The Swiss authorities have rejected a proposal to prop up the ailing national pension scheme with profits from the Swiss National Bank.This content was published on May 30, 2006 - 17:45
Finance Minister Hans-Rudolf Merz said the plan would not only deprive the federal government and the cantons of much needed funds, but also threatened the bank's independence.
Merz warned on Tuesday in Bern that shifting profits to the pension scheme would leave the federal authorities with a shortfall of around SFr833 million ($689.6 million) annually. He added that if voters accept the proposal, the government would not be able to fulfil its duties.
For the finance minister, diverting the national bank's profits into the pension scheme would not actually help it answer the challenges it faced in the coming years, in particular a much larger number of pensioners and a further increase in life expectancy.
Merz said rather than a fresh injection of funding, the pension scheme required structural changes that parliament still had to discuss.
The president of the Swiss Conference of Cantonal Governments, Lorenz Bösch, said moving funds from one place to another would be a waste of time, since no extra money would actually be available.
He added that handing over national bank profits to the pension scheme would create funding gaps, which could in turn lead to cuts in subsidies or push cantons deeper into debt.
The finance minister said a people's initiative launched by the centre-left Social Democrats also threatened the autonomy of the national bank.
"The bank would be under pressure to make bigger profits and would no longer properly fulfil its role as guardian of monetary policy," Merz warned, adding that the plan would give politicians a stranglehold on the central bank.
Its president, Jean-Pierre Roth, said the proposal was based on the illusion that the bank's profits were around SFr2.5 billion annually. According to Roth, the average was closer to SFr1 billion.
He added that a wrong estimate of the bank's profits would only lead to political conflict and disappointment. The proposal calls for funds over SFr1 billion to go to the pension scheme.
Under the present system, about a third of the profits go to the government and two thirds to the cantons.
The Social Democrats, who kicked off the "yes" campaign on Monday ahead of September's nationwide vote, have said their proposal would ensure that employees and employers would not have to pay more to the pension scheme and avoid an increase of value-added tax at least until 2015.
The Social Democratic Party has claimed that those fighting the proposal are pursuing their aim of cutting social benefits and providing the wealthy with tax breaks.
Merz has been one of their favourite targets, with his plans to cut taxes.
Social Democratic parliamentarian Rudolf Rechsteiner said concerns about the national bank losing its independence were overblown and that the bank would continue deciding how much of the profits it handed over.
swissinfo with agencies
Swiss social security is based on the so-called three pillar system of public, occupational and private insurance.
Old-age and survivors' insurance and invalidity insurance jointly make up the first pillar with pensions intended to cover basic living costs.
This first pillar is complemented by occupational benefit plans.
The first two pillars should amount to at least 60% of the beneficiary's last income.
Since Swiss old-age and survivors' insurance is funded on a "pay-as-you-go" basis - pensions are financed by the working population - funding is struggling to meet requirements as life expectancy increases.
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