The Social Security and Health Committee of the Council of States (SGK-S), the upper house of the Swiss parliament, has made another step to find a compromise on reforming the country’s first pillar pension system AHV.

The committee has voted in favour of a pension supplement to compensate women whose retirement age increases in the transition phase from the old to the new system.

In June, the National Council, the lower house of parliament, gave the green light to lifting the retirement age for women from 64 to 65 years old, while the Council of States had given its approval in March.

The SGK-S has now decided that the supplement is based on income and increases for smaller wages. The full supplement is CHF240 (€221) per month for women with an income of up to CHF57,360 per year, CHF170 for wages up to CHF 71,700 per year, and CHF100 for an income of over CHF71,700 per year.

The committee has therefore listened to the request of the National Council to support women particularly with lower incomes.

The SGK-S has also specified that the first nine age groups of women whose retirement age increases during the transitional period would receive a pension supplement of between CHF100 and CHF240 per month.

For the first three age groups the supplement will gradually increase in parallel to the retirement age. The supplement will be granted in full for the following four years while for the last two years of the transitional period it will go down again to counterbalance the risk of increase at the end of the period.

The committee has followed a progressive-declining pension supplement model as proposed by the Council of States.

The issue of compensation for women caught in the transitional period is a contentious one in which parliament is dealing with to bring the first pillar reform to its finishing line, as highlighted in the IPE’s country report last year.

Swiss parliament building

The debate in parliament will end in winter at the earliest

The two parliament houses disagree on the number of women to compensate for higher retirement age withdrawing their pension early. The SGK-S has decided for a cut of the pension and at the same time for the full pension supplement to women who withdraw their pension early.

In April, the Social Security and Health Committee of the National Council (SGK-N) spoke instead in favour of fewer cuts for women withdrawing their pension up to three years early.

Increasing the retirement age for women is part of a more general reform to financially stabilise the first pillar system, called AHV 21, alongside raising VAT tax and the tax reform STAF.

The SGK-S has now approved the proposal of the National Council to raise VAT by 0.4 percentage points and against deploying earnings of the Swiss National Bank from a negative interest rate to the AHV fund.

The Council of States had proposed an increase to VAT tax of 0.3% and the Federal Council of 0.7%.

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