The Political Economy of Pension Reform
Edited by Martin Rein and Winfried Schmähl
Chapter 4: The Institutionalization of the Swiss Multi-pillar Pension System
Giuliano Bonoli INTRODUCTION Amidst worldwide concern over the ‘demographic time bomb’ and heated debates on ‘pension crises’ and pension reforms, Switzerland stands out, with a few other industrial countries, as one whose pension system is unlikely to experience major disruption as a result of population aging. Its three-pillar pension system, which comprises a pay-as-you-go universal basic pension, a tier of fully funded compulsory occupational pensions and ﬁscal incentives to buy personal pensions, seems particularly well suited to withstand demographic pressures while at the same time guaranteeing reasonable pension coverage on a universal basis. This positive assessment of the Swiss approach to old age income security is found in the international literature on pensions. Switzerland’s multipillar pension system closely resembles the ideal type put forward by international agencies such as the World Bank (for example, 1994). Moreover, in projections of public pension expenditure, Switzerland stands out for a comparatively low expected increase in the proportion of GDP that will be needed to ﬁnance retirement in 20–30 years (Bonoli 2000, p.18). Finally, an extremely positive view of the Swiss system is also found in what is probably the most comprehensive study on Swiss pensions carried out by international observers, which goes as far as suggesting that the system may be seen as the ‘triumph of common sense’ (Queisser and Vittas, 2000). Such favourable evaluations of the Swiss pension system may come as a surprise to those who know well Swiss political institutions and the hurdles that policies need to clear before...
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