Cabinet wants to limit pension fund withdrawal

Interior Minister Berset says the current system encourages retirees to use up their pensions and depend on welfare benefits Keystone

The Swiss cabinet is looking to restrict access for old age pensioners to funds paid into their mandatory social security system.

Interior Minister Alain Berset said the aim of the mooted reform was to guarantee the current pension standards while limiting the risks of an increasing number of pensioners claiming supplementary benefits from the state.

As part of a draft bill, the cabinet wants to rule out all the contributions to the occupational benefit system being paid to a pensioner to invest in a company or to buy accommodation.

However, the cabinet stops short of banning the withdrawal from the fund before reaching retirement age to help finance the acquisition of a residence or life outside Switzerland.

Berset said the reform plans, which were sent out to consultation before being presented to parliament, would lead to spending cuts of up to CHF171 million ($168 million) for the system of supplementary benefits.

“We want to improve the system and ensure pensions but not cut pensions,” Berset told a news conference on Wednesday.

Criticism

The Employers Association has criticised the proposed reform as purely cosmetic.

The influential organisation said the supplementary benefits paid to needy pensioners had increased by 50% over the past decade to CHF4.5 billion. It says the costs are expected to rise to CHF5.5 billion by 2020.

The Trade Union Federation has warned that the proposed reform would hit less wealthy pensioners living in care facilities hard.

The federation has called for an increase in state pensions to avoid pensioners depending on welfare payments.

Switzerland’s social security is based on a three-tier system of old age state pension, occupational pension payments and individual savings.