Swiss Pension System and OASI 21 (AHV 21)

1. AHV 21 reform

On 25 September 2022 the Swiss citizens will vote on the stabilization of the old-age and survivor's insurance (OASI / AHV 21). The reference age for men and women would be set at 65, which is one year higher for women than before. Nine cohorts of women would receive compensatory payments. In addition, the transition from working life to retirement would be made more flexible for all and stronger incentives to continue working at retirement age would be provided. To finance the OASI, value added tax would be increased by 0.4 percentage points. From an economic point of view, do the positive or negative aspects of the overall package (reference age, flexibilization and increase in value added tax) outweigh?

2. Measures

The OASI (AHV) is financed to about 73 percent by contributions from the insured and employers, to 20 percent by subsidies from the Confederation, to 6 percent by revenues from value added tax and to 1 percent by other revenues. According to the forecasts of the Federal Social Insurance Office (FSIO), OASI expenditure will exceed income from 2025 onwards without reform. One reason for this is that, according to a medium scenario of the FSIO, the old-age dependency ratio – defined as the number of people aged 65 and over per 100 people aged 20 to 64 – will increase from 32 to 46. In such a scenario, how should the OASI be brought back into financial balance? Mainly through...

3. Pay-as-you-go vs. capital-funded system

The Swiss pension system is based on both the pay-as-you-go (first pillar, OASI) and the capital-funded system (second pillar, pension fund). How do you assess the current balance? Should the weighting between these two elements be shifted or not? From an economic point of view, I would...

4. Conversion rate

In the second pillar (pension fund), the minimum conversion rate determines how much of the money saved will be paid out as a pension each year after the ordinary retirement age. In the compulsory part, this rate is 6.8 percent; the Federal Council wants to lower it to 6 percent. How should adjustments to the minimum conversion rate be handled in general? The minimum conversion rate on the compulsory part should...

Currently, several other initiatives concerning the OASI (AHV) are in the collection stage or pending before parliament.

5. Flexible adjustment of the retirement age

The pension initiative of the Young Liberals contains a rule-based adjustment of the retirement age. The retirement age would automatically be adjusted depending on the life expectancy of the Swiss resident population. Regardless of the concrete design of the rule, how should adjustments to the ordinary retirement age be made? The ordinary retirement age should...

6. SNB initiative

The SNB initiative of the Swiss Trade Union Federation (SGB) demands that if the Swiss National Bank makes a high balance sheet profit, part of it should be credited to the OASI (AHV) compensation fund. The current distribution to the Confederation and the cantons would remain unaffected. From an economic point of view, do the positive or negative aspects of this SNB initiative outweigh?