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What impact could Switzerland’s referendum on pensions have on you?

Swiss voters will head to the polls on September 25th to decide on three issues, including one that could affect current and future retirees.

What impact could Switzerland's referendum on pensions have on you?
Seniors in Switzerland could be impacted by the upcoming referendum results. Photo: Pixabay.

In the third round of national referendums in 2022, voters will weigh in on three issues, including industrial farming and withholding tax.

Foremost among them, however, is the one seeking to reform the OASI scheme.

What is at stake?

OASI is a term for the old age and survivors’ insurance which, according to the government, “is the cornerstone of the Swiss social insurance system. It grants pensions of two basic types: old age pensions to people of retirement age [AHV / AVS], and so-called survivors’ pensions to spouses or dependent children of a deceased insured person”.

This reform proposed by the government would provide for a higher value added tax (VAT) — currently at 7.7 percent —  to finance the scheme.

If passed, the new legislation would also amend the existing law on AHV / AVS, particularly in relation to increasing the retirement age for women from the current 64 to 65, same as for men. This move too is seen as necessary to keep the AHV / AVS scheme afloat financially as life expectancy in Switzerland is increasing and people require pension benefits longer than in the past.

Should you be concerned by the outcome of this vote?

If you plan to stay in Switzerland once you stop working, then yes.

As the Federal Council explains it, “the reform to is intended to guarantee OASI pensions for the next ten years or so».

In fact, this issue is important to anyone working and planning to retire in Switzerland, as without a new influx of funds, the Swiss pension system could plunge into the red within a few years, “because baby boomers are reaching retirement age and life expectancy is rising”, the Federal Council says.

Who opposes the proposal?

While the government recommends that voters accept this reform, trade unions and political left are against it, arguing that the new system, especially the higher retirement age, would be “detrimental to women” and low-income people.

“It is a real slap in the face inflicted by the insurance lobby and its friends in parliament”, according to Switzerland’s largest labour union, UNIA.

As for the Green Party, it argues that an “increase in the retirement age for women would only be the start. If the reform passes, it’ll leave open door to retirement at age 67 for everyone”.
The government has no such plans, however.

Will this referendum be accepted or rejected?

While nobody knows for sure, based on the latest polls conducted on September 7th, it looks like the voters will probably back the government.

According to the most recent poll carried out by the Tamedia media group, both the increase of the TVA and overall OASI reform (two separate issues within the same referendum) win win a narrow majority of votes, with 55 and 56 percent, respectively.

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

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Pollsters predict Swiss back pension reform

Swiss voters appeared Sunday to narrowly accept the government's divisive pension reform plan, which would raise the retirement age for women, while snubbing a push to ban factory farming.

Pollsters predict Swiss back pension reform

Shortly after polling stations closed at noon (1000 GMT), the gfs.bern polling institute projected that Swiss had voted to reform their pension system for the first time in more than a quarter of a century.

Bern has long argued the need to “stabilise” the country’s old-age security system, under pressure as life expectancy rises and the giant baby-boomer generation reaches retirement age.

The government has seen its attempts to introduce similar pension reform plans thwarted in the polls twice before, in 2004 and 2017, but gfs.bern projected that separate votes on different aspects of the reform had both passed.

Early results indicated that 51 percent of voters had opted for the most controversial part of the reform, involving hiking women’s retirement age by one year, gfs.bern said an hour after polls closed.

A separate vote on boosting funding for the reform through a sales tax hike was meanwhile on track to pass with 56-percent support, the pollster said.

If those numbers are confirmed, women will need to work until the age of 65, the same age as the current retirement age for men, before receiving a full pension.

Gender pension gap

Parliament approved the key measures, which include a sales tax hike, last year, but left-leaning parties and unions decry the reform “on the backs of women” and pushed the issue to a referendum under Switzerland’s direct democratic system.

While backers of the reform argued that men and women retiring at the same age is not unreasonable, the plan sparked significant pushback, especially from women.

This result “is painful for the left and the unions, but especially for the people it will affect,” Socialist Party parliamentarian Samuel Bendahan told the RTS public broadcaster.

Opponents argued that women face significant discrimination and a broad gender pay-gap in Switzerland, meaning they receive far smaller pensions than men.

They argued it was unfair to increase their retirement age without first addressing those issues.

In 2020, women in Switzerland on average received pensions nearly 35 percent smaller than men, according to the Swiss economy ministry.

Polls ahead of Sunday’s vote revealed deep divisions between the sexes, one Tamedia poll showing 70 percent of men questioned in favour and 58 percent of women opposed.

Early results Sunday were not broken down in terms of gender, but did show a divide between different regions, with the German-speaking part of the country clearly in favour of the reform and the French speaking part opposed.

Initial results from Geneva for instance showed more than 62 percent of voters had voted against the plan, the RTS public broadcaster reported.

Factory farming ban rejected

While the pension reform plans appeared set to pass, gfs.bern projected that another hotly debated issue on Sunday’s ballot, a proposed ban on intensive livestock farming, would not pass.

Early results showed that a full 63 percent of voters had rejected the popular initiative by animal rights and welfare organisations, gfs.bern said.

The backers of the initiative had wanted to make protecting the dignity of animals like cattle, chickens or pigs a constitutional requirement, and impose stricter minimum requirements for animal-friendly housing and care, access to outdoors and slaughtering practices.

The proposal, which essentially amounted to outlawing factory farming, would also have extended to imports of animals and animal products.

The government and parliament opposed the initiative, insisting that Switzerland already has among the world’s strictest animal welfare laws, and warning that tightening the rules further would significantly hike prices.

Bern had also cautioned that the import clause could impact relations with Switzerland’s trading partners.

Backers of the initiative said Sunday that while they would have liked to see their proposal pass, they were pleased the campaign had raised awareness about the issue.

“For us, it is in any case a victory,” Vera Weber, head of the Franz Weber Foundation, told RTS, pointing out that “all of Switzerland has discussed the problems linked to intensive livestock farming and our meat consumption.”