as other comprehensive income contain:
CHF million | 2024 | 2025 |
|---|---|---|
Actuarial gains/losses arising from: | ||
- Changes in demographic assumptions | 0.0 | – 0.2 |
- Changes in financial assumptions | – 44.1 | 24.9 |
- Experience adjustments | – 18.8 | – 31.0 |
Return on defined benefit plan assets (excluding interest income) | 64.1 | 96.2 |
Impact of changes in asset ceiling | 13.3 | – 99.8 |
Remeasurements of defined benefit plans | 14.5 | – 9.9 |
Main actuarial assumptions used at year-end are:
Weighted average in % | December 31, 2024 | December 31, 2025 |
|---|---|---|
Discount rate | 1.1 | 1.4 |
Future wage growth | 0.8 | 0.8 |
Future pension growth | 0.1 | 0.1 |
Mortality assumptions: | ||
- Switzerland | BVG 2020G | BVG 2020G |
- Germany | Heubeck 2018G | Heubeck 2018G |
The global interest rate levels remain volatile. After a decrease in 2024, in particular long-term interest rates increased again in 2025 by 0.3 percentage points.
The measurement of the defined benefit plan obligations is particularly sensitive to changes in the discount rate and the assumptions regarding future pension growth. The table below shows the potential impact of a change of 0.5 percentage points in the discount rate and a change of 0.5 percentage points in the assumed future pension growth rate on the defined benefit plan obligations:
CHF million | December 31, 2024 | December 31, 2025 |
|---|---|---|
Increase in the discount rate by 0.5 percentage points | – 50.7 | – 46.4 |
Decrease in the discount rate by 0.5 percentage points | 56.2 | 51.5 |
Increase in the future pension growth rate by 0.5 percentage points1 | 44.1 | 40.7 |
1Reduction in the future pension growth rate by 0.5 percentage points was not considered in the sensitivity analysis as the respective rate was zero.
A change in the assumption of future wage growth rate by 0.5 percentage points would impact defined benefit plan obligations by less than 1 percent (same as 2024).
The sensitivity analysis above considers the change in one assumption while leaving the other assumptions unchanged. Interdependencies were not taken into account.
Significant accounting estimates and judgments
Defined benefit plans require actuarial calculations in order to determine defined benefit plan obligations. These calculations are based on assumptions such as discount rates, future trends in wages and pensions as well as the employee share in the costs of the future benefits. Statistical data such as mortality tables and staff turnover probability rates are also used to calculate defined benefit plan obligations. If these parameters change, actual future results can deviate from the actuarial calculations. Such deviations can have an effect on the defined benefit plan obligations.
Material accounting policies
Employee benefit plans are operated by certain subsidiaries, depending upon the level of coverage provided by government post-employment benefit facilities in the respective countries. Such employee benefit plans exist on the basis of both defined contributions and defined benefits.
Contributions to defined contribution plans are recognized as personnel expenses in the period in which they are incurred.
For defined benefit plans, the benefit plan obligation is determined using the projected unit credit method, with valuations being carried out by independent actuaries, usually at the end of each year. The present value of the defined benefit plan obligation less the fair value of the defined benefit plan assets is recognized in the balance sheet as a liability. When the calculation results in a potential asset, the respective defined benefit plan asset recognized is limited to the present value of the economic benefits available in the form of reductions of future contributions to the plan (asset ceiling). Remeasurements of the net defined benefit plan assets and liabilities, which comprise actuarial gains and losses, the return on defined benefit plan assets (excluding interest), and the effect of the asset ceiling, are recognized immediately as other comprehensive income. Contributions by employees are recognized as a reduction of service cost in the period in which the related service is rendered.
Net interest on the net defined benefit plan assets and liabilities is determined by applying the discount rate used to measure the defined benefit plan obligation at the beginning of the year. Service cost and net interest are recognized as personnel expenses.