The Swiss national council, the lower house of parliament, has approved the second pillar reform looking at a so-called alternative proposal, rejecting core elements of a model put forward by social partners and backed by the government.
The national council voted in favour of compensatory measures for the reduction of the conversion rate used to calculate pension pay-outs, from 6.8% to 6%, spread over a period of 15 years, only for a targeted group of retirees, as foreseen by the cabinet’s proposal.
Based on the reform approved by the national council, for the cohort pertaining to the first five years retirees will receive a maximum compensation of CHF2,400 (€2,300) per year, the second cohort for the second tranche of five years will see a maximum of CHF1,800 per year, and for the last five years’ cohort CHF1,200 per year.
This means that 35-40% of retirees benefit from the reform, the national council said, adding that the measure would cost around CHF800m.
The government’s proposal, instead, would benefit all new retirees with a life-long pension supplement, which is valued at CHF200 per month for the first cohort, CHF150 per month for the second cohort and CHF100 monthly for the last cohort. After that period, the government sets the annual amount.
The government proposal would cost CHF1.7bn and would cement the redistribution mechanism in the second pillar, the national council said.
The next step would be for the council of states – the parliament’s upper house – to debate the reform approved by lower house. The parliament may give the final green light to second pillar reform as soon as next summer.
Earlier this week in another parliamentary session the national council decided in favour of starting savings for old-age at the age of 20 instead of the current 25, reducing the wage ceiling to sign up for a mandatory occupation pension of CHF12,548 per year from the current CHF21,510.
The parliament’s lower house, however, has not clarified how the compensation will be financed.
According to the alternative proposal, supported also by the pension fund association ASIP, Pensionskassen would finance the compensatory measures for the reduction of the conversion rate.
Commenting on the approved reform, ASIP said that it would cost less than the social partner model thanks to targeted compensations and it would also mean better pension benefits for women, part-time workers and low-wage earners.
Pensionskassen have sufficient reserves to fund compensatory measures for the generation transitioning to the new pension system, it added.
No comments yet