AHV 21 reform: The most important changes compared with today
The Federal Council wants to safeguard the first pillar (AHV/Old Age and Survivors' Insurance) until 2030 by means of the AHV 21 reform. To do so, it is meeting the needs of insured by allowing greater flexibility in the retirement age. In addition, the Federal Council is providing incentives to continue working for longer. The reform will be financed by bringing the retirement age for women into line with that of men and increasing value added tax.
AHV revenue and expenditure have not been balanced since 2014, and the electorate knows how urgently reform is needed. Nevertheless, the 2020 pension reform bill was rejected two years ago. The Federal Council responded promptly to the "no" vote, and adopted the message on the AHV 21 reform in the summer of 2019.
The main objectives of the AHV 21 reform
For the Federal Council, the AHV 21 reform has two main objectives:
1. To maintain the level of pensions.
2. To safeguard the financing of AHV up to 2030.
These are the most important changes envisaged by the AHV 21 reform
1. The reference age (at present retirement age) for women would be gradually increased from 64 to 65. This applies to both the first and second pillar. If the reform is accepted, women born between 1959 and 1967 will be particularly affected by an increase in the retirement age because they will be close to retirement. For this reason, compensation arrangements have been put in place for them: In the event of early retirement, the pensions of those born in these years will be reduced less sharply than for normal early retirement.
2. The choice of when to draw your pension is more flexible. Both men and women would be able to draw their pension from the age of 62 at the earliest or defer it until they are 70 at the latest. In addition, the reform would make it possible to draw a pension gradually, either by reducing the level of employment and deferring or drawing only part of the pension early, or by taking retirement in monthly instead of annual stages.
3. Working beyond the reference age of 65 can increase a person's pension amount, thereby providing an incentive to work longer. An exemption of CHF 1,400 per month continues to apply. However, whereas contributions paid in excess of that in the past were not included in the calculation of a person's pension, the AHV 21 reform envisages other possibilities for boosting your pension: Contribution gaps can be closed in this way and the average annual income on which the AHV calculation is based increases.
This is how the AHV 21 reform will be financed
• Increase in value added tax by 0.7 percentage points from 7.7% to 8.4%.
• Increase in the reference age for women from 64 to 65.
The AHV 21 reform has been submitted to the Federal Assembly. A popular ballot is mandatory to change the level of value added tax. The revised law is subject to an optional referendum after approval by the Federal Assembly. A popular ballot is also to be expected in this case.
The Federal Council would like the AHV 21 reform to enter into force on January 1, 2022. Whether this deadline can be met depends on how the Federal Assembly deals with the bill and on the dates and the outcome of the popular ballots.