The Swiss Parliament has officially concluded discussions approving the reform of the first pillar AHV that almost certainly will face a public vote next year following the opposition of left-wing parties and unions.

“The AHV reform stands, it should secure pensions for the next years,” the parliament said in a note, adding that efforts to reorganise AHV have failed in recent years; the last reform took place in 1997.

The AHV will need financing of CHF26bn (€24.9bn) by 2030 to function in the wake of an aging population.

The parliament voted in favour of increasing the retirement age for women from 64 to 65 years old as part of the reform package, and for a life-long compensatory measure for the nine cohorts hit by the increase of the retirement age.

The retirement age for women will see an increase of three months per year, a measure that should save CHF10bn in 10 years. If the reform comes into force in 2023, women born between 1960 and 1968 will be caught in the transition between the old and the new system.

Women can withdraw their pension at the start of their retirement age and receive a supplement based on their income, or they can withdraw their pension earlier but face a cut.

The pension supplement for women withdrawing pensions at the start of their retirement age amounts to CHF160 per month for incomes of up to CHF57,360 per year, CHF100 per month for incomes between CHF57,360 and CHF71,700 per year and CHF50 monthly for women with an annual income of CHF71,701 or over.

Women can withdraw their pension earliest from the age of 62 with pension cuts but to a lesser extent than before. Women with lower wages can still withdraw their pension a year earlier than the statutory retirement age without cuts, while withdrawing two years earlier leads to a reduction in pension by 2% and of 3% three years earlier.

For women with middle-ranged income their pension is reduced by 2.5% at 64 years, 4.5% at 63 years and 6.5% at 62 years old, while for higher earners the reduction rate is 3% in case of withdrawal one year earlier, 6.5% two years earlier, and 10.5% three years earlier than the statutory retirement age.

The compensatory model will cost around CHF3.25bn between 2024 and 2032, meaning one third of the savings generated by increasing the retirement age.

The compensatory measures will be financed through an increase of the value-added tax (VAT) by 0.4 percentage points from the current 7.7%, a measure expected to secure revenues of CHF1.4bn a year.

The Swiss Trade Union Federation SGB and the Social Democratic Party (SP) support a public vote against the reform. A public vote is considered certain, likely expected in September 2022.

The reform package is an “affront to women who hardly receive any compensation for the increase in the retirement age,” the Social Democrats said, adding that it would lead to a pension cut of CHF1,200 per year. The trade union SGB plans to build a broad alliance for a referendum against the reform of AHV, it said.

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