Mercer | Pension Reform ‘2020’: Time For Action

Mercer | Pension Reform ‘2020’: Time For Action

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Pension Reform ‘2020’: Time For Action

On March 16, 2017, the Swiss Federal Assembly has adopted the Pension Reform ‘2020’ proposed by the conciliation conference. The two Councils shared the conviction that the ‘status quo’ is not an option, as it endangers the sustainability of the 1st and 2nd pillar and would be the worst solution regarding the intergenerational contract. As a result, the Federal Assembly spoke out in favour of the main aspects of the reform:

  • Harmonized reference age for men and women at 65 years,
  • flexible retirement provisions in a coordinated and actuarially appropriate manner,
  • reduced minimum conversion rate,
  • compensatory measures, particularly:

    • Reduction and flexibility of coordination offset
    • increase of savings scales
    • introduction of a supplementary AHV/AVS pension
    • increasing the ceiling for AHV/AVS pensions of married couples to 155%
  • measures to maintain financial stability between the two pillars (fixing the compensation fund to 80% of the annual expenses).

Federal Councillor Alain Berset called the Pension Reform ‘2020’ ‘the most important project of the legislative period’. As it stands, the new legislation will have great impact on companies, pension funds and their members: Employees with lower salaries or working part time will have to pay higher contributions, which also affects companies. The costs associated with pensions will rise and there might be transitional provisions to be paid.

To give you an overview of the challenges ahead, we have prepared an overview of the issues and steps to be taken and will hold a webcast to discuss the reform with you in more detail.
 

What are the next steps of the reform?


The Pension Reform ‘2020’ shall be submitted to a popular vote after the referendum deadline. The entry into force is planned for January 1st, 2018, with a transitional period for the innovations affecting the 2nd Pillar until January 1st, 2019. It has to be taken into account that the reform only enters into force if the increase of the V.A.T. (to bridge the gap in funding for AHV) is also accepted in the popular vote. If one of the proposals is refused, none of them will enter into force.

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