Five key takeaways from Switzerland’s pension votes

On March 3 the Swiss agreed to boost state pensions and refused to raise the retirement age. KEYSTONE/© KEYSTONE / PETER KLAUNZER

Swiss voters have backed a proposal to boost state pension payments. In a separate vote, an initiative to gradually raise the statutory retirement age has been roundly rejected. Here are five key lessons from the March 3 votes. 

On Sunday, 58.2% of Swiss voters, and a majority of cantons, backed the “Better living in retirement” initiativeExternal link, which will grant an additional 13th monthly pension payment to help retirees struggling to make ends meet in the face of rising living costs.

In a separate vote, 74.7% of citizens rejected a people’s initiative which aimed to ensure the long-term financing of the pension system by gradually raising the retirement age from 65 to 66 over the next decade, then pegging it to life expectancy.

1) The right-wing Swiss People’s Party put citizens’ solidarity with Swiss Abroad to the test

Debates about the 13th pension payment initiative, which also raged on SWI swissinfo.ch, became heated after the People’s Party specifically targeted pensions paid to Swiss living abroad. The party was hoping that Swiss-based voters would not grant expat pensioners an increase.

But it did not take into account the Swiss Abroad themselves. They represent one-third of all people drawing a Swiss pension who live outside the country. And unlike non-Swiss workers who returned home after retiring, the Swiss Abroad have a say in what goes on in Switzerland. And this diaspora, which accounts for some 220,000 votes, couldn’t understand the position of the People’s Party.

The right-wing party put Swiss cohesion to the test. It questioned whether the country’s four language regions – German, French, Italian and Romansh-speakers – really supported the Swiss Abroad and its 800,000 members. The answer remains unclear.

But simply asking this question broke a taboo. And this kind of test can be repeated with any future ballot. Switzerland’s solidarity with its expatriates seems to be back on the agenda of the country’s largest party. Any privileges that resulted from the 2015 Swiss Abroad Act must again be defended. And the lobbying work of the Organisation of the Swiss Abroad (OSA) will become increasingly important in the coming years.

For the 350,000 pensioners drawing Swiss pensions abroad who do not have Swiss nationality – all former workers who have emigrated back to mainly Portugal, Spain and Italy – unlike the Swiss Abroad, they have no lobby or organisation to defend them, let alone the right to vote. Their pensions are easy prey.

2) Rising costs and a simple idea were convincing factors, even in conservative circles

The 13th pension payment initiative was very popular among voters. Turnout for Sunday’s ballot was 58%, well above normal. In the run-up to the vote, debates were particularly lively, and online media articles generated hundreds or even thousands of comments. According to a survey carried out by the University of Zurich, no previous vote issue generated so many Swiss press articles.

In 2016, a similar project launched by the left, which called for a 10% increase in the state pension (first pillar), was largely defeated at the ballot box. But the economic context has radically changed: inflation and rising costs of living allowed the left to push through the first ever successful initiative on boosting the old-age and survivors’ state pension (OASI).

The initiative text was easy to understand. It was defended by Pierre-Yves Maillard, the powerful president of the Swiss Trade Union Federation, who knew how to appeal to the wallets of pensioners, an electorate that traditionally turns out to vote in large numbers.

But it was perhaps another argument, which was very popular in conservative circles, that helped to topple the country’s most conservative strongholds, particularly in German-speaking Switzerland: if the Swiss authorities are capable of spending billions of francs on development aid and welcoming refugees, then we should do the same for pensioners. Even the country’s most seasoned political scientists are at a loss. Never before has an initiative from the left and the unions sparked such sympathy among right-wing voters. 

3) The role of the state in the pension system was at the centre of the campaign

The Swiss pension system is based on three pillars: the state-managed old age and survivors’ insurance (OASI), an occupational pension plan, and private investment options.

Two visions of the state’s role in the pension system clashed on Sunday. By attempting to secure a 13th monthly pension payment, the left aimed to strengthen the first pillar – which is seen as the fairest and most solidarity-based. This would indirectly reduce the importance of the second pillar.

