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What is Switzerland's 13th-month pension plan and why are they voting on it?

Helena Bachmann
Helena Bachmann - [email protected]
What is Switzerland's 13th-month pension plan and why are they voting on it?
Many retirees would benefit from the 13th pension, referendum committee says. Photo: Pixabay

A recent poll has shown that the overwhelming majority of Switzerland’s population wants the government to introduce the 13th- month pension plan. What is it and how would retirees benefit from it?


Nearly 70 percent of Switzerland’s population are in favour of extending the first-pillar state pension over 13 months, according to a survey carried out by Tamedia media group. 

The proposal, brought about by left-wing parties and trade unions, seeks to base the first-pillar  pension (AHV in German and AVS in French and Italian) on the the 13-month salary system practiced by most Swiss employers.

This means that annual earnings are calculated on, and paid out in, 13 instalments rather than 12.

The idea behind this system is that the 13th instalment paid out in December (in effect, two months’ salary) will help pay for Christmas expenses and other end-of-year bills.

READ ALSO : What is the 13th-month salary in Switzerland and how is it calculated?

Spreading the AHV / AVS  benefits over 13 months would increase first-pillar pensions by 8.33 percent, supporters say.

‘Not sustainable’

The push toward the 13th pension is not new; it  has been debated by MPs  for a while.

Earlier this year, both chambers of the parliament voted against the proposal, claiming that an increase in the first-pillar pension would not be financially sustainable in the long term. The additional expenditure would reach 5 billion francs by 2032, MPs said.

In response, supporters of the new system collected over 137,000 signatures —37,000 more than required by law —  to bring this issue to a national vote.

This move is necessary to compensate financially-strapped retirees for the higher cost of living, Social Democratic Party, which spearheaded the campaign, explained on its website.

“Rents and health premiums are rising, and pensions no longer cover essential expenses," the party said. 

The additional 8.33 percent that would be generated by the 13th payout, would  benefit those who need it most: low and middle income retirees, supporters point out.


More pension woes

They also argue that the hike is even more necessary now, as second-pillar occupational pensions are at risk of decreasing by about .08 percent.

That’s because Switzerland's rising life expectancy — one of the highest in the world — is weakening the pension system, with the government saying the only way to protect the second-pillar scheme is to reduce payouts.

READ ALSO: Will you be able to live comfortably on your Swiss pension?

This issue will be decided on at the ballot box on March 3rd as well, when both pension-related reforms will be voted on.


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