SWITZERLAND - The second chamber of the Swiss parliament has criticised its fellow parliamentarians for rushing a reform of the pension system.

In today's session, the smaller chamber rejected a bill which would have seen a cut in the conversion rate for annuities (Umwandlungssatz) to 6.9% by 2008 from the current 7.1%. An earlier revision of the pension law had suggested a cut to 6.8% by 2014 only.

This means in seven years time a Swiss person with CHF500,000 (€302,000) in pension assets will get an annual pension of CHF34,000 instead of the CHF35,500 they would get today. This means the money saved for retirement will last longer but also the monthly pension benefit will decrease.

The second chamber supported the argument suggesting the rate needs to be cut as Swiss people are living longer and returns on pension fund capital is slightly lower than expected.

However, they voted 22 to 11 against speeding up the reform process and also opposed a suggestion to decrease it even further to 6.4% by 2011. This further reduction will now take place after 2014.

The bill will now remain untouched until after the parliamentary elections in October this year.

Swiss unions in April said they would organise a national referendum should parliament pass the bill. As a referendum is binding on parliament, the law could then only have taken effect if a majority of the Swiss voters approved.

Unions argued the returns for Swiss Pensionskassen of 12.6% in 2005 and 6.6% in 2006 were better than government estimates so there was therefore no need to cut the conversion rate.

In today's session, the second chamber confirmed the completion of a deal, agreed in January, which will see the neighbouring state of Liechtenstein link to the Swiss pension protection fund.