On the 25 September 2022 the Swiss electorate voted on the Supplementary financing of OASI by increasing Value Added Tax and amending the Federal Act on Old-Age and Survivors' Insurance (OASIA) (OASI 21).
Summary
Two proposals - one reform
The OASI reform comprises two proposals. The first would increase VAT in order to fund OASI. This increase is a constitutional amendment that is subject to a mandatory vote. The second proposal would make changes to OASI benefits. A referendum against these changes has been demanded. The two proposals are linked to each other; if either is rejected, the entire reform process fails.
Current situation
The financial stability of OASI is at risk because baby boomers are reaching retirement age and life expectancy is rising. In a few years, OASI's revenue will no longer be sufficient to finance all its pension payments.
The proposals
The reform to stabilise OASI (OASI 21) is intended to guarantee OASI pensions for the next ten years or so. It provides for both savings and additional revenue. A uniform retirement age of 65 will now apply for both women and men. The retirement age for women will be gradually increased from 64 to 65. This increase will be cushioned by taking compensatory measures: If the reform comes into force as planned in 2024, women born between 1961 and 1969 will be able to retire early under better conditions or receive a higher OASI pension if they work until they are 65. Additional revenue will come from an increase in VAT: the reduced tax rate will be increased from 2.5 to 2.6 per cent, the standard rate from 7.7 to 8.1 per cent. The reform also brings more flexibility: People will be free to choose a transition to retirement between 63 and 70 and to gradually reduce working hours while claiming a partial pension. Those who work after the age of 65 may now in certain cases close contribution gaps and thereby increase their pension. This creates an incentive to work for longer.
Last modification 25.09.2022
