The reform of the first pillar pension system approved by the parliament in December will alleviate the public deficit, financing the first pillar AHV by 36.4 percentage points, according to a study conducted by the University of Freiburg and UBS.
Above all, lifting the Value Added Tax (VAT) by 0.4 percentage points would reduce the deficit with regard to AVH by 20.3 percentage points to 125.7% of gross domestic product (GDP) in the long term.
Increasing the retirement age for women and men to 65 years old would reduce the gap in terms of GDP by a further 17 percentage points.
The reform, which will face the public vote likely this autumn and could enter into force in January 2024, would have a positive impact on public finances only for a few years.
According to the Federal Social Insurance Office (BSV), the AHV will likely record a deficit again from 2027.
The pension promises of the first pillar AHV are exceeding future income leading to a public deficit of 125.7% of GDP, an “implicit debt” of CHF900bn (€873bn) based on the current legislation, according to the study.
The level of debt resulting from future pension promises is still at 119.5% of the GDP by taking into account CHF50bn in assets in the AHV compensation fund, it added.
With the tax reform an additional CHF2bn is injected per year in the first pillar system and the cumulative deficit by 2050 will be around CHF157bn, according to calculations in the study.
The number of people aged 65 years old and over in Switzerland will increase by around 51% by 2040, with baby boomers born after 1950 reaching retirement age in the coming years.
According to the scenario drawn by the Federal Statistical Office (FSO) the number of people in working age will practically stagnate over the same period, assuming stable net immigration of 35,000 people per year.
While in 2020 the ratio between working people and retirees is 3.2 to one, by 2040 is 2.3 to one, having an impact on the financial stability of the first pillar AHV.
The costs amount on average to CHF19,000 per year for pensions paid to a 65-year-old person, rising quickly to an average of almost CHF30,000 per year over the entire retirement period, the study said.
Parliament questions cabinet on Russian assets
The National Council, the lower house of the parliament, has questioned the government on investments of Pensionskassen and institutional investors in Russia.
The government replied that it lacks knowledge of the exposure of pension funds or other institutional investors with direct or indirect investments in Russia and it is not entitled to intervene in investment decisions.
Publica announced that it would exclude Russia from its investment universe after the Swiss government backed EU sanctions.Investments in Russian securities represent less than 0.5% of Publica’s total assets, the cabinet said, adding that the speed of divestments of Russian securities or indirect investments by Publica, other pension institutions or institutional investors, depends essentially on the liquidity of the market, which is currently very limited and most Russian securities are suspended from trading.
The question, asked by Walder Nicolas of the Green Party, related to whether the government knew about the holdings of Pensionskassen and institutional investors in Russia and what it intended to do to ensure that they divest holdings following the example of Publica after the “brutal invasion” of Ukraine.
SIX to trade crypto futures
Stock exchange SIX has partnered with LMAX, the operator of venues for FX and crypto currency trading, to trade crypto futures.
Investors will initially trade US dollar settled bitcoin and ethereum futures 23 hours a day five days a week, from Q3 this year, extended to 24 four hours seven days a week in a second step.
Javier Hernani, head of securities services at SIX, said: “We are making substantial progress according to our digital asset clearing strategy and are expanding our portfolio of cleared asset classes.”
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