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Controversial pension cuts come under fire

The pension scheme is at risk of coming unstuck Keystone

The Left has criticised planned cuts in benefits for women pensioners ahead of a nationwide vote on May 16.

This content was published on May 11, 2004 - 08:44

The government and a centre-right majority in parliament argue, however, that the pension scheme risks coming unstuck if nothing is done to prop up its finances.

Under the plans, approved by parliament last year, the retirement age for women would be raised to 65, benefits for widows would gradually be reduced and pensions would only be revised in line with inflation every three years instead of every two years.

Trade unions, centre-left parties and some women’s groups are now challenging the decision in a nationwide vote. They say women and low-income earners stand to lose out.

Paul Rechsteiner, a centre-left Social Democratic Party parliamentarian and president of the Federation of Trade Unions, says the cuts amount to a dismantling of the welfare state.

“The state pension scheme is solid. It is wrong to weaken the most important pillar of the social security system.”

“The cuts in benefits are a first step towards a retirement at 67 years, and we have to stop this now.”

Funds

Supporters of the latest reforms argue that the future of the state pension scheme is in jeopardy.

“We have a demographic problem. All of us are getting older and at the same time the birth rate is falling,” says Rudolf Stämpfli, president of the Swiss Employers’ Association.

“We will have a smaller number of people who pay into the pension fund [jointly financed by contributions from employees and employers] for those who are eligible for a pension,” Stämpfli told swissinfo.

In a similar vein, Toni Bortoluzzi, a rightwing Swiss People’s Party parliamentarian, has been campaigning for cuts in benefits:

“We have to try to stabilise the increase in spending by raising the retirement age for women and by other measures,” he said.

But Bortoluzzi rejected allegations that people on low salaries would be hit hardest by the cuts.

Flexibility

Emanuel von Erlach, a political scientist at Bern University, says both sides have been campaigning with tried and tested arguments.

“The Left has been keen to portray itself as a guardian of women’s interests,” he said.

Von Erlach points out that the idea of raising the retirement age is a difficult one for the public to swallow.

“It would be more rewarding to discuss measures to make the retirement more flexible. Many people are willing to work beyond the official age limit,” he told swissinfo.

More VAT

In addition to the pension cuts, voters will also decide on a proposed 0.8 per cent hike in Value Added Tax (VAT) to shore up the debt-laden invalidity benefit scheme.

Claims continue to rise, putting a heavy strain on the system and driving its debts to SFr4.5 billion ($3.4 billion) last year.

The proposal, which is opposed by two of the country’s four main parties, outlines an eventual 1.0 per cent rise in VAT to boost funding for the old-age pension scheme.

VAT in Switzerland currently stands at 7.6 per cent.

swissinfo, Urs Geiser

Key facts

The state old-age and invalidity pension scheme was set up in 1948 and it is set to be to amended for the 11th time.
The retirement age for men is 65, while women currently retire at 64.
The proposed cuts in benefits are estimated at SFr925 million ($713 million) annually.
The government and parliament want to increase Value Added Tax by 1.8% to fund old-age and invalidity benefit schemes.
Supporters argue the cuts are necessary to guarantee the future of the scheme, while opponents say women have to bear the brunt.
Both funds are financed jointly by contributions from employees and employers.

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