Swiss Government Sets Out State Pension Reform Plans For Autumn Debate

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The Swiss government has detailed plans for a reform of the state pension, AHV/AVS, with one of the aims being to secure the first pillar’s financing until 2030. 

Following a referendum in May in which the Swiss public approved the use of VAT money to top up the first pillar, the Bundesrat has now put forward the main measures the reform, billed as “AHV21”, should contain. 

Among the major steps to make the first pillar more sustainable is a step-by-step increase of the retirement age for women to match that of men at 65, if possible by 2021.

The final implementation schedule for all measures will depend on the outcome of a parliamentary debate on the amendments in the autumn.

The change to the retirement age will also apply to the law governing occupational pensions (BVG/LPP). The government’s proposal for the state pension comes shortly after trade unions and employer representatives reached a compromise on second pillar reform.  

Under the first pillar reform proposal, CHF700m (€572) would be earmarked in total for pension top-ups and other measures to compensate women retiring within nine years after the changes have taken effect. 

Other proposals by the government include making the statutory retirement age more flexible for all by placing it in a corridor between 62 and 70 years of age.

Working longer would be incentivised, for example by allowing people to take out part of their state pension while continuing to work.

alain berset

Alain Berset, Swiss federal interior minister

Additionally, contributions made to the first pillar after the reference retirement age of 65 would lead to a higher state pension.

To finance all this the VAT will be increased by 0.7 percentage points “at the most”.

In an interview on Swiss national television following the presentation of the proposed amendments, Alain Berset, Swiss minister of the interior, said he expected a “rather complex and emotional discussion” in parliament.

Amending retirement provision has proven difficult in Switzerland over the last years. With regard to first pillar reforms, left of centre parties fear too high a burden on certain workers – this time women – and those right of centre have been resisting spending more money on the state pension. 

In September 2017 the Swiss public rejected a comprehensive reform package, known as AV2020, making it necessary to pursue negotiations on separate packages of amendments for the first and second pillar.