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REFERENDUMS IN SWITZERLAND

What’s at stake in Switzerland’s federal referendums on September 22nd?

On September 22nd, Swiss citizens will head to the polls (unless they've already mailed in their ballots by post) in the third round of national votes in 2024.

Published: 21 August 2024 11:50 CEST
Updated: 31 August 2024 08:06 CEST
What's at stake in Switzerland's federal referendums on September 22nd?
Swiss retirees don't want to receive lower pensions. Photo: Claudio Schwarz on Unsplash

Two issues will be submitted to a popular vote on September 22nd, 2024.

The first, and the less contentious of the two, is the vote “For the future of our nature and our landscape (Biodiversity Initiative).”

It calls, as its name suggests, for increased funding to preserve the country’s biodiversity and ecosystems.

If accepted, this proposal would enshrine in the constitution the obligation of cantons and the federal government to increase protection of nature, landscapes, as well as historic buildings and sites, by allocating more funding to this pursuit.

Pension reform

The other issue — which involves the second-pillar (LLP) pension ‘reform’ — is far more controversial.

But what exactly is the second-pillar (LPP) retirement fund?

Like the first one —the state AHV / AVS pension — the second pillar is also obligatory.

It is designed to enable pensioners to maintain their standard of living in retirement.

To benefit from the scheme, you must pay in monthly contributions throughout your working life, if:

  • You are at least 17 years old
  • You pay into the first pillar
  • You are in fixed employment and earn at least 22,050 francs a year

You and your employer each pay half of the required amount, which is based both on your salary and your age.

From 25 to 34 years old, the contribution is 7 percent of your salary; 35 to 44, 10 percent; 45 to 54 years old,15 percent; and 55 to retirement, 18 percent — each of these contributions spilt in half between you and your employer.

How much occupational pension you receive once you retire will depend on how much you (and your employer) contributed into the second pillar fund throughout your working years. It will also depend on your last salary. 

As a general indication, the amount of first and second pillar pension usually makes up 60 to 70 percent of your last salary. (People who want to get even more money, can invest into the third pillar, which not compulsory, but helpful.)

READ ALSO: What is Switzerland’s ‘second pillar’ pension and how you will benefit from it? 

Why is the pension reform vote stirring controversy?

While the text is very complex, the reform would entail cutting the LPP from 6.8  to 6 percent, which means annuities would drop by about 3,240 francs a year on average.

The Federal Council, which supports this move, argues that this reform is meant to ensure that pension funds can sustain the impact of longer life expectancy among retirees.

However, for most pensioners, the second pillar is an important supplement to the retirement income and they don’t want to see it decreased.

But there is another reason as well.

In view of recent events, many people in Switzerland have doubts about the government’s pension calculations.

Just weeks ago, it was revealed that Switzerland’s Social Insurance Office had miscalculated projected spending for the old-age pension up to the year 2033: the annual expenditure is likely to be around 4 billion francs less than originally estimated.

Based on this news, many people in Switzerland now say there is likely enough money in the pension coffers, and the cut in LPP is therefore not needed.

READ ALSO:  What does Switzerland’s huge pension ‘fiasco’ mean and what happens next?

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For members

TAXES

Is Switzerland moving closer to new tax system for married couples?

Switzerland’s National Council spent hours this week debating a key change in the law that will affect how married couples in the country are taxed. But will it happen?

Published: 17 September 2024 12:53 CEST
Is Switzerland moving closer to new tax system for married couples?

For many years, married couples have been taxed jointly, mostly because in the past many women did not work.

Today, married couples are still taxed together, and that includes same-sex couples living in a registered partnership.

This means that If both partners are employed, they often have to pay higher taxes than unmarried couples filing their taxes separately. Their income is added (and taxed) together regardless of who made what. 

That is good for the government, because more money is flowing into public coffers, but not so good for married people whose tax burden is high.

In fact, ‘tax penalties’ for married people are so high that the think tank Avenir Suisse asked in mid-2020, “why marry when living in sin is cheaper?”

But the push to change this system has been gaining momentum.

In February 2024, the Federal Council sent a proposal to the parliament, calling for a reform of the longstanding legislation by allowing separate, rather than joint, taxation of spouses.

In August, the National Council’s  Economic Committee has narrowly approved this move.

That’s a good progress, so why is this measure now stalled?

That’s because MPs can’t agree among themselves on whether individual taxation is really best.

For instance, Philipp Bregy, a deputy from the Centre Party argues that such a move would put a huge burden on the cantons by creating a “bureaucratic monster.”

READ ALSO: Does marriage make financial sense in Switzerland?

He cited the example of the canton of Zurich, which would have to create 150 new positions in the tax administration to process the new declarations.

Another MP, Paolo Pamini from the Swiss People’s Party, sees the proposed system as a threat to the traditional family and wants to maintain the household as a single economic entity.

There is also the matter of a massive loss of tax revenue: the government expects this measure, if implemented, to result in losses of 800 million francs a year in federal taxes and 200 million less in cantonal coffers.

For the Liberal-Radical deputies, on the other hand, the penalisation of marriage “must be removed from a societal and economic point of view.”

“The reform introduces tax fairness,” according to MP Beat Walti.

What happens next?

The debate will continue in the National Council on September 25th.

However, given the divergence of views, it is not certain whether this issue will be resolved before the parliament ends its autumn session on September 27th.
 
 

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