Swiss voters have thrown out plans to reform the creaking state pension system, highlighting the difficulties even prosperous western European countries face adapting welfare regimes to cope with ageing populations.
Authorities pushing the first serious reform of the pension system in two decades had warned that old-age benefits were increasingly at risk as life expectancy rises and interest rates remain exceptionally low, cutting investment yields.
But it fell by a margin of 53-47 percent, sending the government back to the drawing board on the thorny social issue.
The package turned down under the Swiss system of direct democracy included making retirement between the ages of 62 and 70 more flexible and raising the standard value-added tax (VAT) rate from 2021 to help finance the stretched pension system.
It sought to secure the level of pensions through 2030 by cutting costs and raising additional revenue.
Minimum pay-out rates would have gradually fallen and workers’ contributions would rise, while public pensions for all new recipients would go up by 70 Swiss francs ($72.25) a month.
The retirement age for women would have gradually risen by a year to 65, the same as for men.
Switzerland’s public finances are among the strongest in Europe, but in the past few years the basic state pension system has switched from creating surpluses to deficits that are projected to increase significantly during the next decade.
A 2014 OECD survey found Switzerland, where a worker earns over $91,000 on average, spends a relatively low 6.6 percent of economic output on public pensions. Life expectancy at birth was 82.5 years. More than 18 percent of the population was older than 65.
“In Switzerland, proposals can only survive if there is a broad consensus,” said Patrick Emmenegger, political scientist at the University of St Gallen. Sunday’s vote had shown “how little room there is for compromise . . . It is extremely difficult to get things through. I’m not optimistic about any plan B coming soon.”
Bern now faces the task of re-thinking how to reform a system largely unchanged for two decades.
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