The Swiss Employers’ Association – Schweizerische Arbeitgeberverband – is backing the reform of the country’s second pillar pension system approved by parliament in March.

The reform of the second pillar pension system is “urgently needed”, the association said in a statement, adding that occupational pensions have been under pressure for some time now.

Moreover, increasing life expectancy, and tough market conditions for capital markets are exacerbating the situation, it added.

The Swiss government is supporting a further reform of the first pillar, taking into account also the second pillar, to link retirement age with life expectancy.

Increasing life expectancy means that pension promises for the mandatory part of occupational pensions, meaning for wages of at least CHF22,050 per year, are too high, and pensions have to be partially cross-financed for example with returns on from employees’ accounts, the association explained in the statement.

Therefore, it added, the reduction of the conversion rate is a “fair solution” for employees and existing pensioners.

The Swiss parliament has approved the reform of the second pillar in March, with the goal to strengthen the financing of occupational pensions, maintaining a certain level of benefits, and improving the protection of part-time employees, women in particular.

The reform package includes the reduction of the conversion rate to calculate pension pay-outs (Umwandlungssatz) from 6.8% to 6%, to break the redistribution mechanism between employers and pensioners; lowering the threshold to join a pension fund; a coordination deduction to determine wages insured under the second pillar linked to wages; and a pension supplement for the generation caught in the transition to the new system.

The reform would make an important contribution to support the three-pillar pension system model, the employers’ association said.

A referendum against the changes to the occupational pension law will liekly take place next year. The Federal Chancellery – Budenskanzlei – received in June 77,932 signatures, enough to call a referendum.

The Swiss Federation of Trade Unions, SGB USS, unions Travail.Suisse, Unia, and VPOD, and the social democratic party (SP), and the Greens support the referendum.

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