This week, the referendum roster was announced for 3 March 2023. There will two votes on Switzerland’s state pension system. One aims to tackle the impending funding crisis by extending the retirement age, and the other aims to alleviate old age poverty by increasing payments without a plan to pay for it.
The first would raise the retirement age by one year to 66 by 2032 and then link it to life expectancy beyond that date. If life expectancy rises by one year then the retirement age would rise by 0.8 years. While the proposal is structured around dealing with rising life expectancy, the demographic shift in the population is a far more pressing financial challenge. Even with no change in life expectancy, the number of beneficiaries relative to taxpayers is set to rise significantly. And this could add significantly to the tax burden on younger people, something the organisers argue is unfair.
The second referendum asks voters to approve a plan to increase state pensions by nearly 8% by paying a supplementary 13th month. Organisers say the extra money is needed to cover rising living costs, rent, health insurance and electricity costs in particular. Inflation in 2023 was 2.1%. However, the plan does not mention where the money would come from to fund the extra payment. In reality, funding options are probably tax increases (VAT, social taxes etc) or a later retirement age, both unpopular options. To some degree, the proposal is only half a proposal. Spending money is one thing, funding it is another.