The social security and health committee of the Council of States (SGK-S), the upper house of the Swiss parliament, will deal with the reform of the second pillar of the country’s pension system at its next meeting in early September.

At that meeting, the committee intends to make a decision on the ‘sticking point’ of compensation for beneficiaries who would receive a pension cut because of the reduction of the conversion rate used to calculate pension payouts from accrued assets upon retirement – Umwandlungssatz – from 6.8% to 6%. This will then allow the Council of States to discuss the reform in the autumn session.

SGK-S has resumed discussions on the compensatory measures after the Council of States requested a review of the proposal put forward by the representative of the Liberal Party (FDP) Josef Dittli.

Dittli proposed a compensation threshold for cohorts affected by the transition from the old to the new system of up to CHF215,100 (€213,000) saved in pension capital by the time they retire.

Beneficiaries who have saved a higher amount in pensions would be subject to the rules approved last December by the National Council, the lower house of parliament.

The National Council has approved a version of the reform foreseeing a maximum compensation of CHF2,400 per year for the first cohort of retirees; for the second cohort, a maximum of CHF1,800 per year; and CHF1,200 per year for the cohort of the last five years.

The Swiss pension fund association, ASIP, said in a statement that it has urged the SGK-S committee to look at the version of the reform already approved by the National Council, that benefits low earners and part-time workers.

Swiss cabinet urges a vote in favour of first pillar reform in referendum

The Swiss government is recommending a vote in favour of the reform of the first pillar pension system AHV in a referendum that will take place on 25 September.

According to the government, the reform will stabilise AHV’s finances for a period of around 10 years and pensions will be secured at the current level.

The AHV is currently in a difficult financial situation and within a few years its income will no longer be sufficient to cover all pensions. Over the next 10 years, the AHV will need an additional CHF18.5bn to meet its obligations, according to the government.

With the reform, the retirement age for both men and women would stand at 65, and this would also apply to pension funds. A higher retirement age for women (from 64 to 65) would mean the AHV could save around CHF9bn over a period of 10 years.

Based on the reform proposal, VAT would increase by 0.4 percentage points, which would increase AHV’s income by CHF12.4bn by 2032.

Compenswiss to apply new accounting standards

Compenswiss, the public institution managing Switzerland’s first-pillar social security funds AHV, IV and EO, will start to apply the International Public Sector Accounting Standards (IPSAS) from the financial year 2025.

The government approved the ordinance to apply the new accounting standard at its meeting on 29 June following a consultation on the matter.

IPSAS is an international set of accounting rules for the public sector. In contrast to the currently applied accounting rules for AHV, IV and EO, IPSAS are based on the principle of accrual accounting. This means that transactions must be recorded at the time they are conducted and not at the time they are paid (cash accounting).

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