22 Employee benefits

22.1 Post-employment benefits

The Zurich Airport Group maintains the following employee benefit plans:

a) Defined benefit plans

Affiliation contract with the BVK Employee Pension Fund of the Canton of Zurich (BVK)

The employees of Flughafen Zürich AG are affiliated to the BVK (Employee Pension Fund of the Canton of Zurich). The BVK is a multi-employer plan for employees of the Canton of Zurich and other employers. The BVK is registered with the Pensions and Trusts Supervisory Authority of the Canton of Zurich and is monitored by the latter.

The BVK Foundation Board, comprising nine employer and nine employee representatives, is the senior executive body of the Foundation and thus responsible for the strategic objectives and principles and for monitoring its management. The management is responsible for implementing legal requirements and the instructions given by the Foundation Board and its committees.

The BVK is subject to the provisions of the Federal Act on Occupational Old Age, Survivors’ and Invalidity Pension Provision (BVG) and its implementing provisions. The BVG defines the minimum insured salary, the minimum retirement credits and the return on them, and the conversion rate. As a result of these statutory provisions and the features of the plan, Flughafen Zürich AG, as an employer affiliated to the BVK, is exposed to actuarial risks such as investment risk, interest rate risk, disability risk and the risk of longevity.

Moreover, in accordance with the statutory provisions, the management body of the pension fund is also responsible for ensuring that restructuring measures are decided and implemented in the event of a shortfall, so that complete cover for future pension benefits is restored within a reasonable period. Among other things this includes restructuring payments in the form of additional contributions.

According to the applicable Swiss accounting regulations (Art. 44 BVV2), the liabilities of the BVK were funded at an (unaudited) level of 97.6% as at 31 December 2022 (previous year: 111.6%).

Employees of Flughafen Zürich AG are insured with the BVK against the risks of old age, death and disability. The retirement benefits are determined on the basis of the individual retirement savings accounts at the time of retirement and are calculated by multiplying the balance of the savings account by the conversion rate stipulated in the regulations. The statutory retirement age is 65. Early retirement with a reduced conversion rate is possible as of the time the employee turns 60. Flughafen Zürich AG pays age-related contributions for all insured persons of between 6.0% and 17.4% of the insured salary and risk contributions of 1.2%. Up to the age of 20, only the risk contribution is incurred.

The assets originate from the BVK benefit plans. The investment strategy is defined by the BVK Foundation Board, based on the proposals and recommendations of the Board’s own investment committee, which in particular is responsible for managing the BVK’s assets. It prepares all the investment-related decisions taken by the Foundation Board and manages and supervises their implementation by the management. In addition, it is supported in the monitoring of the investment strategy and the investment process by an external investment controller.

The investment strategy (asset allocation) ranges within tactical bandwidths so as to enable a flexible response to current market situations. The aim is to manage the capital investments effectively and efficiently. The assets are well diversified. Compliance with the investment guidelines and the investment results are reviewed periodically.

Because the BVK, as a multi-employer plan, does not prepare separate financial statements for Flughafen Zürich AG, the company is also liable for liabilities of other affiliated employers, in accordance with the statutory provisions.

Explanation of the amounts in the consolidated financial statements

The actuarial calculation of the defined benefit obligations as at 31 December 2022 and the service cost was performed by independent actuaries using the projected unit credit method. The fair value of the plan assets was determined as at 31 December 2022 based on the information available at the date of preparation of the annual financial statements.

As no separate information was available for the affiliation contract with Flughafen Zürich AG for the plan assets or for the breakdown of assets into asset classes at the reporting date, assumptions had to be made on the basis of the available information for these purposes.

The net defined benefit obligations recognised in the balance sheet at the reporting date are as follows:

The defined benefit obligations changed as follows:

The weighted average duration of the defined benefit obligation at 31 December 2022 was 13.6 years (previous year: 16.4 years).

The plan assets changed as follows:

The unrecognised asset due to the asset ceiling changed as follows:

The net defined benefit obligations changed as follows:

The company expects employer contributions of CHF 19.5 million for financial year 2023.

Analysis of the amounts recognised in the income statement:

Analysis of the amounts recognised in other comprehensive income:

The actuarial gain of CHF 158.7 million (previous year: CHF 17.9 million) attributable to changes in financial assumptions was mainly the result of the marked increase in the discount rate from 0.30% to 2.15%.

Actual investment performance was much lower than anticipated in the reporting period due to unfavourable capital market trends. The difference of CHF –56.5 million (previous year: CHF 65.9 million) between the actual return and the interest income on plan assets was recognised in other comprehensive income. In addition, a negative effect of CHF –5.6 million (previous year: CHF 0.0 million) arose as at the reporting date as a result of limiting the plan assets on which there are no economic benefits.

In the previous year, the technical basis used for calculations was changed from BVG 2015 to BVG 2020, resulting in an actuarial gain of CHF 37.5 million.

Assumptions used in actuarial calculations:

The discount rate is based on CHF-denominated corporate bonds with an AA rating issued by domestic and foreign issuers and listed on SIX Swiss Exchange. The future rate of salary increase is the long-term historical average adjusted for management’s current estimates for the future. Based on the current financial status of the pension fund, no future increases in pensions are anticipated.

As at 31 December 2022, the life expectancy assumption was calculated on the basis of BVG 2020 (previous year: BVG 2020) by projecting future longevity improvements in accordance with the Continuous Mortality Investigation model (CMI model), based on historically observed longevity improvements in Switzerland and a future long-term longevity improvement rate of 1.50%.

Breakdown of plan assets by asset class:

Sensitivities

The discount rate, the assumption regarding future salary increases and the return on retirement savings accounts are the significant actuarial assumptions in calculating the present value of the defined benefit obligations. A change in the assumptions of +0.25% or – 0.25% has the following impact on the present value of the defined benefit obligations (DBO):

The above sensitivity calculations are based on one assumption changing while the others remain unchanged. In practice, however, there are certain correlations between the individual assumptions. The same method was used to calculate the sensitivities and the defined benefit obligations recognised at the reporting date.

b) Defined contribution plan

An agreement exists with Zurich Insurance Company offering benefits to the pensioners of the former Flughafen-Immobilien-Gesellschaft (FIG). This group of beneficiaries did not transfer to the BVK. This is a defined contribution plan which is fully funded. Zurich Insurance Company is responsible for providing all future benefits.

22.2 Other long-term employee benefits

Flughafen Zürich AG pays its employees loyalty bonuses on the basis of years of service, in accordance with the employment regulations of 1 January 2016. The corresponding provision of CHF 10.7 million (previous year: CHF 11.8 million) was calculated based on the number of accumulated years of service which, at the reporting date, was 10.5 years (previous year: 10.8 years).