Two years after Swiss voters approved the introduction of a 13th monthly state pension payment, parliament remains divided over how to finance it. The debate has further sharpened concerns about the unsustainability of Switzerland’s pay-as-you-go pension system as the population ages.
Left-wing parties accuse conservative and liberal politicians of trying to use the funding debate to pave the way for a future increase in the retirement age. Their opponents argue that financing the reform through payroll contributions would place an excessive burden on a shrinking working population. The left prefers payroll taxes because they scale with salaries and push more of the burden on to the well paid.
This week the National Council, Switzerland’s parliament, backed a temporary funding mechanism based solely on an increase in value-added tax (VAT). On Wednesday the lower house reaffirmed its position by 99 votes to 97, rejecting a compromise adopted by the Council of States that would have combined a VAT rise with higher salary contributions.
The National Council also voted to extend the temporary VAT financing until the end of 2033, rather than 2030, in order to allow more time for work on a broader pension reform.
Elisabeth Baume-Schneider, the federal councillor responsible for social insurance, warned that the financing of the 13th pension payment would ultimately need a permanent solution. The additional pension payment, she noted, has no expiry date.
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