SWITZERLAND - The Swiss parliament has further slowed down plans by the government to cut pensions, in order to make assets in pension funds last longer.

Second pillar pensions will be cut by around 8% from 2015 with first cuts not happening for another two years, according to a new suggestion by the Swiss parliament.

The government decided last year to speed up reforms to the conversion rate ("Umwandlungssatz") which is used to calculate annuities because Swiss people are living longer than expected, and it is having a significant knock-on effect to public financing.

In 2003, a law was passed to cut the rate from currently 7.05% for men and 7.1% to 6.8% by 2014 for both sexes.

However, the government brought in a bill last summer which would have seen the rate go down to 6.9% already in 2008 and subsequently go down to 6.4% by 2011.

The smaller chamber in the Swiss parliament opposed this suggestion arguing the changes were "too speedy" and the bill remained untouched until this spring. (See earlier IPE story: Swiss pension cuts postponed)

A reduction of the conversion rate by 0.5 percentage points means an average pension cut of 8%, so Parliament is now working on a new motion which aims to introduce a 6.4%  cut by 2015 at the earliest.

A parliamentary commission suggests a five-year period should be established, after the law comes into effect, to adjust the rate step-by-step.

This new bill will pass parliament in autumn of this year at the earliest and the law is then not expected to come into effect until beginning of 2010, because it is part of a package which has yet to be finalised.

The assembly decided against a suggestion to keep the 2003 law and further decrease the conversion rate after 2011.