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Impact Investing

IPE special report May 2018

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Swiss voters to decide on SNB pension cash

SWITZERLAND - Swiss voters will on Sunday decide whether over CHF1bn of the Swiss National Bank's annual profits will be diverted to the Old Age and Survivors' Insurance Fund (AHV/AVS). According to opinion polls, those opposed to the move have substantially gained on supporters of the initiative.

Would the vote have been held last Sunday, 46% would have consented to using the National Bank's profits, which is 15% less than in the first opinion poll held on the issue in August. The opponents gained 18% and reached 35%.

"It will be a very close call and there is a danger of the vote tilting towards ‘no'," Nicolas Galladé, spokesman for the Social Democrats in Switzerland spearheading the so-called KOSA-campaign, told IPE. "We had started off well but we have seen a massive counter campaign."

Should the vote turn out in favour of the KOSA-campaign, the Swiss National Bank's profits would be split to see CHF1bn (€0.6bn) to go to Swiss cantons and the rest go towards the AHV.

However, the SNB says that it will only yield a CHF1bn profit over the next years and that therefore no money will be left to put into the AHV. The SP and supporters of the KOSA-campaign base their assumptions of profits reaching CHF2-3bn on the results of the last 20 years. "No one has yet been able to explain sufficiently why the median profit of CHF3bn yielded over the last 20 years can no longer be achieved", Galladé said.

The SNB also opposes the campaign because it fears to lose its independence. "In view of the growing financial needs facing the Old Age and Survivors' Insurance Fund (AHV/AVS) in the coming years, the gradual reduction of our distribution potential will inevitably lead to continuous tensions between political circles and the SNB.

"It is widely accepted that shielding the central bank from political pressure constitutes an important factor in the preservation of monetary stability", SNB chairman Jean-Pierre Roth had said at a press conference in June.

Should the Swiss people vote against the KOSA suggestion - and the peoples' decision is final, all parties in the Swiss parliament have come up with a compromise under which CHF7bn, the government's one third share in the SNB profit it made selling some of its holdings of gold, will be put into the AHV. The SP criticises that this will only be enough to fill the deficit in the invalidity insurance also covered under the AHV. "It will not help the AHV with the demographic challenges of the future", Galladé says.

Dieter Leutwyler, spokesman for the Swiss Ministry of Finance, confirms that there are people who think that the CHF7bn will not be enough. In that case "pension adjustments and possibly an increase of the VAT" will be discussed. The SP says it will fight any attempt to cut pensions or raise contributions to the AHV.

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