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Pension rescue plan dumped by voters

A new way must be found to save Switzerland's state pension scheme

(Keystone)

Politicians and business leaders welcomed voters' rejection of a proposal to use profits from the Swiss National Bank to plug an expected shortfall in the old-age pension scheme.

Opponents said the outcome confirmed that the public supported the independence of both the national bank and the cantons in financial matters.

Only three of the 26 cantons decided in favour of the proposal with nearly 60 per cent of voters around the country dismissing it at the ballot box.

Voters displayed "tremendous political maturity" by rejecting the initiative, said Swiss Bankers Association spokesman Alain Bichsel on Sunday.

The rejection of the initiative protected the independence of the cantons as well as the national bank, said Urs Rellstab, spokesman for the Swiss Business Federation, economiesuisse. This was important in the light of "new leftwing ideas" such as tax harmonisation, he added.

The initiative proposed diverting SFr1.5 billion ($1.21 billion) of the national bank's annual profits, already earmarked for the cantons and the federal authorities, into the old-age pension scheme. It was put forward by the centre-left Social Democratic Party and trade unions.

Under current arrangements cantons receive two-thirds of the bank's surplus while the federal authorities pick up the remainder. The bank has agreed to hand out SFr2.5 billion per year until 2012.

Swiss National Bank

Switzerland's central bank is independent of the government, which means it is free to set interest rates. Its policy goal is price stability, ...

Alternative plans

Opponents of the initiative - including the government, the national bank, the cantons and three of the four main political parties - argued that it would have compromised the bank's independence.

Lorenz Bösch, president of the Conference of Cantonal Governments, welcomed the result, but said he was surprised by the size of the majority.

But Social Democrat parliamentarian Rudolf Rechsteiner, who launched the initiative, vowed to carry on his fight to save the state pension scheme despite the overwhelming defeat at the ballot box.

Social Democrat president Hans-Jürg Fehr said the "ball was now in the court of the winners" to come up with an idea of how to save the pension scheme.

The government and a majority in parliament have agreed to use some SFr7 billion in proceeds from the sale of the national bank's excess gold reserves to shore up the pension scheme.

Four years ago a plan to use these same proceeds to create a special charity to fight poverty was rejected by voters. They also rejected a 2004 government proposal to raise the rate of VAT to cover the shortfall in the pension scheme.

swissinfo with agencies

Pensions (Three Pillar system)

The old-age pension system consists of three levels (pillars). The first is the state pension plan. Every resident must pay contributions to a ...

Key facts

Almost 59% of voters rejected the proposal to prop up the country's ailing old-age pension scheme with profits from the National Bank.
All but three of the country's 26 cantons voted against the initiative, with only Basel City, Ticino and Geneva coming out in favour.
Voter turnout was slightly higher than average at 48%.

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In brief

The state old-age pension scheme is a central pillar of the country's social security system. It is aimed at providing minimum coverage for all people over the age of 65 (men) and 64 (women), surviving dependents and those who need constant care.

Employers and employees, as well as the state, fund the system through mandatory contributions.

The scheme, which was set up in 1948, risks running into financial trouble as a result of demographic changes. The number of contributors has been dropping amid a growing list of beneficiaries and an increase in life expectancy.

Proposals to prop up the scheme include raising the retirement age, cuts in old age benefits and raising VAT.

In 2002 voters turned down a proposal to use the proceeds from the sale of the National Bank's excess gold reserves for poverty reduction.

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