The Swiss workers have recently experienced a significant improvement in their retirement outlook due to a successful trade-union initiative. This initiative aimed to increase the state pension, known as the 13th old-age and survivors’ insurance (OASI) pension payment. The vote was historic as it was the first time a union initiative had been successful at the polls, despite facing strong opposition from various parties, trade associations, and the banking and insurance industry.
The success of the initiative was primarily driven by the growing pension misery faced by many low- and middle-income voters. Contrary to the media narrative, the divide in voting behavior was not along generational lines but rather along class lines. The Swiss pension system, which combines a pay-as-you-go state insurance scheme (OASI) and a capitalization-based occupational scheme, has been under pressure due to low interest rates, causing occupational pensions to lose up to 20% of their real value over the past 15 years.
The OASI scheme, established in 1948, is a significant achievement of the Swiss labor movement and has been the bedrock of the Swiss welfare state. It is funded by employee and employer contributions, supplemented by a federal input from tax revenue. The scheme has a broad-based contribution base, ensuring it has the funds to bear the costs of growing pension entitlement resulting from rising life expectancy. It also has a strongly redistributive effect, with the maximum state pension being the same for high and middle-income earners.
The trade unions’ successful initiative could mark the beginning of a new, more socially just era in Switzerland. It also sends a message to other countries that even traditionally conservative countries can push through proposals to raise the state pension, underpinning solidarity and social cohesion. The widespread approval of the 13th OASI pension payment opens up a new way forward for pay-as-you-go redistributive pension systems.
