SWITZERLAND - The Swiss second-pillar occupational pension system could see its membership rise by up to eight per cent following a decision to lower the eligibility threshold, an official said.

The Federal Parliament last year revised the social security law, the Bundesgesetz über die berufliche Vorsorge, or BVG. The move will lower the salary threshold, above which people are required to join the second pillar, from 25,320 Swiss francs (15,932 euros) to 19,000 francs (12,109 euros).

Rinaldo Gadola, head of Bern-based administrative arm of the social security office, told IPE that it was still too early to assess the number of workers who would be required by the updated BVG to join a pension fund.

But he added that around 180,000 could possibly join the already 3.1 million-strong second pillar - an increase between five and eight per cent.

“However we must not forget that of these 180,000, 80,000 are believed to be already voluntarily insured within the second pillar,” Gadola explained.

Such a threshold potentially creates a condition of poverty for low wages workers, especially women, who on retiring would only be paid a statutory pension.

The former director of the former federal social insurance office, Otto Piller, has warned about such a condition in the past.

Workers, whose pension is lower than 10% of the legal minimum are, however, entitled to capital benefits.

The BVG law was introduced on January 1 1985 and has been subject to a number of reviews in the last 20 years. The amended BVG will come into force from January 2005.

In September 2003, the council of ministers also decided to change the BVG minimum interest rate from 3.25% to 2.25% The rate had already been changed from the original 4% in January 2003.

In October it emerged that the cost of reorganising Switzerland’s second-pillar occupational pension schemes is threatening to break the country’s budgetary limits. The finance committee of the Council of States recommended that the 1.1 billion Swiss franc (712 million-euro) cost be defined as an extraordinary payment to prevent it breaching the limits of the “debt brake” (schuldenbremse), Switzerland’s self-imposed budgetary cap.


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