Undoubted advantage

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“The simpler the alphabet, the easier it is to read.” The Spanish artist Joan Miro is said to have come to that conclusion in Japan, whose exhibition at Bern’s Zentrum Paul Klee ends on Sunday.

One can also say: the simpler the law, the easier it is to find a majority for it. No encouraging results for the Federal Occupational Pension Act (BVG). On the other hand, left-wing political forces announced a referendum and started collecting signatures.

In the previous long debates of recent years, it was primarily about the conversion rate, the entry threshold, grants to the transitional generation, and the unthinkable, because it is difficult to understand, coordination deductions.

But it was hardly about another radical adjustment, so to speak, about a birth defect that people have been unsuccessfully trying to cure for about twenty years. It is this birth defect that could be at least partially cured by a new reform, namely, percentage deductions from wages that increase with age.

Today, mandatory pension contributions are 7, 10, 15, or 18 percent of insured wages. They must be paid equally by employees and employers. The highest deduction of 18 percent applies from the age of 55. This has the unfortunate side effect that workers over 55 cost more than 50-year-olds for the same wages and skills. They are at a disadvantage in the labor market compared to their younger counterparts.

If you study the rules of your pension fund, you may find that the percentages are higher. This is generally a good sign. This means that more is saved than necessary. This leads to optional balances.

But the revision of the law concerns only the mandatory, i.e. legal part. If the BVG came into force, according to the ideas of Parliament, the pension credit would be 9 percent up to 44 years old, and from 45 years old – a single 14 percent.

No one seriously denies that this is progress. This measure, proposed by the Federal Council, was not challenged at all during the debate. And it’s even better than the 2020 reform package, which, unfortunately, did not find a majority in the September 2017 vote.

You can find the BVG revision passed by Parliament good or bad. Anyone who rejects them because of allegedly insufficient grants, because of a lower entry threshold, a lower and new co-ordination deduction based on a percentage of salary, or a lower conversion rate, should not ignore the fact that the rejection of proposals also comes a refusal to improve the position of older employees in the labor market.

Source: Blick