Innovation Zweite Säule (IZV), the association of Swiss second-pillar experts, is publicly rejecting the reform of the second-pillar pension system as the 22 September vote approaches, laying bare opposing views on the proposed changes within the pension industry.
According to IZV, the reform proposed is intended to change the Swiss second-pillar pension system for the better, but it is hard to put it into practice.
The proposed changes, if approved in the upcoming referendum, will make the second-pillar pension system “even more complex”, unsettling pension fund members, the association added in a statement.
The reform “legitimises and expands” the redistribution mechanism within the second pillar, instead of reducing it, the association said, referring to the lifelong pension supplement paid as compensation to 15 cohorts that will see their pensions cut as a result of the reduction of the conversion rate to calculate pension payouts.
The compensation measures for the 15 cohorts cost CHF11bn (€11.7bn), and “there are many losers”, it added.
IZV believes there is still an opportunity “for a good reform of the second pillar”, firmly backed by experts, that would take over the positive elements of the reform (BVG21) on the ballot later this month.
“So far, we have followed the political process sceptically but neutrally,” IZV president Josef Bachmann said.
The association has now publicly submitted an alternative to the proposed reform, without redistribution, with changes that can be introduced all at once as a package, or in stages.
It is proposing to only moderately cut the wage threshold to join a pension fund and the coordination deduction to define the share of the wage insured under the second pillar, and to reasonably increase contributions.
The conversion rate to calculate pension payouts would decrease in small steps, according to IZV’s proposal, from 6.8% to 6% over eight years with 0.1 percentage points per year.
IZV’s alternative plan shows division within the Swiss pensions industry, with different views that can influence the outcome of the referendum.
“No one is fully convinced by the [reform] proposal within the pension funds’ world”, IZV said.
The Swiss Chamber of Pension Fund Experts (SKPE), and “many chief investment officers of pension funds” are also against the reform, said Mia Mendez, chief executive officer of the pension fund for the employees and partners of PwC (Pensionskassen PwC).
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