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Following on from our recent post about changes to the retirement age in Switzerland for females, voters are again being called to the ballot boxes on 3rd March to vote on pension reform. On one hand, unions are lobbying for pensioners to receive more money, while on the other hand, liberals are keen to let everyone work longer to finance the pension system. In this newsflash, we explain the main points.

OASI (Old Age Survivors Insurance) is the 1st Pillar of the 3-Pillar Swiss pension system and represents the obligatory State Pension part. Workers paying  OASI contributions throughout the working life, are entitled to the full state pension. Currently, this equates to a  minimum of CHF 1’225 per month and up to CHF 2’450 per month maximum for a single person. Missed contributions reduce the pension amount by around 2.3% per year.

In addition to note:

  • The higher your salary, the higher your OASI contributions. This will of course also increase your pension.
  • To get a maximum pension, your average annual income will need to be at least around CHF 88’200.
  • The pension for married couples, and those in a registered partnership is limited to 150% of a maximum single pension. This currently equates to CHF 3’675.

Unions view on reform

  • The Swiss unions are of the opinion that pensioners should have greater spending power and they are proposing to grant pensioners 13 X pension payments each year, instead of the current 12.
  • The unions and the political left are justifying this by citing the current inflation rate as well as the rise in the cost of living to get their initiative passed.
  • If accepted, the maximum annual old-age pension would rise by CHF2’450 for a single person to a total of CHF31’850 per annum and by up to CHF3’675 for couples for a total of CHF47’775 per annum.

Right Wing / Centre Parties initative

  • Right-wing and centrist parties, as well as the country’s main economic organisations on the other hand, oppose this reform, which the Government estimates would cost almost CHF4 bn a year.
  • Opponents claim the additional pension payments would be financed at the expense of people of working age, either through higher contributions or higher taxes.

The second initiative for the vote on March 3 stems from the radical liberal party

  • It proposes that the retirement age is increased from 65 to 66 years of age in order to guarantee the medium-term financing of the old-age pension system.
  • This increase would be phased in gradually until 2033.
  • The government believes that this won’t fundamentally solve the demographic problems facing the pension system and is presumably like most of the electorate, against it.

In Summary

Referendums for the Swiss pension system have taken place regularly since its inception in 1948. Given that the number of people currently working in Switzerland is just over 5 million , it is unlikely that the Unions initiative to increase the pension amount will get passed. And with the Government against a staggered increase in the pension age as a viable solution to solving the ongoing Swiss Pension drama, the second initiative also seems doomed.  But as the famous baseball player Yogi Berra said in the 1973 National League pennant race “It ain’t over till it’s over!”

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