A proposal to cut old age pensions for beneficiaries living outside Switzerland has caused a public uproar. The debate on a reform of the state pension scheme, ahead of a vote in September, promises to be heated.This content was published on June 23, 2017 - 16:44
The Swiss old age pension system is under pressure - the number of beneficiaries keeps growing but there are fewer contributors, causing the risk of a serious deficit.
The proposal to cut the pensions of people living abroad comes from the Petra Gössi, the head of centre-right Radical Party, one of the main political parties in Switzerland.
It would not only target the around 360,000 workers from Italy, Spain and Portugal who have spent a good part of their active professional lives in Switzerland, often in lowly-paid jobs, and have gone back to their countries of origin for retirement, but also the Swiss abroad community.
“Old age pensioners living abroad don’t create value. They neither pay any taxes nor do they spend money [in Switzerland],” she is quoted as saying by the Friday edition of the tabloid Blick.
“We give them a golden handshake and the next generations will have to foot the bill,” she adds.
Her comments come as a campaign ahead of a nationwide vote on September 24 on a controversial reform of the old age pension system gets underway.
Gössi and a majority of her Radical Party have come out against the constitutional amendment approved by parliament with a narrow margin in March.
The reform includes an additional CHF70 ($72) per month for future pensioners (while raising the retirement age for women by one year to 65 in line with men).
Making a difference
CHF70 might not look like a lot of money, but it makes a difference for many pensioners living abroad. They currently receive between CHF450 and CHF490 per month.
But these payments to beneficiaries outside Switzerland people account for just 13% of pensions that are paid out, according to official data.
Gössi’s statements have unleashed an angry reaction.
The president of the main Unia trade union group, Vania Alleva, has criticised Gössi’s comments as shameful and utterly contradictory.
“Italians and Spaniards who help build modern-day Switzerland are the victims [once again],” she told Blick.
A syndicated report in the Tages-Anzeiger and Der Bund newspapers pointed the finger at Gössi for targeting old age pensioners with small benefits. It is ironic, observed the article, that her party always refused to discuss excessive manager salaries.
Cost of living
No matter how this debate will continue over the next weeks, the Swiss Abroad community and its pensions are now part of it.
A closer look at the payments made to Swiss Abroad citizens show that these make up 4.69% of the pension total. That is: CHF123,364 per month.
On average, Swiss nationals living overseas receive CHF1,151 per month. This is more than twice the average pension for non-Swiss beneficiaries living abroad (CHF491).
Most of the pensions go towards Swiss expats in neighbouring France and Italy: 25,000 and 9,500 payments respectively. Some 2,300 recipients are in Thailand.
Seeing potential savings, politicians from the centre-right and the right have called for pensions to be adapted to the living costs of the countries of residence of the recipients.
Their proposal may help reduce these payments worth a few thousand francs every month, but it is likely to cause a lot of political trouble.
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