The Swiss House of Representatives has decided to cut back the funding of an early retirement scheme. The decision means that people who retire early will lose up to 16 per cent of their pension.

A parliamentary commission had proposed spending SFr718 million to help people with lower and medium-sized incomes to take early retirement. This would have lowered their pensions by between 8.4 and 14.3 per cent.

In a tight ballot, decided on the casting vote of the House of Representatives speaker, Peter Hess, members of parliament preferred to allocate only SFr400 million to the scheme.

As a result, pensions will be reduced between 11.3 and 16.5 per cent if the people involved want to retire at 62. People who decide to retire later will lose less.

The financing for this scheme is taken from funds saved by increasing the retirement age of women. This proposition encountered less opposition from parliament on Tuesday, with only the left fighting it.

Switzerland's much-vaunted social security system was introduced in 1948, and the state pension scheme is mainly funded by mandatory contributions from the salaries of the working population, as well as employers, government subsidies and taxes.

Because of Switzerland's ageing population, the number of Swiss pensioners is growing disproportionately compared to the working population, as in most other Western countries.

The statutory retirement age for men in Switzerland is currently 65, while women get their pension at 63.

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