Switzerland to decide on two pension reforms amid interest rate rise

Switzerland to decide on two pension reforms amid interest rate rise

The Federal Council has confirmed that the minimum interest rate on second-pillar pensions in Switzerland will rise in 2024. It follows the announcement that the country will vote on two reforms to the Swiss pension system next year.

Minimum interest rates on Swiss pensions to rise

In a statement, the government said that despite the tumultuous economic markets in 2022 and 2023, it would be raising the minimum interest rate on second pillar (BVG) pensions from 1 to 1,25 percent from January 2024. They argued that “higher inflation and the associated loss of purchasing power” is significantly impacting pensioners at a time when second-pillar funds are deemed to be financially stable, so it made sense to increase the rate.

For reference, the "minimum rate" dictates the minimum percentage of second-pillar assets that have to be paid out, which means pensioners should expect to receive higher payments from January. As the BVG is jointly paid by companies and workers before they reach retirement, companies are the ones that will have to initially foot the bill.

Blick noted that the new interest rate - agreed by the Federal Occupational Pension Commission - has managed to dissatisfy both employers and unions. According to the newspaper, a number of trade unions had been calling for a rate of 2 percent, the Swiss Union of the Arts called for it to be maintained at 1 percent, while the Swiss Employers’ Union demanded it be lowered to 0,75 percent.

Switzerland to vote on two pension reforms 

The announcement comes a week after the government confirmed the next batch of referendums in Switzerland, which are due to take place on March 3, 2024. The two proposals on the agenda both concern reforms to the pension system.

The first, a proposal from a collection of Swiss unions, would see pensioners granted a “13th AHV pension” - similar to the 13th month of salary offered by a number of jobs in Switzerland. According to calculations from the Unia trade union, the proposal would see pension pots increase by around 8,33 percent.

“Switzerland has a pension problem”, Unia declares on its website, noting that nearly half of newly retired people are forced to live on less than 3.600 francs a month, the majority of whom are women. “Anyone who has worked all their life deserves a good pension…AHV x13 is a simple but convincing answer,” they added. The proposal certainly has the backing of the public, with 71 percent of Swiss citizens in favour of the plan according to the latest polling from Sotomo.

In opposition to the idea, the Federal Council wrote that they could not see how the policy could be afforded, especially considering the number of people due to retire in the future and the large number of vacancies left unfilled. They argued that the plan would cost around 4 billion francs a year, and that instead of extending benefits the focus should be on reforming the system so that it remains sustainable.

New proposal to base Swiss retirement age on life expectancy

In fact, the second vote on the ballot seeks to do just that. The "Pension Initiative," proposed by the youth wing of FDP. The Liberals would see the pension age in Switzerland increase gradually over time.

Specifically, the proposal calls for the pension age to increase by two months a year. In practice, this means that the retirement age would reach 66 years old by 2032. From that date, the retirement age would increase - or decrease - based on average life expectancy.

Switzerland needs structural pension reform, argues Young Liberals

In the text of the referendum, the Young Liberals wrote that, unlike other nations around the world, “Switzerland has so far failed to implement structural reforms in pension provision.” They argued that pension plans in their current form are not designed with current life expectancy in mind and are therefore not financially sustainable, so it made sense to make the retirement age more flexible so that more people can pay into social security for longer.

In response, the Syna industrial union argued that the proposal “ignores the realities of employees' lives and creates social hardship.” They made the point that using life expectancy as a metric to influence the retirement age ignores the fact that the metric varies hugely by education and salary - i.e, under the plans, those on lower incomes will pay in for longer while having less time to wreak the rewards.

Thumb image credit: RudenkoStudio /

Jan de Boer


Jan de Boer

Jan studied in York and Sheffield in the UK, obtaining a master's in broadcast journalism and a bachelor's in history. He has worked as a radio DJ, TV presenter, and...

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