The social security and health committee of the Council of States (SGK-S), the upper house of the Swiss parliament, voted in favour of a proposal to change the second pillar pension system at its meeting last Friday.

After in-depth analysis, and disagreements before the summer break, the committee has supported the idea to compensate the first 15 cohorts retiring after the reform enters into force for the reduction of the conversion rate – Umwandlugssatz – used to calculate pension pay-outs, from 6.8% to 6%.

However, according SGK-S, people who have accrued pension assets up to CHF215,100 (€221,000) at the time of retirement will be entitled to receive the full compensation in the form of pension supplement of CHF2,400 per year for the first five cohorts.

The second cohort of people caught in the process of transitioning from the old to the new pension system will receive CHF1,800 per year, and CHF1,200 per year for the last five cohorts, according to the proposal voted by the SGK-S.

The latest compromise on the reform mirrors partially the idea introduced by Joseph Dittli, member of the liberal party FDP in the Council of States, during the summer session of parliament. Dittli proposed to grant a pension supplement to people having saved up to CHF215,100 at the time of retirement.

According to estimates, 25% of the second pillar’s members that are caught in the so-called transitional generation from the old to the new system would receive the full supplement.

Members with pension assets in the range of CHF215,100-430,200, according to estimates making up a further 25% of the transitional generation, are entitled to a supplement but reduced, depending on the retirement assets.

The national council, the lower house of parliament, has last year approved the reform of the second pillar of the pension system, voting in favour of compensatory measures for the reduction of the conversion rate for 15 cohorts, and the same amount in terms of compensation proposed by the social security and health committee of the Council of States, but without the CHF215,100 threshold that would grant the full supplement.

The Swiss Federation of Trade Unions, SGB USS, has criticised the latest decision taken by the parliamentary committee, saying that only the transitional generation is compensated for the reduction of the conversion rate, and in contrast to the compromise reached by the social partners, neither employers nor members with high incomes contribute to the costs of the compensation.

It also added that instead of further reducing the level of pensions, the main problem now is to compensate members for the losses on pension assets caused by inflation.

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