The first pillar social security fund AHV is en route to record losses worth CHF3.7bn (€3.4bn) in 2030 if there is no reform, from positive operating results of CHF867m expected in 2021, according to an outlook published by the Swiss Social Insurance Office (FSIO).
The previous forecast calculated a deficit of around CHF3.6bn. By 2032, according to FSIO’s outlook, the difference between income and expenses for the AHV result in a negative CHF6.06bn, with operating losses of CHF5.60bn.
Returns on investments will instead fall from CHF774m this year to CHF459m in 2032.
With a reform proposed by the Federal Council, which foresees increasing the retirement age for women to 65 years old and lifting the current VAT tax rate of 7.7% by 0.7 percentage points, the AHV will still record a negative difference between income and expenses of CHF1.64bn in 2030, and operating losses of CHF306m, according to FSIO.
The reform package proposed by the lower house of the parliament, the National Council, including a compensation for women whose retirement age increases for a transitional period of six years based on average annual income, means a negative difference between income and expenses of CHF1.33bn in 2030, but positive operating income of CHF47m.
The Council of States, the upper house of the parliament, has instead proposed a reform foreseeing compensation for women for a transitional period of nine years, decreasing over time, leading to a negative difference between income and expenses of CHF2.35bn in 2030, and losses from operations for AVH of CHF 1.64bn.
IV and EO funds
The FSIO has sketched three outlooks for the disability insurance fund IV to reflect risks and uncertainties caused by the COVID-19 pandemic, its economic and social consequences.
Contributions to the IV fund for the years 2021–2024 will be CHF300m below the amount assumed pre-pandemic. Cumulative contributions will decrease by CHF1.5bn for the same period, it said.
Regardless of uncertainties, the three outlooks for the IV fund point at positive operating results under current rules of CHF637m, CHF310m and more optimistically of CHF905m in 2030.
The difference between the three scenarios depends on the amount of new pensions expected to be paid, 14,000 in the more optimistic scenario, 17,000 in the worst case scenario.
The financial outlook for the EO, the fund providing compensation for loss of income to people in the military and civil services, for maternity and paternity leave, hasn’t significantly changed, according to FSIO.
The fund expects to record positive operating results of CHF215m in 2030, and returns on investments of CHF71m.
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