How Switzerland wants to keep pensioners working longer in life

Right now, men in Switzerland retire at 65, while since 1997 women stop working at 64.

Prior to that year, they retired even earlier, at 62 — no wonder the state pension AHV / AVS scheme has been running a deficit since 2014.

However, starting in 2025 and until 2028, Switzerland will gradually implement the same retirement age for women as for men — 65 — a move that is expected to boost funding of the old-age pension scheme.

However, to fill both labour shortages and state coffers, legislators want to make working beyond the statuary retirement age more appealing.

How are they doing that?

A motion that has just passed in the Council of States instructs the Federal Council to increase allowances for deferring retirement.

Currently, the law allows employees who work up to age 70 to significantly increase their  1st and 2nd pillar pension benefits.

There is no legal limit to how much money you can earn after retirement, and MPs want to make this financial aspect more attractive.

At the same time, deputies want the  current reduction rate of 6.8 percent per year for early retirement pensions to be increased, in order to keep people working longer rather than dropping out of the labour market before the legal age.

These measures would be combined with a motion already approved by both chambers of the Parliament, which aims to raise the AVS/AHV tax exemption limit after the standard retirement age from the current 16,800 to 21,800 francs.

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Other measures under way as well

While the National Council’s Social Security and Health Committee supports the swift implementation of the proposal, it pointed out that the planned state pension reform –  intended to maintain the benefit levels and to safeguard the financial stability – also includes measures to keep people in the workforce longer.

These measures stipulate that the retirement age will not be raised, but incentives for working longer will be created