7Employee benefit plans

The present value of the defined benefit obligations and costs of the defined benefits are calculated using the projected unit credit method. For active members the calculation considers future salary increases, future pension increases as well as the probability of departures, and for retirees, current and future pension benefits considering future pension increases.

Reconciliation of the amount recognized in the balance sheet as of December 31

The group operates major funded defined benefit pension plans in Switzerland, the UK and the USA. The main unfunded defined benefit plan is a German pension benefit plan. The plans are exposed to actuarial risks, e.g., longevity risk, currency risk and interest rate risk, and the funded plans additionally to market (investment) risk.

In Switzerland, the group contributes to two pension plans funded via two different pension funds, i.e., a base plan for all employees and a supplementary plan for employees with salaries exceeding a certain limit. Both plans provide benefits depending on the pension savings at retirement. They include certain legal minimum interest credits to the pension savings (i.e., investment return) and guaranteed rates of conversion of pension savings into an annuity at retirement. In addition, the plans offer death in service and disability benefits. The two pension funds are collective funds administrating pension plans of group companies and also unrelated companies. In case of a material underfunding of the pension plans, the regulations include predefined steps, such as higher contributions by employer and employees or lower interest on pension savings, to eliminate the underfunding. The pension funds are legally separated from the group. The vast majority of the active participants in the two pension funds are employed by companies not belonging to the group. The Board of Trustees for the base plan comprises nine employee representatives and nine employer representatives. The discount rate in 2025 increased compared to 2024 (from 1.0% to 1.3% for active employees and from 0.9% to 1.1% for pensioners). In 2025 and 2024, there was no gain or loss from the change in effect of asset ceiling recorded in other comprehensive income (OCI) related to the Swiss pension plans. The net pension asset increased from CHF 140.2 million to CHF 171.0 million. The total expenses recognized in the income statement in 2025 amounted to CHF 9.2 million (2024: CHF 15.7 million). In 2025, the group recognized a curtailment adjustment which arose from a reduction in the number of plan participants eligible for future benefits. This event resulted in a gain of CHF 4.2m within past service costs. In 2024, the past service costs included an expense related to a plan amendment to both of the pension plans, which consisted of an increase in the conversion rate.

In the UK, the plan is a final salary plan and provides benefits linked to salary at closure to future accrual adjusted for inflation to retirement or earlier date of leaving service. The scheme is fully closed to new entrants and future accruals. The scheme is managed by eight trustees forming the Board. The plan is a multiemployer scheme with Sulzer (UK) Holding being the principal sponsor. The discount rate decreased in 2025 by 0.1 percentage points to 5.5% (2024: 5.6%). The net pension liability decreased from CHF 65.0 million in 2024 to CHF 56.2 million in 2025, with a gain recognized in OCI amounting to CHF 0.1 million (2024: gain of CHF 11.8 million). In 2025, the total expenses recognized in the income statement amounted to CHF 3.3 million (2024: CHF 3.7 million).

In the USA, the group operates non-contributory defined benefit retirement plans. The salaried plans provide benefits that are based on years of service and the employee’s compensation, averaged over the five highest consecutive years preceding retirement. The hourly plans’ benefits are based on years of service and a flat dollar benefit multiplier. All plans are closed to new entrants. The discount rate decreased in 2025 to 5.1% (2024: 5.4%). The net pension liability decreased from CHF 2.2 million in 2024 to CHF 0.3 million in 2025 with a gain recognized in OCI amounting to CHF 1.0 million (2024: gain of CHF 8.0 million). The total expenses recognized in 2025 amounted to CHF 0.2 million (2024: CHF 0.9 million).

In Germany, the group operates a range of different defined benefit pension plans, with one unfunded plan and two funded plans. All defined benefit plans are closed for new entrants and a new defined contribution plan for all employees was introduced in 2007. Existing employees who participated in the defined benefit plans continued to be eligible for these defined benefit pensions but also became eligible for the new defined contribution pensions. However, benefits received under the defined contribution plan are offset against the benefits under the defined benefit plans. The different defined benefit plans offer retirement pension, disability pension and survivor’s pension benefits.

Employee benefit plans

Employee benefit plans

Employee benefit plans

The defined benefit obligations for the Swiss and UK pension plans represent 88.8% (2024: 88.6%) of the group. The following significant actuarial assumptions were used for these two countries:

Principal actuarial assumptions as of December 31

Sensitivity analysis of defined benefit obligations

Negative amounts in the above table indicate an increase in defined benefit obligations, positive amounts indicate a decrease in defined benefit obligations. The sensitivity analysis is based on reasonably possible changes of the significant actuarial assumptions as of year end. The sensitivities provided are based on the change in one assumption while holding the other assumptions unchanged. Interdependencies were not considered.