Unlike the OASI, the state plays virtually no role in the second pillar. Occupational pensions, funded by employers and employees, are managed by private pension funds. Roughly CHF1,200 billion ($1,358 billion) of pension assets are invested on financial markets every year. This is clearly not to the taste of the camp behind today’s initiative.

In Switzerland, the idea of privatising a large part of the pension system has been well regarded until now. Pension funds and banks – active in the third pillar – also benefit from it and systematically try to torpedo any extension of the OASI.

The initiative’s opponents had a campaign budget of CHF3.56 million, double (CHF1.54 million) that of the unions and their allies. This allowed them to hammer home their main arguments: first, that the increase was based on a one-size-fits-all approach – with high-income earners also benefiting – and second, that the funding of the proposal was unsound.

But the argument of excessive state intervention did not win the day: for the first time in 45 years, an expansion of the OASI was accepted in a nationwide vote.

KEYSTONE/© KEYSTONE / ANTHONY ANEX

4) Political commentators overestimate the importance of double majority

In Swiss democracy, a constitutional amendment requires the approval of a majority of both individuals and cantons. The 13th pension payment initiative clearly showed that the importance of this double majority is overestimated. Support for the initiative began high and then declined, as is generally the case with people’s initiatives. Yet right up to Sunday’s vote commentators thought the initiative had a good chance of success among voters but would probably fail because of a “no” vote across small German-speaking cantons.

A glance at the 175-year history of modern Switzerland shows that this has only happened ten times, and only twice for a people’s initiative. The last time was in 2020, when an initiative on corporate responsibility failed despite a “yes” from a small majority of voters. The other eight issues involved federal decrees, such as a 2012 vote on family policy.

The normal course is that securing a majority of citizens’ votes is a sign that a majority of cantons will follow. Furthermore, in the case of the pension vote, conservative and older voters – who are often decisive for the final result in small cantons – had something to gain from a 13th pension payment.

Today’s result also showed that the source of the initiative, in this case the left, is less important than the financial interests at stake. It’s a textbook case of direct democracy: by promising the right benefits, the unions can win votes even among People’s Party supporters.

5) Raising the retirement age is not a solution as long as older people struggle to find work

Switzerland likes to think of itself as a hard-working country. And even if this image of the diligent and industrious Swiss doesn’t always stand up to international comparisons, the value placed on work is regularly reflected in the results of nationwide votes. This was notably the case when it came to tightening the conditions for unemployment insurance (2010) or rejecting the introduction of six weeks’ statutory holiday per year (2012).

On Sunday, however, a clear majority of Swiss said “no” to the young Radical-Liberals’ initiative to gradually raise the retirement age from 65 to 66 and then peg it to life expectancy. The retirement age of 65, laid down (for men) with the introduction of the old-age pension system in 1948, appears to be a sacred cow.

Sunday’s decision may seem paradoxical, given that many other countries are making their citizens work beyond this threshold in response to rising life expectancies and ageing populations.

The result can rather be explained by Switzerland’s labour market. The difficulties encountered by elderly people during their working lives and the problems they have in finding a job when they become unemployed are the two arguments most often cited to justify Sunday’s “no” vote, according to surveys conducted beforehand.

The problem is particularly acute in Switzerland, where 54% of the long-term unemployed are aged between 55 and 64, according to data from the Organisation for Economic Co-operation and Development (OECD). This proportion is 11 percentage points higher than the average for OECD countries (43%).

During the campaign, the Neue Zürcher Zeitung (NZZ) highlighted the responsibility of employers, and in particular the persistent prejudices of human resources managers towards this age group, which is considered less innovative and flexible – despite studies showing the contrary.

“Companies can do a lot to reduce age-based discrimination, which is very prevalent in the labour market. This applies not only to recruitment, but also to access to training,” says Shruti Singh, an OECD economist responsible for work on policies relating to ageing and employment.

It remains to be seen whether this call for corporate responsibility will be enough to change the situation, or whether more coercive measures will be needed. In any case, the issue must become a political priority. Otherwise, any future vote on raising the retirement age would likely also be headed for certain failure.

Edited by Mark Livingston. Translated from German by Simon Bradley/dos