The LPP (Loi sur la prévoyance professionnelle) defines the minimum mandatory benefits and contribution rates for Swiss occupational pension schemes. Employers may offer over-mandatory benefits through supplementary pension plans, which typically take the form of defined benefit (DB) or defined contribution (DC) schemes. Under-mandatory benefits are standardised and regulated; over-mandatory benefits expose the employer to actuarial risk and create the deficit exposures relevant to due diligence. Significant over-mandatory defined benefit plans require IAS 19 actuarial valuation for IFRS reporting and for accurate net debt assessment in M&A transactions.

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Example: a Swiss industrial company's over-mandatory LPP plan shows a Defined Benefit Obligation (DBO) of CHF 8.5 million against CHF 6.0 million in plan assets — a net deficit of CHF 2.5 million. Under IAS 19, this deficit appears on the IFRS balance sheet as a pension liability. Under CO accounts, it is invisible. The acquisition due diligence must identify this CHF 2.5 million gap and include it as a debt-like item in the price bridge.

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Hectelion analyses LPP plan structures and deficits in every Swiss acquisition, working with actuarial specialists to quantify and document pension-related net debt adjustments.