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Front against conversion rate cut grows

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  • Front against conversion rate cut grows

SWITZERLAND - The largest union in Switzerland as well as several opposition parties are calling on people to sign up for a referendum against a cut of the conversion rate in second pillar pensions.

Both houses of parliament eventually agreed at the end of last year to cut the rate to 6.4% by 2015. (See earlier IPE story: Swiss parliament rallies behind rate cut)

However, the bill could be overthrown should its critics get enough votes to start a referendum; having started last week they have until April 16 to collect 50,000 signatures.

Apart from the union collective Unia, which several large trade unions created four years ago, the centre-right Swiss Democrats and other opposition parties have now announced their support for the referendum.

The Socialist party SP as well as the Swiss federation of unions (SGB) are still debating whether or not to join in the referendum.

Both have, however, already criticised the decision to cut the conversion rate as "pension theft".

SGB-secretary Colette Nova claimed in a statement cutting rates in the second pillar does not touch on the "real issue" of what she sees as "profit-oriented companies operating in a mandatory social system".

The SGB has accused the pension companies of charging too high a fee and making profit at the clients' costs.

Furthermore, the union warned the government of making hasty obligations to fully fund Pensionskassen.

"Recovery plans can have negative effects on the economy as they diminish the purchasing power of the members and the financial power of the companies," Nova pointed out.

The union has therefore asked the government to give Pensionskassen more time to become fully funded again.

In the case of public pension funds, the SGB maintains full funding is not necessary as funds are continuously topped-up by contributions from new civil servants. (See earlier IPE-story: Swiss public schemes told to get fully funded)

In addition, as the law only requires 100% funding no buffers have to be built, which means the funds will quickly fall below the fully-funded mark any time there are downward movements in the market.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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