Innovation Zweite Säule (IZV), the association of Swiss second-pillar experts, and consultancy c-alm have put together a ‘light touch’ proposal to reform Switzerland’s second-pillar pension system, in a bid to reignite debate after the plan to change occupational pensions was rejected in a referendum last September.
IZV and c-alm propose cutting the conversion rate to calculate pension payouts on the share of wage insured under the second pillar from 6.8% to 6% in eight steps, instead of all at once, as proposed in the reform plan that was rejected by the public last year.
The wage threshold to join a pension scheme and the coordination deduction, an amount deducted from the wage insured under the first pillar to calculate the share of wage insured under the second pillar, will decrease, according to the proposal, but to a lesser extent than under the previous reform plan.
IZV and c-alm have suggested a coordination deduction amounting to 45% of the salary insured in the first pillar, maximum CHF19,845 (€21,188), instead of the 20% proposed in the reform that was rejected, and a wage threshold to join a pension scheme of CHF19,845 per year.
Increasing the share of wage insured under the second pillar and lowering the wage threshold to join a pension scheme were two measures aimed at increasing the number of low earners signing up for an occupational pension.
With the changes, pension financing costs on the shoulders of the younger generation would be reduced to CHF400m per year, and costs to compensate those seeing pensions cut due to the reduction of the conversion rate are estimated at CHF1.6bn, compared with over CHF11bn in the previous reform.
The model leads also to maximum pension loss of 5.4% for a person aged 55 who is insured in the second pillar and has a salary insured under the first pillar of CHF88,200 per year.
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