Cabinet rejects idea of flexible pension age

Flexible retirement? Barber Adolf Hui was 98 when this photograph was taken Keystone

The government says it is against a union initiative that calls for a flexible pension age in Switzerland, but it has not come up with a counter proposal.

It argues that the initiative would entail an unbearable economic burden and would mainly benefit those who have financial means.

The initiative, launched by the Swiss Trade Union Federation, demands that all people whose annual salary does not exceed SFr119,340 ($98,000) should be paid a full state pension from the age of 62 if they stop work.

They should also receive a part of the pension if they continued part-time working.

“This initiative goes against the tide of what is happening in Europe, for example in Germany and Britain,” said Interior Minister Pascal Couchepin on Thursday.

He said acceptance of the initiative would mean the retirement age being lowered by two years for the majority of the working population.

Longer pensions

Couchepin also noted that an increasing number of people were reaching retirement age in good health and were therefore receiving pensions longer.

The correlation between contributors and pensioners was deteriorating because of the fall in the birth rate.

He argued that by reducing the retirement age, those people with a good company pension would have an advantage. And others, for example women with part-time jobs or people who did not pay contributions for a while, would be at a disadvantage.

“Older people are indispensable in the labour market,” Couchepin said.

He explained that a shortage of labour could be expected in the medium term, which was a good reason to encourage older people to continue to work until 65 or even longer if conditions were improved.

The interior ministry has calculated that the costs of the initiative would amount to SFr919 million if the retirement age for women were increased to 65 and SFr1.3 billion if it were maintained at 64.

Extra expenditure

Couchepin said that the extra expenditure was not in the budget and the government intended to give “absolute priority” to putting the state pension fund on a sound footing.

“The government is well aware that it is not possible or desirable for all to work longer,” he admitted.

As an indirect counter proposal, the government is supporting reform of the state pension fund in two stages.

The Trade Union Federation countered that the government was “refusing to see the real problems”.

It argued that despite the “fine words” of the cabinet and the business world, older people were often not welcomed by companies, particularly if they had health problems.

Couchepin has suggested that one measure to reform and put the state pension scheme on a more healthy footing would be to raise the retirement age to 67, an idea rejected with scorn by the unions.

swissinfo with agencies

Key facts

The Swiss Trade Union Federation called for a flexible retirement from the age of 62 in March.
More than 107,000 signatures were collected in nine months for the initiative.
There will now be a nationwide vote on the issue.
The electorate turned down two previous initiatives in November 2000, mainly over fears of spiralling costs.

Retirement in Switzerland

The retirement age for men currently stands at 65, while women are entitled to an old-age pension from the age of 64.

The state pension scheme was introduced in 1948. It is funded by contributions from employers, employees and the state.

There have been concerns over the financing of the system over recent years, as the number of beneficiaries is increasing while the number of people paying towards the scheme is on the decrease.

Swiss voters have rejected three previous proposals for a flexible retirement age in the past ten years.

Since 1978 another four proposals to amend the pension scheme were also thrown out at the ballot box.