Pay more for lower pensions?
On September 22, 2024, Swiss citizens will vote on the reform of their occupational pension scheme (BVG reform). Its aim is to strengthen the financing of the second pillar. The unions, the SP and the Greens have launched a referendum.
The project to be put to the vote in September is shaking things up: a Socialist Federal Councillor is once again having to defend an official position against the advice of her own party; a Green Member of the Council of States, Maya Graf, co-chair of the feminist organization "Alliance F", is taking up the frontline to support a reform that is being rejected by her party; Esther Friedli, SVP Member of the Council of States and member of the GastroSuisse board, is following the example of the left and rejecting this reform. The fact is that, on the one hand, the project is very complex, and on the other, the Federal Council and Parliament have been so vague in their details that the effects on pensioners cannot be reliably predicted. Musicians should reject the reform, as it would not bring them any financial benefits, but would lead to a reduction in their pension.
Dilution of the initial reform idea
Following the failure of the "Old Age Pensions 2020" project in the popular vote of 2017, it was decided to reform the two pillars of old age provision separately. The reform of the first pillar ("AVS 21"), which has since been accepted in a referendum, essentially consists of raising the retirement age for women and increasing VAT. Presumably, the barely positive outcome of the vote was influenced by alleged financial difficulties of the AHV, which a few weeks ago turned out to be nothing more than a blatant miscalculation by the Federal Social Insurance Office. With regard to the reform of the second pillar, the Federal Council initially accepted a compromise proposal from the social partners to improve the financing of occupational benefits by adjusting the minimum conversion rate. In return, the coordination deduction was to be halved, and a solidarity contribution introduced, in order to maintain pension levels and provide better insurance cover for people on modest incomes and working part-time - including musicians. During the parliamentary process, however, the bourgeois parties quickly gave up. The reform finally adopted deviates from the social partners' compromise on key points. In particular, severe cuts were made to pension supplements, which were supposed to compensate for the reduction in the minimum conversion rate and the steady decline in pension fund pensions over the years. Parliament has also renounced joint financing of these supplements. All that remains of the original idea are higher salary deductions and a lower minimum conversion rate (6 % instead of 6.8 %), resulting in lower pensions for many insured people, since the conversion rate determines the amount of pension received for assets saved.
Pensions fall despite good pension fund results
Second-pillar pensions are falling steadily, while contributions have never been so high and pension funds are achieving excellent results. Their reserves and safety margins amount to over CHF 110 billion. With the BVG reform, pensions would lose up to 3200 francs a year. Over the last three years, retired people have lost more than 5 % of purchasing power on their BVG pension due to inflation. This corresponds to around 100 francs a month for an average pension. At the same time, compulsory payroll taxes would be increased. With this reform, employees would have to pay an additional CHF 2.1 billion a year to the pension funds. Costs per employee would rise by up to 2,400 francs a year. Pierre-Yves Maillard, President of the Swiss Trade Union Confederation (USS), of which USDAM is a member, sums up the problem succinctly and concisely: "Pay more to get less - this unacceptable package must be rejected!" Today, bankers, managers and experts are already taking more than 7 billion francs a year from our retirement assets. Asset management fees have doubled in 10 years. They cost everyone 1,400 francs a year. Experts also see huge potential for savings. Over the last 20 years, insurance companies have earned almost 9 billion francs from our 2nd pillar contributions, with the blessing of Parliament, by offering costly solutions to small companies that are unfavorable to the insured.
Broad opposition
The argument that, after 20 years, the BVG should finally be reformed is false: unlike the AHV, there is no standstill on reforms in the second pillar.
Moreover, the reform does not provide for any structural improvements for women, such as the introduction of bonuses for educational and care duties.
That's why USS AHV specialist Gabriela Medici points out that: "This reform is also bad for women, many of whom are threatened with lower pensions, while the problems are not solved."
Recently, eight trade associations - GastroSuisse, the Centre Patronal, the associations of the bakery-confectionery sector, the cafe trade, hairdressing salons, fitness and health centers, petrol station shops and the Swiss Meat Trade Association - formed an alliance called "No to the failed BVG reform". The alliance considers the reform a failure and recommends that it be rejected at the ballot box.
