Switzerland wants workers to retire later but won’t force them

[BERN] Switzerland’s government is trying to shore up the state pension system without explicitly requiring people to stay in the workforce for longer.

The “AHV 2030” plan would encourage people to remain employed beyond the official retirement age of 65 through financial incentives. Earnings generated after that age will carry greater weight in determining future pension benefits, the government said on Wednesday (May 20). The proposal also extends the accumulation of pension entitlements beyond the current upper age limit of 70.

The overhaul comes as large numbers of so-called baby boomers are about to retire. That demographic shift is putting pressure on state pension systems in economies around the world. Due to Switzerland’s high wages, workers in the country have a special incentive to retire early, adding extra strain.

The measures would generate about 600 million francs (S$972.5 million) in extra annual revenue for the system’s coffers, the government said. While that brings short-term relief, parliament is still debating how to fund a 13th monthly pension payment voters backed in 2024. The executive has proposed to lift the sales tax to finance the change.

Interested stakeholders can comment on the proposal until September, before the government finalises a draft Bill for the reform and submits it to lawmakers. It will likely take several years until any changes become law. BLOOMBERG