Federal Council fears weakening of AHV with two initiatives
Published: Monday, Jan 22nd 2024, 13:00
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The Federal Council recommends voting no to the two popular initiatives on the AHV that will be put to the ballot box on March 3. In its opinion, the trade union initiative for a 13th AHV pension would weaken the AHV financially. The automatic approach to setting the retirement age demanded by the pension initiative is too rigid for the Federal Council.
Social Affairs Minister Elisabeth Baume-Schneider presented the national government's arguments against the two initiatives to the media in Bern on Monday. Both went too far for the Federal Council. In the fight against the popular initiative for a 13th AHV pension, the Social Democrat has to compete against her own party.
Additional costs in the billions
According to the Federal Council, the 13th pension would result in additional costs of at least CHF 4.1 billion per year when it is introduced in 2026, CHF 800 million of which would be borne by the federal government. Due to longer life expectancy and the retirement of baby boomers, the additional costs will reach five billion francs five years later.
In the eyes of the Federal Council, a Yes to the initiative would "significantly exacerbate" the AHV's financing problems. If the AHV were to come out of financial equilibrium even earlier than it already is, this would considerably increase the pressure to reform and make it more difficult to find viable solutions, Baume-Schneider pointed out.
The weakest would suffer from this, as they would have to make do with no or only a low pension from the occupational pension scheme. "The AHV is an intergenerational contract," emphasized the Minister of Social Affairs. If it is more heavily burdened, this will put a strain on younger people.
The initiative does not specify how the 13th AHV pension - which would go to all pensioners in the event of a Yes vote - should be financed. According to the Federal Council, there are several options. The first would be higher salary contributions at the expense of employers and employees - the federal government initially assumes a total of 0.7 percentage points.
At the expense of the economy and purchasing power
According to Baume-Schneider, if VAT were to be increased, purchasing power would suffer and prices would rise anyway. According to the Federal Council, a combination of higher wage deductions and more VAT would be another option. Or the retirement age could be raised again. Baume-Schneider also did not rule out higher taxes or cuts to offset the additional costs for the federal government.
The pension initiative launched by the Young Liberals will also be put to the vote on March 3. It initially calls for an increase in the retirement age to 66 for everyone from 2028 and until 2033, after which the retirement age must be linked to life expectancy. It would rise automatically if life expectancy increases as expected.
This is because the population scenarios of the Federal Statistical Office assume that life expectancy will continue to rise - by just over one month per year. The Federal Council writes that with the automatic nature of the initiative, the retirement age would be 67 in 2043.
"Does not fit in with the political culture"
The national government admits that the retirement age of 66 from 2033 would save the AHV two billion francs a year. Nevertheless, it opposes the initiative. The reason for this is the required automatism, explained Baume-Schneider. It is too rigid and: "It does not fit in with our political culture."
The Federal Councillor emphasized that a political discussion must be possible on the sensitive issue of retirement age. Various aspects must be taken into account when setting the retirement age. One is the economic situation, another is the retirement age in physically demanding professions, such as construction.
In response to the supporters' argument that there are also links between retirement age and life expectancy in other countries, Baume-Schneider said that there are only a few countries that have a strict automatic system.
Baume-Schneider explained that the Federal Council did not want to jeopardize the AHV, the most social and solidary insurance scheme in the country. She pleaded for targeted measures to support pensioners in financially precarious situations.
One opportunity to implement such measures is the bill ordered by Parliament to stabilize the AHV in the years after 2030.
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