Adapting social security to an ageing population

Switzerland has an increasingly ageing population Keystone Archive

The Swiss parliament is debating changes to the national social insurance system.

This content was published on April 15, 2002 - 15:29

Switzerland is at the forefront of European nations when it comes to guaranteeing a decent standard of living for old age pensioners. But the system risks becoming overburdened by the growing number of old people.

The House of Representatives is this week holding a special session devoted largely to amending the occupational benefits plan. The House is considering a new formula of calculating annual allowances and extending the scheme to low income workers.

The occupational benefit plans are part of Switzerland's three-tier welfare system, which also includes a basic old age insurance and private savings.

The first two pillars are designed to ensure individuals receive an income worth 60 percent of their final salary upon retirement.

Known also as the "second pillar", the occupational benefit plans are funded equally by employers and employees. It was introduced and made mandatory in 1985.

Controversial changes

The government proposes increasing mandatory contributions for older employees to ensure assets are sufficient to cover for retirees' increasing longevity.

Other proposals include the introduction of a legal retirement age of 65 for both women and men, and early retirement from the age of 59. Women can currently retire earlier than men.

Parliament will also consider extending occupational benefits to low-income workers. The main beneficiaries would be women with part-time jobs.

However, the move is expected to lead to more than SFr800 million ($480 million) per year in additional costs. Employers' organisations have voiced strong opposition and threatened to challenge the changes in a nationwide referendum.

The Senate is due to discuss the amendments at a later stage.

Swiss top of list

In 1997, Switzerland was holding about SFr31 billion in pension funds under its occupational benefit plans, according to European Union statistics.

The figure is higher than in Germany or Britain, which have a larger workforce than Switzerland. But in many European countries the basic pension scheme, or "first pillar", carries most of the costs associated with retirement funding.

by Urs Geiser

In compliance with the JTI standards

In compliance with the JTI standards

More: SWI certified by the Journalism Trust Initiative

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