Ageing and Pension Reform Around the World

Evidence from Eleven Countries

Edited by Giuliano Bonoli and Toshimitsu Shinkawa

This book comprehensively documents developments in pension policy in eleven advanced industrial countries in Western Europe, East Asia and North America. In order to explore what population ageing means for the sustainability of pension systems, the authors present a detailed review of pension policy making over the past two decades and provide up-to-date analysis of current pension legislation. They examine the factors that can facilitate or impede the adaptation of pension systems and the features that shape and determine reforms. They also highlight the fact that although the path of reform taken by each country is somewhat different, the processes at work are often very similar.

Chapter 7: Switzerland: Adapting Pensions within Tight Institutional Constraints

Giuliano Bonoli

Subjects: economics and finance, public finance, politics and public policy, public policy, social policy and sociology, ageing, comparative social policy, economics of social policy


Giuliano Bonoli INTRODUCTION The Swiss pension system is often praised in international comparisons, for its capacity to combine successful needs coverage with a solid financial basis. This combination of what are sometimes conflicting goals is achieved thanks to a system structured around three pillars of provision. The first one is universal and has the task of providing all retirees with a minimum income level above the poverty line; the second pillar is compulsory for most employees, is fully funded, and provides earnings-related benefits. Finally, the third pillar is a purely voluntary top up encouraged through generous tax concessions. The multipillar character of the system and the inclusion of both pay-as-you-go and funded financing are its key strengths. Praise notwithstanding, the Swiss pension system does not escape the effects of developments like population ageing or the transformation of labour markets that are putting pressure on pension systems throughout the industrial world. Expenditure on its pay-as-you-go financed first pillar is expected to soar over the next two to three decades at a much higher rate than scheme receipts. The fund of the basic pension has been making losses in several of the last few years, and a key objective of current reform initiatives is to guarantee the solvency of the scheme in the medium to long term. Population ageing, however, does not affect the basic pension only. Second pillar occupational pensions have to deal with the issue of higher life expectancy at the age of retirement (typically between 62 and 65). As...

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