Swiss upper house votes to raise pension age for women

Last update March 21, 2021

Investec March 21, 2021 SNB & CHF

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© Germana Marengo | Dreamstime.com As Switzerland’s population ages the number of people paid state pension is rising relative to the number of workers funding it. Since 2014, more has been paid out than has been paid in. The most effective way to fix this imbalance is to raise the pension age. If the average ...

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Investec considers the following as important: 3) Swiss Markets and News, 3.) Personal Finance, Editor's Choice, Featured, newsletter, Personal finance, Politics, Swiss pension age, Swiss pension reform

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Swiss upper house votes to raise pension age for women

As Switzerland’s population ages the number of people paid state pension is rising relative to the number of workers funding it. Since 2014, more has been paid out than has been paid in.

The most effective way to fix this imbalance is to raise the pension age. If the average life expectancy of a retiree is 15 years, then raising the pension age by one year will cut the cost by nearly 7%.

Switzerland is one of a few countries that still has a lower retirement age for women (64) than it does for men (65). So an obvious step towards fixing the pension funding gap caused by an ageing population is align the state pension age to 65 for both men and women.

This week, the government came one step closer to making this change when the Council of States, Switzerland’s upper house, voted 31 to 13 in favour of a universal retirement age of 65, according to RTS.

By 2030, an estimated CHF 26 billion must be cut from pension outgoings to bring the system back into balance. This change, which will cut CHF 10 million from the cost, will not be enough by itself to solve the problem. In addition, any increase in life expectancy will add further to the challenge.

The issue of increasing women’s retirement age has been controversial. Some argue that the retirement age must rise because it is unfair to fix the problem by forcing higher taxes on a younger generation of workers. While others argue that women on average receive less pensions money and earlier retirement age helps to compensate for this.

Some younger politicians, such as Nicolas Jutzet, don’t think the current reform plan goes far enough. According to Jutzet, over the next 10 years, 800,000 people will retire, increasing the number of retirees by 50%. His party, the young PLR (FDP), wants to see a universal retirement age of 66 that is possibly indexed to life expectancy.

Other elements of the plan that were accepted include an increase in VAT from 7.7% to 8.0% to provide additional pension funding, which was accepted by 29 to 13 votes. Higher rises were rejected by the house.

The house voted in favour by 19 to 12 (13 abstentions) to pay women born from 1959 to 1967 an extra CHF 150 a month if the retirement age rises. The house was also in favour of women having the flexibility to retire from the age of 63 to 70. Pension payments are reduced for early pensions and increased for later retirement.

The project now moves to Switzerland’s parliament for its decision.