SWITZERLAND - Pension benefits provided by the first and second pillars no longer provide enough for a decent retirement and should therefore be seen as in breach of the Swiss constitution, the Swiss union Unia has claimed.

Together, the pensions received from the state pension (AHV) and mandatory occupational pension schemes (BVG) are, in most cases, worth around 60% of an individual's income.

"If the BVG pensions were to go down more then the AHV and BVG pensions combined would no longer achieve the constitutional goal," said Andreas Rieger, head of Unia.

The union argued that less than 60% of the income replacement rate might be enough for people with incomes of CHF8,000 (€5,328) per month but for people with incomes of less than CHF5,000 a month the pensions level is simply not enough.

The Swiss government and parliament have put in place measures which will lead to lower pension payouts in the future, in a bid to ensure the sustainability of the system.

Howver, the union has initiated a referendum against further cuts in the conversion rate used to calculate pension payouts. (See earlier IPE article: The winter of Swiss discontent?)

Although the Swiss constitution does specify exactly what the replacement rate should be, it states the pension received from the AHV and BVG system must be enough to ensure a "dignified living standard in retirement" and 60% is the minimum assumed by most participants, unions and many politicians.

Unia has also called for a halt to contribution increases as it is felt some pension funds might use these in order to recover to a full funding level.

"Higher contributions are counterproductive in times of crisis," the union said.

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