If you are working in Switzerland and plan to retire here, then much is at stake for you in the upcoming referendum, which involves the government’s proposed reform of the second-pillar (LLP) pension.
READ ALSO: What is Switzerland’s ‘second pillar’ pension and how you will benefit from it?
What is this vote about?
Due to rising life expectancy and other factors, the second-pillar pension (also known as ‘occupational pension’) is no longer adequately financed.
This means that LLP pension of low-earners, most of whom are women who work part-time, might not amount to much once they retire.
The proposed reform, which is supported by the Federal Council and parliament, provides for measures to ensure continued funding of future pensions.
In addition, many low earners would receive a higher pension when they to retire because their employers will pay higher contributions every month than they do today, the government claims.
Why, then, is this ‘reform’ so controversial?
Mainly because it would benefit a relatively small number of people and have negative impact on the majority, opponents claim.
According to estimates by the Federal Social Insurance Office (FSIO), reported in Swiss media, people with an annual income of up to 60,000 francs will pay higher contributions in the future, but will receive a significantly higher LPP pension in return.
However, the age group between 40 and 60 with an income of more than 80,000 francs a year will pay fewer contributions in the future, and also receive a lower pension.
Those hardest hit would be people under 30 with an annual income of at least 75,000 francs, as well as those aged 35 to 50 with an income of between 65,000 and 80,000 francs: they would pay more contributions in the future, but will receive a lower pension.
Would women actually benefit from the pension reform?
This does not seem to be as clear-cut as supporters of the measure suggest.
The goal of the reform is to guarantee higher LLP payouts to women working part-time or in low-wage jobs in general.
But according to Swiss media, the FSIO “is not in a position to quantify the effects of the reform in concrete terms.”
The lack of accurate calculations is stirring controversy about the proposed measures
The Swiss Trade Union Federation (USS), which did its own calculations, said the reform would lead to a reduction in LPP pensions for a large proportion of employees, contrary to what the “misleading government figures ” indicate.
The figures published by the government “considerably embellish the situation and the effect on retirement pensions”, according to Daniel Lampart, USS’ chief economist.
“These calculations are based on completely unrealistic assumptions, They assume that a person will receive the same salary throughout their working life, which contrary to the reality,” he pointed out.
In effect, the reform would actually entail cutting the LPP from 6.8 to 6 percent, which means annuities would drop by about 3,240 francs a year on average, opponents say.
Who is for and against the reform?
Besides the Federal Council and parliament, both of which are in favour of the proposed measure, the right-wing Swiss People’s Party (SVP), Swiss Employers’ Association, the Centre, and Green Liberals also support the move.
In the ‘no’ camp are the Swiss Trade Union Federation, Social Democrats, and Greens.
What about the voters?
A poll conducted by MIS Trend market research institute at the end of August, that is, less than three weeks before the referendum, shows that most people are still undecided about how they will vote.
Of those who have already made up their mind, 29 percent said they are against the reform, while 19 percent are in favour.
READ ALSO: What’s at stake in Switzerland’s federal referendums on September 22nd?
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