The Swiss pension fund association ASIP has lamented the minor changes made to the pension reform package Altersvorsorge 2020, saying it should have been reduced to a few key points with further amendments to facilitate debate in Parliament and prevent its failure.

In a statement, ASIP added: “This reform is important and necessary, and it should not fail.”

The Swiss government, having received dozens of statements on its reform plans for the first and second pillar of the pension system, will do away with the Koordinationsabzug used to co-ordinate expected payments from the two pillars to facilitate calculations and lower the entry level to mandatory savings in the second pillar.

Further, it will re-direct money from the VAT to the first pillar, which has been designated for the first pillar AHV fund since 1999 but has so far been split between the fund and the federal budget.

In turn, government funding for the AHV will be cut to simplify financing flows.

The planned increase of the VAT to finance the first-pillar fund will be limited to 1.5% rather than the previously suggested 2%.

ASIP argued that the government should have “tested the reform for its political acceptance” and limit its scope.

Swiss news daily NZZ quoted a social democratic MP saying the reform was now “heading even further in the wrong direction than before”, while the conservative SVP again rejected the reform package as a whole.

The Swiss pension fund association objects to government plans to increase the minimum age for retirement in the second pillar from 58 to 62 years and has called for a partial payout model instead.

It is also critical of the proposal to finance transitional payments from the collective Sicherheitsfonds for people above a certain age when the reform takes effect.

The fund ensuring liquidity when a Pensionskasse must be closed is financed by all Pensionskassen, and several stakeholders have rejected the idea of using it for transitional payments, which would also considerably increase the administrative burden.

Pensionskassen should rather ensure certain payout levels for this transitional generation on an individual basis, the pension fund association said.

ASIP welcomed the planned harmonisation of all statutory retirement age levels for men and women, as well as in the first and second pillar to 65 years.

Other major points like the cut in the conversion rate to 6% or the change in calculating the minimum interest rate in the second pillar only at year-end will remain part of the reform package, which is to be presented to Parliament after the summer break.

The Swiss actuarial association SVA had previously demanded a deeper cut to the conversion rate to 5.6% at most.

The ex-post calculation of the minimum interest rate had been criticised by several stakeholders, which argued that Pensionskassen need to be able to start a year knowing what they had to achieve.