The Swiss parliament has today approved the reform of the second pillar pension system in a final vote, after a compromise drafted by a group of members of parliament (MPs) to set aside different views of the two chambers of the Federal Assembly.

The National Council, the lower house of parliament, voted in favour of the reform with 113 yes, 63 no and 15 abstentions. The Council of States, the upper house of parliament, approved the changes to the second pillar with 25 yes, eight no, and five abstentions.

The lower and the upper houses of parliament held a first round of votes on the proposal drawn up by a group of 26 MPs on Wednesday afternoon, and Thursday this week, as reported by IPE.

In the final vote, parliament has agreed to cut the conversion rate used to calculate pension pay-outs – Umwandlungssatz – from 6.8% to 6%, compensating 15 cohorts caught in the transition to the new system with a lifelong supplement on the occupational pension.

People who have accrued savings of CHF215,100 or less at the time of retirement are entitled to the full supplement, that will decrease progressively for retirement savings between CHF215,100 and CHF430,200. People with retirement savings above CHF430,200 will not receive the compensation.

Parliament has set a fixed salary amount (80%) insured under the second pillar system to pay contributions to Pensionskassen – so-called Koordinationsabzug – a solution that is intended to benefit low-earners and part-time workers, who are often women.

The threshold to join a Pensionskasse would equal under the new regime to a salary of CHF19,845 per year, down from the current annual salary of CHF22,050, meaning that potentially 70,000 new members may join pension funds in the future. The measure costs CHF100m.

The Swiss pension fund association ASIP has criticised the reform, saying in a statement that particularly the compensation for the transitional generation leads to a massive and expensive buildup of pension benefits, a cost on the younger generation’s shoulders.

The reform of the second pillar may now face the public vote through a referendum.

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