SWITZERLAND - The Swiss first pillar scheme AHV will receive nothing from the sale of 1,300 tons of the central bank’s gold reserves, the upper chamber of parliament has decided.

The Staenderat has sealed the debate on whether the first pillar, the cantons or the state would be the main beneficiaries of the proceeds of the sale, which has yielded an extra CHF21bn (E13.6bn).

After years of hectic discussions, trigged by the decision to sell gold in 2000, the cantons have scooped the lion-share.

According to the upper chamber decision, 32 votes in favour and 11 against, they will get two thirds of the proceedings, while the state the remaining share, leaving the AHV empty-handed.

The upper chamber’s decision has annulled the solution preferred by the lower chamber, which would have had proceeds put into an account for 30 years while two thirds of the yearly CHF500m profits would be paid to the AHV and the remaining to the cantons.

The upper chamber blocked this solution with 32 votes against and nine in favour.

The vote has sparked controversy - with the left-wing social-democratic party calling the vote “a pyrrhic victory” for the cantons.

But finance minister Hans-Rudolf Merz said: “Golden times are ahead for the cantons.”

The social democrats also said the cantons will use the extra money to promote tax breaks, likely to mainly benefit the rich.

The Swiss parliament has also approved urgent measures to stop the pensions of state employees from being partially adapted to inflation.

The measure, approved by both chambers of parliament, will save the public coffers an estimated CH50m a year (E32.4m).

Up to now, members of the Publica pension fund for state employees have had their pensions increased by half the inflation increase but this perk will end in January 2005.

During the debate, Vreni Hubmann, a social democrat MP in the lower chamber, called for matters to be kept as they are for 44,000 pensioners with income between 2,900 and 3,500 francs.

She also said the procedures to push through the urgent measures were “unworthy” of the Swiss parliament, asking for the lower pensioners to be exempted.

“It is only a few days before Christmas, I ask you not to give pensioners such a Christmas present” she concluded.

Finance minister Merz responded: “The request is well meant” but pointed out the costs of vetting 44,000 pension dossiers would be “tremendous”.

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