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PENSIONS

Switzerland’s retirees risk losing a whole month’s pension

Inflation remains high by Swiss standards, reaching 3.4 percent and placing a heavy burden on workers and pensioners.

Switzerland's retirees risk losing a whole month's pension
Swiss pensionista have been hit by rising inflation. (Photo by VALERY HACHE / AFP)

The purchasing power of pensions is falling due to inflation and retirees risk losing a whole month’s pension, according to the Swiss Trade Union Confederation (SGB).

In April, Switzerland’s inflation rate stood at about 2.6 percent, but it climbed to 3.4 percent in June.

That’s a significant increase, but the good news (at least for the Swiss) is that this rate is still lower than in many other European countries, where it hovers around 8.6 percent.

The bad news is that Swiss consumers have noticed their cost of living rising and the purchasing power of their salaries and pensions dropping.

READ ALSO: Cost of living: How can you beat Switzerland’s inflation blues?

Based partly on forecasts calling for the increase in health insurance premiums by 7.5 percent next year, an average pensioner couple could lose between 450 and 500 francs, or 8 percent of their income, in purchasing power.

This prospect “is shocking”, said the SGB’s chief economist, Daniel Lampart, demanding that old-age benefits (AHV / AVS), as well as the second pillar, are automatically adjusted to inflation.

The SGB is also calling for the government to institute a 13th AHV / AVS pension payment, as is the case with Swiss salaries.

READ ALSO: EXPLAINED: Why Switzerland’s inflation rate has stayed low compared to elsewhere

The organisation says that the average AHV pension is just under CHF 1,800 per month, but “you can’t live on this in Switzerland”, SGB says. So it calls for an “urgent” increase in AHV pensions.

“In addition to the urgently needed general wage increases, the measures demanded by the Swiss Trade Union Confederation – the increase in premium reduction and the rapid inflation compensation of the AHV pensions – must be implemented urgently in Parliament’s autumn session”, it said.

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PENSIONS

OPINION: Switzerland can no longer justify a lower retirement age for women

Having a lower retirement age for women is a throwback to more patronising times, yet the Swiss government has struggled to introduce parity in this area for decades. As the latest reform attempt comes to a popular vote, Clare O’Dea asks what’s behind female resistance to this change.

OPINION: Switzerland can no longer justify a lower retirement age for women

The retirement age in Switzerland is 64 for women and 65 for men. For generations of Swiss people, this differential treatment is standard. The gap used to be bigger. From 1962 to 1997, women retired at 62.
On September 25, Swiss voters will have their say on a reform of the state pension system (AHV / AVS), which would raise the retirement age for women to 65 and use a VAT hike to help finance pensions. The Old Age and Survivors’ Insurance has been running a deficit since 2014 and this reform is billed as a crucial package to keep it viable.

Is earlier retirement for women a historical benefit worth defending or should it be abandoned in the interests of fairness and financial good sense? If women voters alone could decide, the proposal would be rejected.

READ ALSO: Reader question: How long must I work in Switzerland to qualify for a pension?

According to the most recent poll, 64 per cent of women intend to vote against the reform, while 71 of male voters approve of the law. This is a much higher gender difference than is usually seen, even in sex-specific voting issues. These numbers, if sustained, would ultimately deliver a yes vote but leave a bitter taste for women.

As a woman who will be directly affected by this decision in the not-too-distant future – well, 15 years from now – and someone who made all the classic gender-based “mistakes” when it comes to my own pension provision, I don’t see this potential change as a threat. If anything, it is an opportunity, a wake-up call.
Swiss women earn less than men over their lifetimes for several well-documented yet seemingly unshakable reasons. Mostly these relate directly or indirectly to time spent caring for children or other family members.

Caring responsibilities, even the hypothetical possibility of such responsibilities, influence women’s career choices, the number of hours they work, and their income. This burden also influences how women are perceived and rewarded as employees.

READ ALSO: EXPLAINED: How does the Swiss pension system work – and how much will I receive?

But there is also a kind of fatalism on the part of women in long-term partnerships who know they can’t sustain a career as the “main earner” without a “wife-like” partner to rely on, so they do not try. Divorced women usually find it’s too late to catch up.

Three things that are bad for pension provision are career interruptions, part-time hours and lower pay. Yet this is the norm for most working women over the long term, mothers in particular.

As I see it, there are three ways to improve matters. Either women change to behave more like male workers, the system changes to accommodate existing patterns better, or we change the existing family patterns altogether.

(Photo by ROMAIN LAFABREGUE / AFP)

The problem is that mother workers can only become more like father workers when men pick up the slack (choosing family-friendly jobs, reducing their hours, taking family-centred career breaks, leaning in at home). Where else will the spare capacity come from?

READ ALSO: EXPLAINED: Everything you need to know about retiring in Switzerland

I think all three changes need to happen in parallel. Some progress has already been made. There is no point in hanging around with the retirement age reform. It’s one of the few changes that can be achieved with the stroke of a pen.

Those campaigning against harmonising the retirement age say that all the other things dragging down women’s lifetime earnings – the structure of the labour market, lack of affordable childcare, gender pay gap, the persistence of traditional gender roles – need to be fixed first before we demand an extra year of work from women. That seems defeatist and totally impractical to me.

The priority for all is to avoid women having a much greater risk of poverty in old age as they do now, especially divorced women and widows.

Swiss women currently receive 37 percent less than men through all three types of pension provision combined – the state pension, occupational schemes and private pension. The picture in Switzerland is worse than in most industrialised countries because of the prevalence of part-time work for women – a double-edged sword.

Swiss voters turned down two previous proposals to level up the retirement age for women – in 2004 and 2017. However, taking into account the compensatory measures included in the current reform, that potential extra working year should not be viewed as a penalty.

READ ALSO: Reader question: Can I take my pension money with me when I leave Switzerland?

If that year is spent working, not only will the women have their salary, but they will also have the opportunity to contribute a bit more to the two other streams of pension funding – occupational pensions and voluntary private pensions.

Working also means being physically active, having more social interactions and stimulating your brain. These are all pillars of brain health that help protect against the onset of dementia, a disease that women are twice as likely to suffer from.

The absolute refusal to acknowledge that an ageing population and increasing life expectancy require changes to long-standing pension norms is one of the blind spots of the Left in Switzerland. According to the UBS International Pension Gap Index, the proportion of active (working) to retired people will decrease from the current level of 3 to 1 down to 2 to 1 by 2050.

The reasons why Swiss women should retire one year earlier than men are lost of the mists of time. Well, not quite, there was some talk of “physiological disadvantage” and wives keeping their older retired husbands company. It seems rather silly now.

The final justification left for an early exit from the workforce is that it offers some compensation for all the other financial injustices. That’s a passive rather than an active approach to our problems. I see this reform as part of the solution. Let’s get on with it.

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