Minister says pension payments must be reduced

Payments that a retired person can withdraw from Switzerland’s occupational pension plan must be reduced to preserve security, the government has warned.

This content was published on December 7, 2009 - 14:26

Voters next March will have the final say on setting the minimum percentage rate used to calculate payments. A plan to reduce this conversion rate has angered unions and consumer groups but the government says it is necessary.

“Voters can choose between security and insecurity,” Interior Minister Didier Burkhalter told a news conference on Monday.

The occupational pension scheme - the so called second pillar - is a tenet of Switzerland’s social security system,including old age pensions, disability and unemployment insurance.

Burkhalter said an ageing population and lower capital gains on pensions made it unavoidable to reduce the conversion rate to 6.4 per cent by 2016. It currently stands at 7.05 per cent for men and 7.0 per cent for women.

Under the current rate, a retired man with SFr1 million invested in the occupational pension scheme would receive SFr70,000 ($68,513) annually. The new rate would see payments drop to SFr64,000 a year.

Economics Minister Doris Leuthard has warned that the country’s economic prosperity would be jeopardised if voters reject the reform.

However, trade unions and consumer groups as well as centre-left parties have challenged the reform to a nationwide vote and argue a reduced rate is unacceptable. They collected more than 200,000 signatures for a referendum – four times more than is necessary to force a referendum.

“Pensions would be cut by ten per cent and private life insurance companies would be the only beneficiaries,” said the Unia trade union group and the Social Democratic Party in separate statements.

Other issues to come to a vote on March 7 include a proposal to improve the legal standing of animals and another to streamline regulations on human research, including boosting the protection of children and disabled people.

“The present situation is unsatisfactory and varies from canton to canton,” said Burkhalter.

Urs Geiser,

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