SWITZERLAND – The Swiss Federal Council has increased the minimum pension age for the second pillar but by three instead of five years following public criticism.
The move comes as the council passed the third part of a review of the BVG Law, which established the second pillar. The first round was implemented in 2004 while the second came in this year.
The decision is a change from the original plans suggested by interior minister Pascal Couchepin, who wanted to set the minimum early pension age at 60.
A spokeswoman for the interior ministry, which is responsible for social security, confirmed that Couchepin’s original suggestion had met with resistance from the social partners.
She explained that the 58-year threshold is not a must and applies when pension funds can finance earlier retirement. At the moment men must retire at 65 and women at 64.
Exceptions have been conceded to workers with physically intense jobs and those whose company undergoes restructuring.
“With a minimum pension age set_to 58 years the Federal Council has also considered the criticism expressed the social partners and pension funds,” the interior ministry said.
The new regulations will become operational on January 1 2006 but a five-year transition period will apply.
Separately, the International Monetary Fund has warned that the Swiss second pillar shows signs of “some strains, which deserve attention”.
The IMF suggested in a on Switzerland that the regulatory minimum interest rate, currently 2.5%, “ may need to be brought down further”.
“It would be important to align the annuity conversion rate with its actuarially neutral value, and the discount rate with market interest rates,” the fund said.