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Swiss government backtracks on pension increase

Summary:
In December 2022, parliament sent a recommendation to the Federal Council to increase state pensions by the rate of inflation. However, this week a parliamentary majority voted not to, reported RTS. © Mcxas | Dreamstime.comThe Federal Council had already boosted state pensions by 2.5% from 1 January 2023 before calls were made to bump them up by 2.8% in line with the increase in the consumer price index (CPI) in 2022. On 1 March 2023, 97 versus 92 (1 abstention) members of parliament voted against the extra 0.3% boost. Political parties on the centre and left argued in vain for a full inflation boost to pensions, highlighting rising rents, energy costs and health insurance premiums. However, others argued against it based on its cost, projected to be CHF 418 million. The

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In December 2022, parliament sent a recommendation to the Federal Council to increase state pensions by the rate of inflation. However, this week a parliamentary majority voted not to, reported RTS.

© Mcxas | Dreamstime.com

The Federal Council had already boosted state pensions by 2.5% from 1 January 2023 before calls were made to bump them up by 2.8% in line with the increase in the consumer price index (CPI) in 2022.

On 1 March 2023, 97 versus 92 (1 abstention) members of parliament voted against the extra 0.3% boost.

Political parties on the centre and left argued in vain for a full inflation boost to pensions, highlighting rising rents, energy costs and health insurance premiums.

However, others argued against it based on its cost, projected to be CHF 418 million. The pension system does not need to spend more, said Regine Sauter, a member of the PLR/FDP. What gives pensioners the right to an increase but not families?, she said.

Another argument in favour of dropping the extra rise is past periods of deflation. Over the 12 years from 2010 to the end of 2022, Switzerland’s consumer price index (CPI) rose 2.5%, less than during 2022 (+2.8%). This is due to periods of deflation, most notably in 2015 and 2016.

Swiss state pension adjustments follow changes in salaries and CPI, each given a weighting of 50%. In 2015 and 2016, the formula calculated a pension reduction. However, no reduction occurred. So it could be argued that the current sub-inflation increase makes up for this reduction that never happened.

On 2 March 2023, the Council of States, Switzerland’s upper house, also voted down (21 versus 20 votes) the additional 0.3% increase in pension payments, reported parlament.ch.

More on this:
RTS article (in French)  – Take a 5 minute French test now

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