Switzerland: Referendum to Increase Pensions Passes

Facts

• A nationwide referendum held Sunday, which came amid concerns about the rising cost of living for older people, saw Swiss voters opt to grant themselves one additional month's worth of pension every year — 60% of those who voted approved of the change.¹
• AVIVO, a group representing pensioners, described the result as 'a historic day for retirees.' The initiative emerged victorious in most of Switzerland's 26 cantons, securing the double majority necessary for approval.²
• According to the initiative — expected to cost 4.1B Swiss francs ($4.7B) annually — pensions will begin to rise in 2026. Due to a lack of sponsors, the government will need to devise a financial plan to cover the program, possibly involving a rise in value-added tax.³
• In a distinct ballot, 74.7% of voters opposed a citizen initiative to fund the pension system in the long run by progressively raising the retirement age from 65 to 66 over the next ten years and eventually linking it to life expectancy.⁴
• The pension referenda differed from earlier Swiss referendums that saw voters reject the introduction of longer vacations and a shorter workweek, which was considered potentially harmful to business and financially unwise.⁵
• According to a recent report, Zurich is among the world's most costly cities. The Swiss Trade Union Federation and left-of-center parties consider the minimum pension for seniors and survivors (AHV) of 1,225 Swiss francs ($1,393) a month as insufficient to cover living expenses.⁶

Sources: ¹BBC News, ²Dw.Com, ³Fortune Europe, ⁴SWI swissinfo.ch, ⁵Independent and ⁶Yahoo News.

Narratives

• Establishment-critical narrative, as provided by SWI swissinfo.ch. The left-wing initiative won on Sunday due to a purchasing power crisis that has affected a broad spectrum of voters. This was a protest vote against past Swiss economic excesses, expensive rescue programs for mismanaged banks and energy companies, high manager salaries, and the COVID-19 pandemic, over which the government raised huge sums for big businesses while ordinary people received nothing. Voters have voiced their belief that it is the turn of ordinary Swiss people to be compensated for the soaring cost of living.
• Pro-establishment narrative, as provided by Independent. This is a problematic outcome for government and the overall financial stability of Switzerland. Voters chose to ignore the government's appeals over this initiative, and have compelled representatives to implement a huge, unfunded compensation scheme for pensioners. The state is now left with the impossible task of devising a strategy to finance the program, all while strong opposition among the electorate to tax hikes and welfare cuts persists.

Predictions