The Swiss government is currently considering how to reform work-related pensions, known as 2nd pillar pensions.
Pension finances are strained by longer life expectancy and low interest rates.
Another issue is the low work-related pension savings of low earners and part time workers, groups women are far more likely to fall into than men.
Another group facing head winds under current pension rules is older job seekers. Employer must make higher pension contributions as workers age. This creates a financial disincentive to hire older workers.
The main reforms items being considered include:
- Reducing the minimum pension payout rate from 6.8% of savings to 6.0% – these are annual percentages of savings paid for life.
- Universal monthly top up payments of CHF 200 for those 5 years from pension age, CHF 150 for those 10 years from retirement and CHF 100 for those 15 years out. This would be funded by an additional 0.5% salary deduction effectively transferring money from younger workers to those close to retirement.
- Work pension deductions would apply to any annual salary above CHF 12,443 instead of the current threshold of CHF 24,885. This would help low earners save more.
- Finally, pension contribution rates would rise less with age. The current employer pension cost for employees over 54 is 9% of salary, compared to 7.5% for 45 to 54 year olds, 5% for 35 to 44 year olds and 3.5% for staff under 35. Under proposed rules these would change to 4.5% for those under 45 and 7% for those over 45.
The consultation period for these proposals ends on 27 March 2020.