The Swiss Times - Swiss News in English

Federal Council wants the 13th AHV pension to be financed quickly

The Federal Council wants to pay the 13th AHV pension from 2026. To finance this, it proposes either only higher salary contributions or a combination of higher AHV deductions and an increase in VAT. It advocates a way that can be implemented quickly.

The popular initiative launched by trade unions for a 13th AHV pension was approved by the people and the cantons on March 3, with around 58% voting yes. This means that around 2.5 million pensioners will receive a 13th AHV pension from 2026. This corresponds to a pension increase of 8.3 percent compared to today.

This will cost CHF 4.2 billion in the year of introduction. Five years later, it is likely to be around CHF 5 billion due to the growing number of pensioners, as Social Affairs Minister Elisabeth Baume-Schneider told the media in Bern on Wednesday.

Two variants under discussion

The Federal Council has set key figures for financing the 13th pension and agreed on two options: the first is an increase in salary contributions to the AHV by 0.8 percentage points. The second is a combination of a 0.5 percentage point increase in salary contributions and a 0.4 percentage point increase in VAT.

The Federal Council wants to fulfill its responsibility and clarify the financing of the 13th AHV pension quickly, said Baume-Schneider. The key figures now presented had been brought into play by supporters and opponents during the referendum campaign. The Federal Council also wants to spread the costs across the entire population.

In the weeks since the vote, numerous proposals for financing higher pensions have been discussed in public, including an increase in federal tax and a financial transaction tax.

Baume-Schneider warned that the consequences of these proposals should first be assessed. These sources of funding would be looked at when the next major AHV reform is planned. The Federal Council has already received a mandate from Parliament to present a reform by 2026.

Structural measures are also to be examined as part of this reform. The Federal Council is not ruling out raising the retirement age or other financing options.

Less money from the federal government

In view of the federal government's strained financial situation, the national government is planning to temporarily reduce the federal contribution to the AHV. While the federal government currently pays 20.2% of AHV costs, it plans to reduce this to 18.7% from 2026 and until the next major AHV reform comes into force.

With the current federal contribution, the federal government would have to bear an additional CHF 840 million in costs when the 13th pension is introduced in 2026 - around a fifth of the additional costs of CHF 4.2 billion. With the lower contribution, it would be correspondingly less.

To compensate for this, the Federal Council is again proposing two options: The first involves placing an additional burden on the AHV fund. The second is based on income. Either the salary contributions to the AHV are increased additionally, or there is also a combination of higher salary deductions and higher VAT.

"Thirteenth" once a year

The Federal Council wants to pay out the "thirteenth" of the AHV once a year and not as a supplement to the twelve monthly pensions. This is in line with the will expressed by the people, said Baume-Schneider. The supplement corresponds to an increase of around 8.3 percent in the current AHV annual pensions.

The Federal Councillor described the timetable for the implementation of the key figures as "sporty": her Department of Home Affairs has been tasked with preparing a consultation draft by the summer. The dispatch should then be ready by the fall so that parliament can make a decision.

Package with two templates

The Federal Council is planning a package of two bills for the legislative amendments to implement the 13th AHV pension and its financing. This should ensure that the amendments to the law can come into force even if the financing is delayed or rejected at the ballot box.

If the financing was rejected by parliament or the electorate, the AHV fund would have to be used in the first year of introduction, said Baume-Schneider. "After that, you have to take political responsibility." Parliament is obliged to ensure the financing of the referendum.

©Keystone/SDA

Most Read

Sunday, April 7 – Round Up

7 April 2024
Switzerland may fund French nuclear projects as it grapples with internal issues in the news this Sunday morning.

Swiss Employers Association: Increase Retirement Ages

8 April 2024
Following the rejection of a pension initiative, the Swiss Employers' Association (SAV) recommends a gradual raise in retirement age to 66.

Mustafa Atici Wins: First Migrant in the Executive

8 April 2024
Mustafa Atici, a Kurdish-born entrepreneur, wins the Basel's government election, the first migrant in the executive.

Swiss Oculis Secures $59M in Funding: Iceland Listing Next

11 April 2024
Oculis finalises a $59 million investment round and sets sights on Nasdaq Iceland listing, bolstering its innovative eye care solutions.

Stay in Touch!

Noteworthy

Barry Callebaut Beats Market Trends with Sales Increase
10 April 2024
Zug Leads Swiss Purchasing Power: GfK Study Insights
9 April 2024