Switzerland revises pension expenditure downwards by billions

The Federal Social Insurance Office (FSIO) acknowledged the two calculation errors in the old-age pension financial outlook in August. Keystone-SDA

Following a miscalculation, the Swiss government has corrected downwards the projected expenditure on old-age and survivor insurance (OASI) in 2033 by CHF2.5 billion ($2.66 billion). It had initially projected it would CHF4 billion less.

According to the latest forecast for 2033, the old-age pension scheme will cost CHF69 billion. The Federal Social Insurance Office (FSIO) acknowledged the two calculation errors in the old-age pension financial outlook in August. They had led to implausibly high pension expenditures in the longer-term forecasts.

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In the latest financial outlook, the FSIO is now assuming a downward correction of CHF2.5 billion, it revealed on Monday. Originally, it had assumed around CHF4 billion or a deviation of 6%.

In Monday’s forecast, the FSIO is expecting a deviation of 3.6% and thus a real reduction in pension expenditure of CHF2.5 billion. It now puts this at CHF69 billion for 2033. The data was calculated on the basis of two alternative calculation models developed by the FSIO since June.

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The errors were discovered by the FSIO during inspection work in connection with the 13th old-age pension payment. The Federal Court has to decide on two appeals in connection with the vote in 2022 to increase the retirement age for women. The complainants claim that the figures stated in the voting booklet and based on the incorrect forecast were misleading.

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The social insurance office’s forecast is therefore midway between the findings of the two research institutes commissioned by the FSIO to validate its forecasts. According to the information provided, the KOF Swiss Economic Institute at the Swiss federal technology institute ETH Zurich assumes old-age and survivor insurance expenditure of CHF70-72 billion for 2033, while the Demografik Institute assumes CHF68-70 billion.

The OASI is the foundation of the Swiss old-age pension system. More than 2.5 million pensioners currently receive an OASI pension.

Translated from German by DeepL/gw

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