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PENSIONS

OPINION: Switzerland faces two pension votes but neither offers a solution

Switzerland's two public votes on Sunday March 3rd offer Swiss voters two different versions of reality – the elderly as vulnerable versus the elderly as strong. Clare O’Dea asks whether pensioners need protection or a push.

Published: 27 February 2024 17:44 CET
Updated: 29 February 2024 12:50 CET
OPINION: Switzerland faces two pension votes but neither offers a solution
Switzerland faces two important votes on pension but neither provides an answer Photo by Huy Phan on Unsplash

The first popular initiative, launched by trade unions, is called ‘To live better in retirement’. This noble aspiration comes with an annual price tag of four billion francs. The proposal is to increase the annual state pension by 8.33 percent by making a thirteenth annual payment.

The second initiative emanates from a completely different world view, championed by the youth section of the Radical-Liberal Party. It aims to increase the retirement age from 65 to 66 by 2033, and then to tie it to life expectancy. This idea comes with an annual saving of two billion francs.

Voters will get to decide if older people should receive more or give more, or whether to leave the status quo. Both ideas suffer from being rather blunt instruments but they will serve as an interesting test of public opinion.

Free money

The Swiss are traditionally cautious about voting for ‘free stuff’, even when it might benefit them directly. Statutory paid maternity leave was turned down four times before finally being accepted in 2005. Voters said no to two weeks more annual leave in 2012 and rejected a minimum wage in 2014.

The 2.5 million people – every Swiss resident over the age of 65 – who currently receive the state pension, known as the Old Age and Survivors’ Insurance, can’t be counted on to vote to receive a higher pension. Why? Because most of them don’t need it.

In addition to this basic first-pillar payment (up to a maximum of CHF32,000 annually for a single person), pensioners may have income from their occupational pension, private pension, or both. These are known as the second and third pillar of the pension system.

Retirees whose combined pension payments are not enough to meet their living costs are entitled to complementary social assistance payments. In 2021, that was 12.5 per cent of pensioners.

READ ALSO: The reasons why living in Switzerland can prolong your life

Expensive times?

Inflation in Switzerland is relatively low – 2.1 percent in 2023 was considered a bad year. But it’s also not a great measure of the cost of living, particularly as it does not include health insurance premiums, which are up 8.7 percent in 2024 alone.

There is no doubt that some older people struggle to make ends meet – and they would de delighted to have an extra 1,225 to 2,450 francs per year (current range of the monthly payment) to get by. But is that a reason to give everyone over 65 extra money – including the wealthy?

The fundamental flaw with this proposed reform is that it is not means tested. Making a universal payment is an extremely expensive way to help people who are genuinely facing poverty. It is estimated that one in five pensioners live below or close to the poverty line – counting income, not assets.

It seems clear that the energy put into this initiative would have been better spent designing a measure that would target those who actually need the money. But if you do want to help the needy, right here, right now, this initiative would at least be a quick fix.

Losing support

The proposal to increase retirement age has also been rejected by the government, which is not comfortable with the concept of building in the automatic link to life expectancy – in other words, basing policy on a mathematical formula.

But the initiative campaign says raising the retirement age is the best way to save the state pension while being fair to all generations. The pension pot is mainly funded by today’s workers, in the expectation that they will have the same benefit one day.

Sunday’s votes are people’s initiatives, based on the collection of signatures. To pass, they need not just a simple majority but a majority of cantons to say yes. Neither appear to be in a strong position.

The retirement age proposal looks sure to be defeated, especially as voters just accepted an increase in women’s retirement age from 63 to 65 in 2022, which is still being rolled out. The notion that the rich could still afford to retire while ordinary workers will be chained to their jobs for longer rankles with voters.

After a strong start, support for the thirteenth pension payment has been ebbing away and a ‘yes’ vote now looks in doubt. The results will be closely watched on Sunday.

More complex answers

Most people realise that the retirement age will have to be hiked up sooner or later, but to actually persuade the Swiss to vote for this scenario, there would need to be plenty of extra measures to guarantee fairness and flexibility.

What a lot of the debate around ageing and retirement funding seems to miss is that the elderly are a mixed bunch in terms of privilege. Policies that don’t take into account that complexity are not much help.

Yes, most Swiss people of retirement age are in reasonably good health and in a good financial situation. At 83 years, Swiss life expectancy is among the highest in the world. Depending on the job, the economy could probably squeeze an extra year of work out of them.

However, this segment of the population, born around 1959, cannot be lumped together as one homogenous group. Women and immigrants tend to accumulate smaller pensions. Single people are generally worse off than couples. 

Some have a life of disadvantage and hard jobs behind them; others benefitted from a world-class, heavily subsidised education and have built up huge assets. Some are fit as fiddles, leaping from one mountain peak to the next, and some already suffer from multiple geriatric health problems.

Answers to their needs will have to be written on more than the back of a postcard.

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OPINION AND ANALYSIS

OPINION: Switzerland is a better place than 20 years ago, but much can still improve

From attitudes towards foreigners and improvements in work-life balance, Clare O'Dea examines how Switzerland has changed over the last 20 years and how it hasn't ('the Swiss still don't know how to queue'). Her new book All About Switzerland is now available - details below.

