Parliament tackles reform of the old age pension scheme

The increasing number of old people is placing greater pressure on the pension scheme swissinfo.ch

The Swiss parliament began a three-day special session on Monday on revamping the old age pension scheme. The session is trying to come up with ways to finance the introduction of a flexible retirement age.

The issue is expected to lead to charged debates in the House of Representatives. The main political parties differ widely in their opinion on government proposals to guarantee funding of the old age pension scheme and allowing people to take early retirement.

The government wants to increase Value Added Tax and eventually raise the retirement age for women to 65 to plug the gap in the pension coffers.

Similarly, pensions would less often be adapted to inflation and widows could face a sizeable cut in their allowances.

However, the interior minister, Ruth Dreifuss, who’s also responsible for social affairs, has signalled her willingness to compromise. She said the government had given her the go-ahead to soften its position on a planned reduction in pensions for widows.

The government is standing firm on the amount of money it is ready to contribute towards the introduction of a flexible retirement age. A parliamentary committee wants SFr800 million ($460 million), but the cabinet said SFr400 million should suffice.

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.

Other proposals to improve the funding of the pension system include the use of money from the National Bank to shore up the scheme.

by Urs Geiser