The type of scheme determines the method of accounting treatment. In case of defined contribution plans according to IAS 19, the obligations of the employer are limited to the payment of a fixed contribution to a fund which will provide the benefits to the employee at a later stage. The actuarial risk (e.g. the effects of incorrectly estimated likelihoods of fluctuations, mortality rates) and the investment risk are borne by the employee. The employer contribution is recognised as an expense in the year the employee worked for the company.
In case of a defined benefit scheme according to IAS 19, the employer is obligated to pay out an agreed amount. The employer thus bears the main share of the actuarial and investment risk. For defined benefit pension schemes, the expense for the period under review is determined from the change in pension provisions, calculated using the so-called Projected Unit Credit Method. Swiss pension plans under BVG (BVG contribution and BVG benefit liability plans) apply as defined benefit pension plans under IAS 19 as a rule. Migros Group insures its employees predominantly under defined benefit pension plans. Companies of Migros Group use different, legally independent pension providers. The largest of these providers are the Migros Pension Fund, the Globus Group Pension Fund, the Denner Pension Fund and the Employee Pension Foundation Travel.
It should be noted that the funded status of a pension fund under IAS 19 differs from the degree of cover under the BVG (Occupational Pensions Act), since the latter are calculated using statistical methods, while funded status under IAS 19 is performed using dynamic methods.
|In CHF million||after effect from pension plans||before effect from pension plans||after effect from pension plans||before effect from pension plans|
|Income tax expense||261.2||256.4||241.4||237.8|