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The Federal Council wants to drastically reduce the tax advantages when paying out the third pillar and pension fund capital. This would hit middle class and high earners particularly hard.
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- The Federal Council wants to drastically reduce the tax advantages when paying out the third pillar and pension fund capital.
- For many people this would mean significantly higher taxes.
- A new calculation method stipulates that the tax burden depends on income, which particularly affects middle classes and high earners.
- The plans are encountering major headwinds.
The Federal Council is planning to reduce the tax advantages for the second and third pillars of pension provision, which means significantly higher taxes for many people.
A new calculation method stipulates that the tax burden depends on income, which particularly affects middle classes and high earners. For example, the tax for high earners could quadruple, as the “Sonntagszeitung” reports. The newspaper gives the following example: Anyone who earns 140,000 francs and has 350,000 francs paid out will in future pay 17,800 instead of 6,580 francs.
While low-income earners could benefit, the planned change outrages many who trusted in the previous tax privileges. Critics such as Center Councilor of States Erich Ettlin see this as “a violation of good faith.”
Problems for pension funds?
Proponents of the reform, such as the SP, argue that the current regulation primarily benefits the rich, who achieve significant tax advantages through their retirement savings. The planned change is expected to bring the federal government additional income of around 250 million francs per year.
But experts warn that the attractiveness of the second and third pillars could decline sharply if the incentives were removed, which could lead to fewer people paying in.
Another problem could arise for pension funds. Since many funds rely on new pensioners having their capital paid out, the reform could increase the financial burden on the funds. According to the “Sonntagszeitung”, experts expect that more people will choose a pension instead of a lump sum payment in the future, which will mean higher costs for pension funds.
The financial institutions that benefit from payments into the third pillar are also worried. Banks and insurance companies see the planned reform as a threat to the three-pillar system and warn of possible long-term consequences, including an increase in dependence on social benefits in old age.
Swiss
