The reform of the second pillar is “necessary” to sustainably finance future pensions, affirms the Federal Council. This revision of compulsory professional insurance (LPP) plans in particular to reduce the minimum conversion rate as well as the entry threshold.
Socialist Federal Councilor Elisabeth Baume-Schneider presented Monday in Berne the arguments in favor of this reform attacked in a referendum by the left and the unions and put to a vote in September. According to the government, it will improve coverage of low wages and women.
The LPP faces a double challenge, demographic and financial, declared the head of the Federal Department of the Interior. Alongside low returns on pension fund investments on the financial markets, life expectancy is increasing and pensions must be paid for longer. The financing of annuities in the compulsory part of occupational pension provision is therefore insufficient, argues the Federal Council.
Improvement for low wages and part-time workers
Reason why the reform is “necessary”, he believes. It proposes to manage the financing problem by notably lowering the minimum conversion rate (which determines the amount of the future annuity) from 6.8% to 6%. Concretely, this means that for each 100,000 francs of compulsory retirement assets contributed, the annual pension paid will drop from 6,800 to 6,000 francs.
The Federal Council and Parliament have planned compensation measures. According to them, the reform will improve coverage of people working part-time and with low wages, the majority of whom are women. The Minister of the Interior and Stéphane Rossini, director of the Federal Social Insurance Office (OFAS), however recognized that the reform will not have the same effect on everyone.
“The system will not respond to all situations, it’s true, because they are above all individual,” admitted the head of the OFAS. Some will pay more contributions for a higher pension at the end of their career, while others will pay more and ultimately receive a little less. “It’s a reality that is difficult to quantify, because it depends on the pension funds,” commented Stéphane Rossini.
Ultimately, only a third of policyholders should be affected, because the reform only affects the compulsory part of annuities, i.e. the funds which offer the legal minimum of coverage. People who are already retired are not affected.
“Complex political issue”
The project was voted on by Parliament in March 2023. It was approved by 113 votes to 69 and 15 abstentions at National. For its part, the Council of States said yes by 29 votes to 8 with 5 abstentions. The reform was supported by the bourgeois parties and opposed by the left.
In this vote, the socialist minister finds herself opposed to her own political camp, which denounces a dismantling of pensions. “This is a complex and sensitive political issue,” she said. His predecessor Alain Berset had developed a balanced project with the social partners. The majority of Parliament transformed it, she recalled, on the basis of a less generous project from the Council of States.
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