A group of 26 members of parliament (MPs) in Switzerland has today worked out a proposal to bridge differences between the chambers of parliament on critical points to reform the country’s second pillar pension system, IPE understands.

The National Council, the lower house of parliament, will vote this afternoon on the MPs proposal and tomorrow will be the Council of States’ turn, sources said.

On Friday both chambers will have a final say on the latest proposal, a vote that could lead to approving the second pillar oension system reform.

The National Council and the Council of States have struggled to find an agreement on two key points of the reform: the wage threshold necessary to become member of a pension fund, and on voluntary contributions to Pensionskassen – so-called Einkauf.

The National Council initially wanted to lower the threshold to join a pension fund in Switzerland to an annual salary of CHF12,548, proposing then a compromise at CHF19,845. The current threshold is an annual wage of CHF22,050.

The Council of States, the parliament’s upper house, wants to set the threshold at CHF17,640 per year, a solution benefiting part-time employees, and employees with multiple jobs, it said.

The latter proposal leads to an increase by approximately 140,000 pension fund members, while the National Council proposal would add around 70,000 new members.

The reform plan proposed by the Council of States would cost around CHF100m more per year than the version proposed by the National Council, with administrative costs estimated at CHF30-50m, double of those estimated with the plan of the lower house.

The Council of States wants to change the rules on voluntary contributions in pension funds, while the National Council is asking to stick to current rules.

The two chambers have agreed instead on 25 years old as the age to start to set aside capital for pensions, on the amount of wage deduction to determine a salary insured in the second pillar (Koordinationsabzug) at 20% of wages insured under the first pillar AHV system, and on the compensation for the reductions of the conversion rate used to calculate pension pay-outs (Umwandlungssatz) from 6.8% to 6%.

The two chambers are in favour of compensating the 15 cohorts of the so-called transitional generation caught in the transition to the new system that will see pension payments falling due to the reduction of the conversion rate.

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