Published: 18 May 2024 10:49 CEST
Updated: 18 May 2024 14:45 CEST
OPINION: Switzerland is a better place than 20 years ago, but much can still improve

In the 20 years that I’ve been writing about Switzerland, I’ve tended to focus on one part of the picture at a time. Standing back from the canvas, I can see that there has been a pretty positive evolution in the country over that time.

The change has happened in measurable ways – an extra 1.6 million inhabitants, for one thing – but also in ways that are difficult to define. What I notice is more tolerance, more questioning of the norm, and more focus on fairness.

Some of this has come about through facing up to the wrongs of the past, whether that’s the historical abuse of children in the care system, the denial of the vote to women for so long (until 1971!), or the seizing of dictators’ assets.

Although it takes a painfully long time, mistakes and injustices do eventually come to light and there has been an appropriate reaction of self-recrimination and reflection towards these wrongs, and a willingness to make amends. All this has made Switzerland a better place.

READ ALSO: Are foreigners to blame if they find the Swiss unfriendly?

The foreign factor

When it comes to foreigners, there has definitely been in a positive change in attitudes towards immigrants from the countries of the former Yugoslavia. I detected very strong prejudice against this group in my early years in Switzerland. The second generation has now grown up here and found their place in all walks of Swiss life.

Unfortunately, asylum seekers have borne the brunt of xenophobia in recent years, with the notable exception of Ukrainians fleeing Russia’s war of aggression, who were granted special treatment. Switzerland has welcomed more than 80,000 Ukrainians since 2022, about a quarter of whom have since left the country.

Several cantons, notably Neuchâtel, have led the way in extending more rights to foreign residents and making it easier for them to integrate or obtain Swiss nationality. But naturalisation rates are still low, which is a pity for the Swiss, if only they would realise that.

When I first came to live in Switzerland from Ireland, I benefitted from the newly-valid agreement on the free movement of persons with the EU and EFTA countries. Since then, hundreds of thousands of Swiss and EU/EFTA nationals have been free to move countries for work, adventure, love or retirement.

Those immigrant workers have been a boon to the Swiss economy, which has one of the highest levels of GDP per capita in the world. Travel wise, Switzerland is well and truly integrated into Europe, joining the Schengen Area in 2008.

OPINION: The true signs you are becoming more Swiss than the Swiss

Family matters

Just this week, my twin daughters, who are Swiss citizens, received their first ever ballots for the next federal and cantonal votes on June 9th. Apart from reminding me of the fact that foreigners in Switzerland are largely excluded from the democratic process, this landmark also reminds me of how times have changed in relation to maternity rights.

It is hard to believe that Swiss women did not have statutory paid maternity leave until 2005. Voters had rejected the notion that women should have guaranteed paid leave after giving birth on four previous occasions – 1974, 1984, 1987 and again in 1999.

For all those years, maternity benefits were left up to employers to dictate, which was clearly not enough protection for all mothers. Today, new mothers are entitled to 14 weeks statutory leave but most employers offer more than that. Since 2021, fathers in Switzerland have been entitled to two weeks paternity leave.

There’s definitely room for improvement in the area of work-life balance for families, and there are some ideas in the pipeline, including state subsidies for childcare. With a fertility rate of 1.39 births per woman in 2022, Swiss-born babies is not where population growth is coming from.

Taking turns

One issue that seems almost unfixable in Switzerland is the high cost of healthcare. The country has the second most expensive system in the world, after the United States. Most of the cost is shouldered by households, directly or indirectly.

Whatever about the cost, the care itself is excellent and relatively well staffed. With one in three healthcare workers holding a foreign diploma, including a large proportion of cross-border workers the system is heavily reliant on non-nationals.

On June 9th, Swiss voters will get to decide on two people’s initiatives, both of which aim to curb the cost to consumers. My impression in the past was that the Swiss were reluctant to vote for freebies for themselves. But this may be the right timing for these proposals, considering that voters accepted an initiative in March of this year to increase the state pension by 8 per cent.

When it comes to daily life in Switzerland, politeness and order is the rule, with one exception – the Swiss still don’t know how to queue! I had this experience just the other day waiting outside a small museum that was only letting in a few people at a time. If you can cope with that fundamental flaw, the rest is easy.

All About Switzerland

A dynamic, up-to-date guide to Swiss society and current affairs, All About Switzerland ebook features a selection of 29 articles by Clare O’Dea. The articles were first published by The Local Switzerland from 2022 to 2024. The ebook is available on Amazon, Kobo and other retailers.

 
 
 
 
 
 
 
 
 
 
 
Photo: Charly Rappo

Originally from Dublin, Clare O’Dea has lived in Switzerland for two decades. Author of fiction and non-fiction, Clare has had a varied media career in Ireland and Switzerland, with a stint in Russia. She has contributed articles to The Local Switzerland since 2022. Her new book All About Switzerland: Selected articles from The Local Switzerland is Clare’s fourth and is available as an e-book online.

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