The proposal to reform the Swiss second-pillar pension system in the upcoming 22 September referendum does not deserve support, Mia Mendez, chief executive officer of the pension fund for the employees and partners of PwC (Pensionskassen PwC), said in a LinkedIn post.

Pension supplements are to be “given away” in the pay-as-you-go system, she said.

“This must be clearly rejected. These pension supplements will burden us for decades. They are given to 15 cohorts. These pensioners then live around 20 to 25 years,” Mendez added in a frank and rare public disclosure of the PwC pension fund’s position on the Swiss second-pillar pension reform.

According to Mendez, who is also a member of the management board of the pension funds association, ASIP, which is backing the reform, the conversion rate used to calculate pension payouts passed into law with a ‘compromise’ (called 1. BVG-Reform) in 2005, “didn’t strengthen the second pillar either”.

Introducing a pay-as-you-go mechanism for occupational pensions is a further step towards a “people’s pension” weakening of personal responsibility, she explained.

Other points of focus of the possible reform include cutting the wage threshold to join a pension fund, increasing the share of insured wages to protect low earners and part-time workers, and the reduction of the conversion rate, which will be compensated by a lifelong pension supplement.

The reform foresees increasing contributions of employees aged 25 to 34 years old, and decreasing those of other age groups.

“Savings contributions are to be reduced (max. CHF57 per month, so no over-55s will be employed), but this will result in lower pensions. We are living longer and longer. We should save more, not less,” Mendez said.

According to an analysis conducted by Silvan Gamper, senior consultant at consultancy c-alm, the costs for the pension supplements amount to CHF11.3bn, and the reduction in terms of the redistribution mechanism amounts to CHF400m.

This means that it will take 28 years for the reform to take effect, the analysis added.

For Mendez, the analysis raises the crucial question of what matters more – a sufficient reduction of redistributions, costs for pension supplements, or improvements for low earners and part-time workers, He concluded that “disadvantages far outweigh [the advantages], unfortunately”.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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