The Swiss might need to work until 67. In a report, a parliamentary commission suggests automatically raising the statutory retirement age, as part of a set of measures designed to eliminate a large pension funding shortfall brought on by an aging population and falling investment returns.
The state pension system needs to find a way to fill a funding hole of CHF 8.3 billion between now and 2030. An existing plan by the name of “Old age pensions 2020” includes an increase in the retirement age of women to 65 and an annuity rate reduction on second pillar savings.
Switzerland has a pension system with three elements, known as three pillars. The first, funded from social security payments, is paid by the state. The second is funded by salary deductions invested in the name of the employee. The third pillar is an optional payment that can be made every year by all employees.
The commission wants the retirement age to rise automatically. If social security deductions, collected from salaries, cover less than 80% of outgoings, the rise would be automatic. The age would rise in 4 month increments up to a maximum of 67 years. VAT would rise in parallel at a rate of 0.4% to help fund the gap. This commission’s position is shared by the Swiss employers association and economiesuisse.
In addition, retirees would be able to choose a retirement age between 62 and 70, receiving more in each year of retirement the later they left it.
The changes would not take place before 2028 and would require a change to the Swiss constitution, said a spokesperson.
One advantage of the commissions proposal is a lower VAT increase. Existing plans call for a 1% rise in VAT. The commission’s plan would see it rise 0.6%.
Switzerland’s parliament will discuss the commission’s proposal in September.