On 25 September 2016, Swiss will vote on a plan to increase state pensions. Vote initiator, Switzerland’s Socialist Party, wants basic state pensions to go up by 10 percent. It argues that because costs have gone up, and returns on savings have declined, an increase is required to make up the difference.
In Switzerland, everyone is entitled to an old-age pension, funded by deductions from the salaries of those working. The Federal Constitution requires these pensions be sufficient to cover basic living expenses. Most pensioners rely on additional sources of income to supplement these payments, normally from occupational pension schemes. Those who struggle to cover their costs can claim supplementary benefits. Rather than targeting those who are struggling, the proposed 10 percent increase would be received by all retirees.
The Swiss government thinks the plan will put further strain on an already strained system. People born in the 1950s and 60s, when the birth rate was high, are now reaching retirement age. Increasing pensions at a time when retiree numbers are rising and the number of working age people is declining, will exacerbate the problem. In addition, they say they already have a detailed plan called the Pension Provision 2020 programme, and this initiative would throw a spanner in the works. Unsurprisingly, the National Council, the main organ of the Swiss federal government, rejected the initiative by 139 votes to 53 with 1 abstention.
Like the government, Switzerland’s other two main parties are against the plan, and a cross-party group has been assembled to oppose the initiative. The Liberal Radical Party (PLR/FDP) thinks increasing payments will put an already financially strained pension system at greater risk. It also thinks it is unfair to burden young people with higher salary deductions to support a growing number of retired people.
The Swiss People’s Party presents a similar argument. It points out that all retirees, rich and poor, will get the increase, while putting the whole system under further financial strain and placing an extra burden on the young.
To a large extent the two sides disagree on the numbers. The Socialist Party thinks that modest increases in social security payments, taken from salaries, combined with VAT increases will be enough to allow an already well-functioning pension system to pay higher sums to retirees. The majority in government, and the those from the Liberal Radical (PLR/FDP) and Swiss People’s Party, think Socialists have misled themselves with poor arithmetic. The PLR calculates that by 2030, the plan will require an additional CHF 5.5 billion per year, on top of an already predicted annual shortfall of 7.5 billion. The resulting total shortfall of CHF 13 billion would be borne by young, sometimes poor, working families, they say.
Some commentators, such as Florent Quiquerez, writing for 24 Heures, think the typically higher voter turnout among those over 64, a group more likely to vote for a pension increase, could swing the vote in favour of the plan, and against younger voters who are less likely to vote, but would be required to fund much of the rise out of their future salaries. According to an SSR/SRG survey, a majority of those between the ages of 40 and 64, and in particular those over 64, are in favour of the plan, while those under 40 are firmly against it.