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Major pension reform wins majority in parliament

The parliamentary approval of the reform package is also a victory for Interior Minister Alain Berset Keystone

Both chambers of parliament have agreed on a major overhaul of Switzerland’s old age pension scheme, including raising the retirement age for women and a slight increase in benefits.

Voters later this year will have the final say on the package, which is aimed at shoring up the finances of the state pension.

The overhaul agreed on Thursday includes increasing the pension age for women from 64 to 65 – in line with that of men – and a monthly increase of CHF70 ($69) for people retiring to be paid by slightly higher salary deductions once the reform is approved by voters.

Another measure is cutting occupational pension plans by reducing the so-called conversion rate from 6.8% to 6%.

The aim is to secure funding of state old age pensions, which are part of Switzerland’s three pillar social security scheme.

graphic with three pension pillars
swissinfo.ch

It took the House of Representatives and the Senate about two years to hammer out a compromise.

In a close vote, centrist and leftwing parties – Social Democrats, Christian Democrats, Greens and two small centrist parties – just managed to muster the number of votes needed to pass the bill: 101 voted in favour, 91 against with four abstentions. The rightwing Swiss People Party and the centre-right Radicals voted against.

The Senate had clearly approved the reform.

Government appeal

In his final address to the House on Thursday, Interior Minister Alain Berset on behalf of the government stressed the crucial importance of the reform for “Switzerland, the people, the economy and the stability of the institutions”.

He and several other speakers said voters should get the opportunity to decide on the issue, which involves a change to the constitution, at the ballot box in line with Switzerland’s system of direct democracy.

Berset repeatedly warned against rejecting the reform presented to parliament nearly four years ago, as the old age pension fund would no longer be able to cope with the increasing number of beneficiaries.

He said if the reform were rejected, the financing gap would reach about CHF8 billion a year and debts of the old age pension fund would run up to CHF40 billion by 2030.

Voters are likely to have the final say on the issue in September, as the reform package includes a 0.6% increase in Value-Added Tax.

Previous attempts to reform the pension system have been thwarted in parliament or in nationwide votes.

In September 2016, voters clearly rejected a proposal by trade unions calling for a 10% boost in benefits from the state retirement fund – a move supported by the political left but deemed far too costly by its opponents.

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