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Swiss want employers to secure troubled pensions

"No raid on our pensions". A banner at a recent union rally against penions cuts. Keystone

The majority of Swiss believe that employers should pay to rebuild the country's troubled compulsory pension funds.

This content was published on March 16, 2003 - 14:39

A public survey, published on Sunday, also found strong opposition among the Swiss to a possible cut in pensions.

Switzerland is currently in the midst of a debate about the future of pensions schemes, many of which are facing massive shortfalls following the stock market downturn.

Because between 60 and 80 per cent of pensions payouts are funded from investment returns, rather than members' compulsory contributions, many are now potentially unable to meet their commitments.

Next month, the Swiss cabinet is due to present plans to parliament for reforming occupational pensions.

The company pension is known as the "second pillar" in Switzerland's three-pillar pensions scheme, which also includes the state pension (first pillar) and private pensions schemes (third pillar).

Company pensions are compulsory for those earning more than SFr25,000 a year.

Options for reducing the shortfall include cutting payouts, increasing premiums and reducing the guaranteed minimum level of investment returns required of pension funds.

Who should pay?

However, a survey published in Sunday's "SonntagsZeitung" shows public opposition to a cut in payouts is high.

Only 14 per cent of the 1,000 people surveyed support a cut in pensions, while 67 per cent believe employers should carry the burden.

Unease about the health of Switzerland's three-pillar pensions system also appears to be high.

Asked whether they would be able to live on income from their first and second-pillar schemes, one in three say they believe not.

More than half of those surveyed say reforms to the pension system are needed. By comparison, some 38 per cent say the system is in good shape and does not need an overhaul.

Expensive

While much of the shortfall has been blamed on falling stock markets, which have severely depleted the capital reserves of many funds, the SonntagsZeitung took issue with the high cost of running company pensions in Switzerland

"Pensions are the most expensive form of social security in Switzerland," said the paper.

"Official statistics show administrative costs for [company pensions] are 24-times higher than those for the [state pension]," it added.

It also blamed the high costs on administrative fees that flow from pensions to banks, agents and insurers.

It pointed out that the large number of pension schemes - currently around 9,000 - had added to the cost.

"[But] the reality is... that in the complex pensions business, many providers cavalierly help themselves," the paper said.

swissinfo with agencies

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