Vote The most important facts about the BVG reform

This Sunday, the electorate will once again decide on a socio-political proposal, namely the reform of occupational benefits insurance. Also known as the BVG reform. Here is an overview.

The BVG reform is intended to financially stabilize the second pillar and help people with low incomes to receive a higher pension. The most important facts about the proposal:

The starting position

Swiss pension provision is based on the three-pillar principle: the first pillar with state old-age and survivors' insurance (AHV), the second pillar with occupational pension provision and the third pillar with voluntary private pension provision. Occupational pension provision is an important supplement to AHV in order to cover living costs after retirement.

During their working life, employees save up retirement assets in the pension fund with their salary contributions and their employer's contributions. These are later used to pay the pension fund pension.

Because life expectancy and the proportion of pensioners in the population are increasing and at the same time the capital invested by the pension funds is generating lower returns due to low interest rates on the financial markets, pensions in the so-called mandatory part of the occupational benefit scheme are no longer adequately financed. In addition, low-income earners will later have no or a very small pension fund pension. An above-average number of women are affected because they often work part-time or in sectors with low wages.

The template

Occupational pension provision was introduced in 1985 when the Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans (BVG) came into force. Up to a certain income, the law stipulates how much pension must be paid out per franc saved. The minimum conversion rate is currently 6.8 percent. This means that a pension of CHF 6,800 is currently paid out for every CHF 100,000 of retirement capital.

After an initial BVG reform in the noughties, several attempts at reform failed, including a reduction in the conversion rate. Parliament made a new attempt in 2020. The new reform provides for the minimum conversion rate to be reduced to 6.0 percent. This would mean that CHF 6,000 would be paid out for every CHF 100,000 of retirement capital.

At the same time, according to the BVG reform, low earners should receive a higher pension later on: They and their employers are to pay higher savings contributions each month than today. The so-called fixed coordination deduction, which currently determines the income to be insured, is to be abolished. Instead, 80 percent of the income subject to AHV contributions is to be insured in future.

In addition, people whose income is currently too low for this are to receive a second pillar. The entry threshold for the pension fund is to be lowered from CHF 22,050 annual salary to CHF 19,845. Around 70,000 people, including many women with small workloads, will now have their salaries insured in the occupational pension scheme.

Those who retire in the first 15 years after the bill comes into force and do not have much time for additional savings are to receive a lifelong pension supplement of up to CHF 200 per month. The decisive factors are the year of birth and the amount of retirement capital. Around half of all insured persons are likely to receive the supplement. If the reform comes into force in 2027, it will be those born between 1962 and 1976. The supplements will cost a total of around CHF 11.3 billion over 15 years. They are to be financed by the pension funds and with contributions from employers and employees.

Those affected

According to the federal government, the pension fund reform will primarily affect employees who are insured according to the BVG minimum or only a little more. This is likely to be no more than a third of all insured persons.

Model calculations assume that people with an annual salary of less than CHF 60,000 and people with multiple jobs will benefit from higher retirement assets. Although certain people will have to pay less with the reform, they will also receive less pension. And it cannot be ruled out that someone will pay in more and receive less pension. For whom the reform will affect depends on their personal situation - for example, their professional career and the regulations of the pension fund.

Those insured beyond the compulsory scheme are not directly affected. However, all employees and their employers will finance part of the pension supplement for the transitional generation. Nothing will change for those who have already retired.

The supporters

For the Federal Council and Parliament, the reform is necessary to ensure that future pensions under the mandatory occupational pension scheme are adequately financed in the long term. Without a reduction in the conversion rate, pension funds that only offer minimum benefits would continue to use income from the retirement assets of working people for pensions of retired people. People who earn little would be better protected in old age. Women in particular would benefit from this.

The Yes committee includes social politicians from the SVP, FDP, Center Party, GLP and EVP. The main argument put forward by those in favor of the reform is that significantly more people will receive a higher pension than a lower one. This would reduce the risk of poverty in old age.

Parliament has learned its lessons from the past, said Center Party President Gerhard Pfister at the launch of the Yes campaign. On the one hand, it had refrained from mixing up the various pillars of old-age provision. On the other hand, the reform is not a pure restructuring bill.

The opponents

The left is fighting the reform with a referendum. It complains that the bill would require more to be paid into the second pillar, but the pension would still be lower for many. This is particularly true for sectors with low wages, but also for the over-50s. For women, the proposal is "a deceptive package", as it does not eliminate the disadvantages they face due to career breaks and the unequal distribution of unpaid work.

In addition, the pension funds have achieved high returns over the past ten years and are "swimming in money", according to the left-wing No committee. Given the current very good situation of the pension funds, it is time to grant an inflation adjustment on current pensions.

At the beginning of August, eight business associations launched their own No campaign. They argued that the proposal would lead to false incentives to save and more bureaucracy and should therefore be rejected. In addition, the pension supplements are incorrectly calibrated and unfairly distributed. In contrast, the business umbrella organizations Economiesuisse and the Employers' Association describe the BVG reform as overdue and are campaigning for a Yes vote.

SDA