SAirgroup in surplus furore
SAirgroup has stirred up a fuss in Switzerland by reporting SFr1bn (E636m) of its SFr3bn pension fund surplus on the company’s balance sheet. According to a company spokesman, the move is in line with International Accounting Standards (IAS) adopted last year. In an interview with Switzerland’s Sonntag Zeitung, the company’s CEO, Philippe Bruggisser, confirmed the company was reporting the money on the balance sheet and, more controversially, said the company’s contributions to the pension entitled it to some of the surplus.
The legal separation of companies and pension funds in Switzerland means surplus belongs to the pension funds. Jean-Claude Domzel, spokes-man at SAirgroup, explains the CEO’s interview but ownership of the assets is still unclear: "There was no transfer, he didn’t say the money will go from one account to another. He just says that we can go on the assumption that part of this money belongs to the group," says Domzel. SAirgroup is looking to expand but Domzel denies the surplus will bankroll these plans.
The move has drawn criticism from the Swiss pension fund association and there is concern IAS could threaten Switzerland’s pillar one contributions. Bruggisser said, in the interview, that he does not believe the company should contribute for employees earning over SFr100,000 (E64,000).
The practice of reporting surplus to the balance sheet is not new and Hanni Thurnherr, assistant to the pension fund manager at Novartis, the pharmaceuticals company, says the group sometimes does it. But, she added that the surplus remains the pension fund’s and that pillar one contributions are sacrosanct: "The company has to pay X percentage and it has to pay this whatever the result on the balance sheet."
Nestlé has used IAS for many years now but doesn’t report surpluses on the balance sheet. "Our auditors KPMG told us it was alright that we didn’t transfer surplus funds," says spokesman Marcel Rubin. "Pension funds are separate legal entities… we don’t activate anything in our balance sheet from the surplus."
John Anthony, managing director of consultants Watson Wyatt in Zurich, says sometimes it makes sense to transfer assets, for example if the plan specifies contributions can change with the fund’s performance, and that there’s no need for a change to IAS for Switzerland. "It has become quite a political discussion, quite polemic." Dicken Reid