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At the heart of the Swiss political system, lies “Direct Democracy”. This allows the electorate to vote on all decisions taken by Swiss Parliament and to propose amendments to the Federal Constitution.

In a typical year, the Swiss electorate will vote up to 4 times on a range of approximately 15 different federal initiatives. Votes can be cast at the ballot box or by post.

And with an average turnout for federal votes of around 40%, Switzerland tops world rankings for active political participation by its citizens. The Swiss are also allowed to propose votes on specific issues themselves. This can be done via an initiative, and an optional – or mandatory referendum.

For the third time in 2022, Swiss voters are being called to the ballot box to decide on a series of legal changes. One of those changes is regards to the retirement age of women, with Parliamentary intent being to raise it from 64 to 65. The Government proposed changes to the pension system  in 2021, under the title “AHV 21”. The thought process behind this reform is to maintain the level of pensions, as well as the financing of the AHV and keep these secured until 2030.


While many countries face pension fund challenges, including how to prevent their pension systems from collapsing due to changing population demographics – Switzerland faces an additional obstacle – and that is, how to work with “Direct Democracy!




So how does the Swiss pension system operate, what are the main challenges and why is “Direct Democracy” a stumbling block?

The Swiss pension system is based on three pillars:

  • Old age and survivors’ insurance (AHV) or state pension covering basic living costs.
    • The maximum state pension in Switzerland is currently CHF 2’390 per month for an individual and CHF 3’585 per month for married couples.
    • But this assumes: No AHV contribution gaps (44 years for men / 43 years for women and an average annual income of at least CHF 86,040 (adjusted for inflation).
  • Occupational pension planning (LPP) or private pension. This is meant as a “top-up” to the state pillar.
  • Private savings for old age (encouraged via tax breaks) and as an additional pension “pot”.


Although this 3-pillar system gives Switzerland a certain time advantage over other countries, it is not resistant to the ageing Swiss population, which according to forecasts, will be unable to finance future retirees under the current parameters.

Reforming the Swiss pension system is therefore a necessity and a process which has been dragging on for years. Today, this is still very much a work in progress. All previous proposals for major overhaul, have either run aground in parliament, or simply been rejected by the electorate through Direct Democracy. Some of the related issues:

  • Overcoming the constraints of Direct Democracy has become increasingly difficult for political authorities. And most young people (who are more likely to back change measures to stop the AHV from sinking into the red), tend not to vote. Meanwhile, participation in popular votes is traditionally high among the elderly and those close to retirement age.
  • One of the most contentious parts of the government’s pension plan is the proposed raising of the retirement age for women from 64 to 65. Parliament actually approved this reform last year with the idea of placing the central pillar of the Swiss social security system on a more solid financial footing. This step would  raise an estimated additional CHF10 billion. But the political left is aiming to convince voters to veto the parliamentary decision.
  • It is a well-known fact that women in Switzerland typically earn less than men during their working lives. And consequently, when they retire, they receive lower pensions than men. Although strictly speaking, this is down to the pension funds and not the Swiss old age pension system, it does not change the emotional feelings and tradition surrounding the retirement age of women. These are now claiming, that they will be CHF1’200 per year worse off in their retirement as a result.



The Swiss State Pension was introduced in 1947. According to Thomas Gaetcher, professor of social insurance law at the University of Zurich, “The model is great, but it has never been completed.” He points out:

  • that the Swiss Government invests too little in the first pillar, so that the basic old-age pension no longer enables anyone in Switzerland to get by.
  • that the second pillar, i.e. private pension funds, is being hampered by low interest rates leading to funding gaps.

The alliance against “AHV 21”, collected the necessary number of signatures (100’000) to challenge the government reform in record time. Emotions are high and the Swiss voting electorate is weary of any changes to the system and any reforms proposed to the pension system to futurize it, may well be rejected.


In Summary: With pillar 1 State pensions now inadequate compared to the high living costs in Switzerland, and pillar 2 private pensions suffering from low interest rates – future prospects for the current pension system look bleak without pension reform. The government has made change proposals under its AHV 21 initiative including raising the age of retirement of women to 65.

The electorate alliance against AHV 21,  argue that the planned increase in the retirement age makes savings at the expense of women. The government on the other hand, claim that the reform will generate CHF10 billion in incremental tax revenues, a necessary saving due to the fragile nature of the pension system in Switzerland.

But the Swiss electorate are a tough nut to crack with Direct Democracy at the heart of Switzerland’s DNA and proposed Swiss parliament reforms have been rejected so far by the electorate. It will be interesting to see how the proposed upcoming vote on the pension reform turns out.


Accurity GmbH is a professional employer organisation (PEO) based in Zurich. We are SECO licensed with a 20+ year enviable reputation as a trustworthy, reliable and transparent partner for companies of all sizes including SMEs, contractors and recruitment agents. Our core services include EOR and ANobAG for contractors and clients wishing to engage contractors. Our team can also advise on pensions. Contact our team for a non-binding consultation on to see how we can help you.