A new model for retirement provision

Centre Patronal is a business association with the aim of representing the interests of the private sector and developing services for companies and their managers. The association was founded in 1940 in the canton of Vaud and is based in Paudex. It currently employs around 400 people. Centre Patronal has been represented in German-speaking Switzerland with a branch in Bern since 1973 and in Zurich since 2022. Centre Patronal also manages an AHV fund and various second-pillar pension schemes. Based on this expertise, the association has been working for years on new proposals for sustainable, modern and social pension provision. The key point is a paradigm shift: for the first pillar (AHV), the main proposal is that entitlement to full pension benefits should no longer be based on a reference age (65 years), but on the number of years of contributions (44 years). For the second pillar (occupational pensions), on the other hand, a new "BVG minimum plan" is to be outlined in order to improve benefits on the basis of increased savings.

"Sacred cow" retirement provision

Pension provision is a key concern of the Swiss population. For years, there have been repeated referendums in this area without a truly sustainable solution being found for either the AHV or the occupational pension scheme, so that these two pillars together continue to guarantee the famous 60 percent of the last salary. The challenge is to restore confidence in our social security system, in its long-term financing and in its ability to meet the current wishes and needs of our society.

The first pillar is the one that requires the most urgent measures. Centre Patronal proposes that entitlement to full pension benefits be granted depending on the number of years of contributions (the current system requires 44 years of contributions from the age of 21). This change in approach seems fairer for people who enter the workforce early and often have strenuous occupations.

In order to restore the AHV's financial equilibrium in a socially responsible manner, efforts must be extended to two other areas in a fair manner, continues Centre Patronal. Specifically, in addition to increasing the contribution period, VAT and wage contributions must also be increased moderately. It is difficult to say whether such a proposal would gain majority support. However, Centre Patronal believes it is well supported in this respect: Both the quest for fairness underlying these reforms and the trends emerging from opinion polls would indicate that efforts to rebalance the system should be split.

Strengthen savings in the 2nd pillar

The second pillar does not require as urgent a reform as the AHV, as the pension funds, which have a great deal of room for maneuver, have already taken measures and most of them therefore deviate from the "BVG minimum plan". Nevertheless, in the eyes of Centre Patronal, it is important to define the outlines of a new, financially and technically realistic "BVG minimum plan" that will bring new benefits to the population. Lowering the conversion rate is essential due to increasing life expectancy and also to enable the second pillar to be extended to people who were previously excluded from it. It is also essential to increase the minimum pension capital by strengthening pension savings.

In order to strengthen pension savings and at the same time improve the situation of many insured persons, Centre Patronal is making various concrete proposals, which consist in particular of abolishing the "coordination deduction" (instead, contributions on the entire income of part-time employees, multiple employees and the self-employed), while retaining an entry threshold. The credit rates are also to be changed with a simpler, less progressive age-related scale in order to achieve an ordinary standard rate of 10 % (5 % employee, 5 % employer) from the age of 50. Median earners will not be forgotten, as their savings contributions will be increased by a uniform rate of 6 % to give them a better pension. Finally, the model provides for a simple and original transitional arrangement that makes it possible to maintain the pension level of those already insured.

Reform meets with approval

Centre Patronal's proposals are underpinned by a financial impact study conducted by Prof. Dr. Christoph Schaltegger and Dr. Patrick Eugster. All proposals were "tested" by the opinion research institute Sotomo, which found a high level of acceptance among the Swiss population. A clear majority of people have a positive or rather positive attitude towards a working life model. If it came to a vote, 21% would vote "yes" and 39% would vote "rather yes". 15 percent are undecided. A referendum on the working life model would meet with approval across all political camps, most clearly in the center party and least in the left camp. According to the opinion poll, there are also clear positions on the 2nd pillar: A clear majority is in favor of lowering the entry threshold. Lowering the minimum conversion rate remains very unpopular. There is also support for starting retirement savings before the age of 25. A majority is also in favor of abolishing the coordination deduction.

And do the Swiss believe that their pension from the 1st and 2nd pillars will reach the targeted 60% of their final salary? Many are pessimistic about this: although the 18 to 35 age group would like to see a replacement rate of 67% at the time of retirement, they believe they will only reach 48%. The 36 to 50 age group is more optimistic in this respect: they expect a replacement rate of 52%. Finally, the over-50s expect a replacement rate of 57%, but would like to see one of 71%. All of these survey results underline the fact that wishes and reality diverge when it comes to retirement provision and that new ideas for a financially secure life after retirement need to be discussed "with an open mind".

More information: www.centrepatronal.ch

Centre Patronal acquires Trianon

The business association Centre Patronal acquires Trianon AG, a Mobiliar Group company since 2016, in order to further develop its own offering and Trianon's business areas. The company is now one of Switzerland's leading companies in the field of business process outsourcing. Its activities include the administration of pension funds, HR services and proactive absence management. Centre Patronal has been representing the interests of the private sector and providing services for companies for 85 years. With the acquisition of Trianon by Centre Patronal, clients will benefit from an additional range of services. The acquisition of Trianon by Centre Patronal is expected to take place in the third quarter of 2025, subject to approval by the relevant authorities.