Swiss people have voted in a referendum with a slight majority in favour of changing and further funding the first pillar pension system (AHV), in the first reform taking place in 25 years.
The amendment to the federal law on old-age and survivors’ insurance (AHV 21) was approved by 50.57% of the votes, and additional funding of the AHV via VAT with 55.07% of the votes.
“The Federal Council accept the result [of the referendum] with great modesty, the results show how difficult it is to find solutions supported by the majority, with compromises, on matters relating to old-age provisions […] the minority has to be heard above all on future work in the parliament,” said Alain Berset, minister for home affairs also responsible for retirement matters, yesterday during a press conference commenting on the vote.
The result of the referendum is a “clear signal” to parliament and the Federal Council for a pension system that does not discriminate against women, and that “needs absolutely an urgent and good reform of the second pillar,” the minister added.
The reform will lead to the financial stability of the AHV, a necessary step to take to face demographic changes in the next few years, Berset said.
The two main blocks of the reform include increasing the retirement age for women from 64 to 65 years old, the same as for men, both in the first and second pillar, and increasing the VAT slightly, by 0.4 percentage points, to fund the system.
The reform is expected to come into force on 1 January 2024, and a uniform retirement age for men and women will apply from 2028. If AHV 21 comes into force in 2024, the transitional generation – Übergangsgeneration – is represented by women born between 1961 and 1969.
The measures to compensate women caught out in the reform, the so-called transitional generation, include a lifelong pension supplement if they don’t decide to withdraw their pension earlier, and a lower reduction rates for those who decide to retire earlier.
The reform of the first pillar pension system also introduces a flexible retirement age, meaning that men and women can withdraw their pension a maximum two years earlier that the retirement age set, but with a 6.8% cut per year.
Employees can also withdraw their pensions for a maximum of five years later than the retirement age set by law, with a supplement of between 5.2% to 31.5%.
The changes and the additional funding through the tax reform approved in 2019 had little to do with a “real reform”, the Swiss Employers’ Association (SAV) said in a statement.
In the coming years up to six more bills could find their way to the ballot box, the association added, naming the reform of the second pillar pension system – now stuck in parliament – the pension initiative of the Young Liberals and the “Generations Initiative”.
A further reform of the AHV may take place, as parliament has asked the Federal Council to review it by the end of 2026.
“For the employers, restructuring of old-age provision is still a priority. It remains to be seen the means used to achieve the goal – the main thing is that progress is made. It is important to use the momentum [of an ‘in favour’ referendum] and to get into a regular reform rhythm,” it added.
The Swiss Federation of Trade Unions, SGB USS, instead “regrets” the approval of the reform of the AHV by the public, adding that it goes against women.
“The cuts in benefits worsen the already problematic income and pension situation of women,” it added in a statement.
According to the trade unions, now measures are urgently necessary for the financial independence and equality of women, closing the “pension gap” quickly, and to improve wages and working conditions of women.
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