Best views, weather, etc. How to test them 👓 SC, Ala. sites look back Betty Ford honored
NEWS
Switzerland

A pension benefit hike? Swiss voters say no thanks

Helena Bachmann
Special for USA TODAY

GENEVA — A majority of Swiss voters Sunday rejected a 10% increase in government retirement benefits, a rare move for a country to turn down such a raise through a referendum.

A file photo shows a retired couple walking across the 'Sechselaeutenplatz' next to the opera in Zurich on Aug. 24, 2015.

Nearly 60% of voters turned down the controversial measure launched by trade unions and left-wing parties, who claimed that a hike in benefits would compensate for low interest rates on savings that will reduce retiree income in coming years.

Most political parties and even some senior citizen organizations opposed the increase, arguing that it would cost an additional $4 billion a year, which would likely be footed by younger workers.

The referendum’s backers said the pension plan — similar to Social Security in the United States — could be financed by an additional 0.8% contribution to the retirement fund, split between the employer and employee. That would be in addition to the current monthly contribution of 10.25% from a person's salary.

“The outcome clearly shows that Swiss people are not ready to take financial risks and want to keep their pension as is,” Parliament member Raymond Clottu said Sunday in a TV interview.

Switzerland already has one of the best retirement plans in the world, according to Mercer’s Global Pension Index, which ranks pension systems in various countries.

Government figures show that an average Swiss retiree who worked full time his whole adult life gets a pension of $1,880 a month. In the United States, the average benefit is about $1,300, according to Social Security Administration.

Swiss workers who retire — men at 65 and women at 64 — receive not only the state-run pension, but also benefits from the “occupational pension,” financed equally by employers and workers. This compulsory fund provides additional revenue to retirees, so they can have a decent standard of living as they age. The amount a person contributes depends on the worker’s age and income.

In addition to the two pensions, most people also have tax-free personal savings similar to IRA accounts in the USA.

Although the benefits will remain unchanged for now, the government is debating how to finance its retirement plans after 2020, when more Baby Boomers will retire, straining the pension system.

“The general feeling is that at a time when the Social Security system is under pressure due to changing demographics, increasing the benefit may not be the best thing to do,” Georg Lutz, professor of political science at University of Lausanne, told USA TODAY.

Sunday's referendum defeat shows “voters are not just thinking about their own interests, but about what’s best for the country,” he added.

Such pragmatism has played an important role in previous referendums as well, with voters overwhelmingly defeating proposals seemingly in their best interest because they would be detrimental to the country's economy.

In June, nearly 77% of voters rejected a measure calling for unconditional basic income, which would have made Switzerland the first country to guarantee a $2,500 monthly payout to all its residents.

In 2012, more than 66% of Swiss voters turned down a proposal calling for six-week paid holidays. In March 2001, nearly 70% of rejected a proposal for lower priced medications. That referendum was defeated because the drugs would come from other countries and not be required to meet Swiss quality standards.

Featured Weekly Ad