Switzerland’s pension fund association has called on stakeholders to be ready to compromise to ensure the passage of a pension reform package, issuing its appeal ahead of a parliamentary committee hearing on the measures.
The association, ASIP, issued its appeal earlier this week to coincide with the second reading of the Swiss government’s reform package, Altersvorsorge 2020 (AV2020), by the social security and health committee (SGK-N) of the lower house of parliament, or Nationalrat.
Hans-Peter Konrad, ASIP’s director, said the association hoped for a successful resolution.
“We want AV2020 to succeed,” he told IPE. “To do so we need a proposal that fairly distributes the burden across citizens, beneficiaries, and employers.”
“Reform is needed of the first and second pillar, and we support the comprehensive reach of the reform,” he added.
ASIP believes that the upper house of parliament, the Ständerat, which has already debated the AV2020 reform package, has come up with a proposal that is “more or less acceptable”, according to Konrad, and hopes for a similar outcome from the SGK-N.
Key reform areas
ASIP highlights three areas of reform, including the harmonisation of retirement ages for both men and women to 65. It also says pension funds should retain the ability to offer benefits from age 60, and backs lowering the so-called conversion rate with certain measures in place to offer compensation.
ASIP said that it supports the proposal from the Ständerat to lower the conversion rate, which is used to calculate the pension benefits from accrued assets, from 6.8% to 6%, even though it thinks that from a technical perspective it should be even lower, namely 5.5%.
“But we know that politically this is not feasible,” Konrad told IPE.
The association believes that the 6% proposal “goes in the right direction” and can be accepted as the basis for the calculation of accompanying measures to mitigate the impact of the lower conversion rate.
Crucial for ASIP is that these compensating measures are taken within the second pillar, and not within the state system.
The measures to maintain the pensions level should be limited to a 10-year period and should be “decentralised”, in other words be left up to each individual pension provider to come up with a solution.
The Ständerat’s reform proposal involves a centralised model, under which a protection fund would be responsible for financing the compensation for the lower conversion rate.
ASIP is against this centralised approach, in part because it considers it too complicated.
The Nationalrat committee proposed modifications to the AV2020 reform proposal this afternoon (19 August), saying that it needs to be further developed during parliamentary debates.
One of its main decisions, it said, was to reject as “counterproductive” measures proposed by the Ständerat to compensate for the targeted lower conversion rate and higher retirement age for women.
The Ständerat’s proposal included first pillar supplements, which the Nationalrat committee today said would burden future generations without representing a structural solution to the problem of financing the state pension.
It has come up with alternative measures to compensate for the lower conversion rate, which it has also backed being set at 6%.