Federal Council rejects two votes on pension reform
The Federal Council this week rejected two very different initiatives to change the statutory pension insurance.
Like much of the developed world, Switzerland is faced with a large gap between the money needed to finance state pensions and the money that goes to pay them, age of the population and the way the system is financed.
The Swiss government is working flat out on the pension reform. However, some see that it is doing too little and too slowly, and have launched initiatives to encourage larger measures.
The first referendum aims to link the state retirement age to life expectancy. Raising the retirement age in line with life expectancy will limit the number of retirement years and reduce the funding gap. The organizers of this initiative argue that such a mechanism ensures the sustainability of state pensions by limiting the number of years that pensions are collected.
However, on November 24, 2021, the Federal Council announced that it was rejecting this plan on the grounds that the automatic increase in the retirement age based on life expectancy limits the government’s flexibility and does not take into account the complexity of provision and retirement.
Another initiative aimed at increasing pension payments was also rejected by the Federal Council, as it was unclear where the additional funds would come from in the context of a funding gap. This initiative aims to increase government pension payments by 1/12 by adding an additional 13th month.
The Swiss Parliament has already asked the Federal Council to present a pension reform plan by the end of 2026, which aims to resolve the state pension gap projected from 2030 to 2040.
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