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The reform of old-age and survivors’ insurance (AVS) submitted to the people on September 25 is divided into two parts. The Swiss will therefore have to answer two questions: “Do you accept the federal decree of December 17, 2021 on the additional financing of the AVS by means of an increase in VAT?” and “Do you accept the amendment of December 17, 2021 to the federal law on old-age and survivors’ insurance (AVS 21)?”

What are the objects?

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The Swiss people will vote on the two components that make up the reform of the AVS, the objective of which is to stabilize the financing of the first pillar. These two objects are linked together: if one is refused, the whole reform falls by the wayside.

So why submit two objects and not just one? The reason is simple: the first requires a modification of the Constitution, unlike the second. He plans to increase the value added tax (VAT), in order to help replenish the coffers of the AVS. Concretely, the normal rate will increase from 7.7 to 8.1% and the reduced rate, which concerns for example foodstuffs, medicines, newspapers and books, from 2.5 to 2.6%. This measure should bring in additional revenue estimated at 12.4 billion francs by 2032.

Read also: Alain Berset: “The AVS is very favorable to women”

The other aspect of the AVS 21 reform further stimulates debate and monopolizes attention. He calls for a change in the law to raise the retirement age for women from 64 to 65, to the same level as men. The increase will be gradual: if the reform comes into force in 2024, the retirement age will be 65 for everyone in 2028.

However, the reform provides for compensation for women born between 1961 and 1969. Those who take early retirement will benefit from a lower pension reduction than at present. If they decide to leave the world of work at age 65, they will receive a lifetime pension supplement. In total, this second component would save approximately 4.9 billion francs over the next ten years.

What’s at stake?

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It’s no secret that the financial stability of the AVS is threatened by demographic trends. Baby boomers will reach retirement age in the coming years, which will result in an increase in the number of pensioners and a decrease in the number of contributors. In addition, the lengthening of the life expectancy of the Swiss means that pensions will be paid for a longer period.

The dual objective of AVS 21 is to guarantee the financing of old-age insurance for the next ten years or so and to maintain the current level of pensions. The last major revision of the AVS dates back to 1997. Today, no one disputes the need for a new reform. It is rather the manner of conducting it that divides.

Who is for?

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The Federal Council and Parliament recommend voting yes to the two objects that constitute the reform. The vote in the National Council resulted in 126 yes, 40 no and 27 abstentions. The Council of States approved AVS 21 by 43 yes, against no no and no abstention.

This revision of the AVS is supported by the right-wing parties (UDC, Vert’libéraux, PLR and the Centre) and economic circles. Its supporters believe that it avoids undermining the finances of the first pillar in the coming years. For them, it is also a question of fairness: future generations must not only contribute, they must also be able to benefit from the AVS.

Economic associations consider the proposed reform to be a good compromise. They add that raising the retirement age for women to the same level as men puts an end to unjustifiable discrimination.

Who is against?

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Left parties and trade unions fought AVS 21 by referendum. They reject a reform which, according to them, is done only on the backs of women, who would lose a year of pensions, when they already receive lower amounts than men. In their eyes, the reform does not correspond to the reality of the labor market, half of the men and women no longer exercising gainful activity one year before retirement age.

For the referendum committee, the AVS is solid and is not currently in debt. It even made a profit of 2.6 billion francs in 2021. The authorities’ forecasts for the next few years would also be too pessimistic.

Opponents also fear that raising the retirement age for women is a first step towards retirement at 67 for all. As an alternative, they propose to donate part of the profits of the Swiss National Bank (SNB) to the AVS. Last May, the Swiss Trade Union (USS) launched an initiative along these lines.

What do the polls say?

According to the second SSR poll published on 14th September, 59% of respondents are in favor of increasing the retirement age for women and 38% are against it. The share of undecided is 3%. According to the third Tamedia poll published the same day, the gap would be narrower (55% yes, 44% no). The opinion polls nevertheless agree on one point: there is a split between men, who clearly approve of this object, and women, who reject it more or less strongly depending on the survey (51% SSR, 58% Tamedia ).

The VAT increase would be accepted in greater proportions (65%), notes the SSR survey. The Tamedia survey mentions a lower approval rate (56%).

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