Conciliation conference presents compromise on 13th AHV pension: Council of States to decide on Thursday

The result follows the concept of the centre-left majority in the Council of States: the additional revenues for the AHV should not only flow on a temporary basis, but permanently. On value-added tax, the conciliation conference is sticking with the Council of States' previous plan: the standard rate is to rise by 0.4 percentage points. The National Council had previously wanted to increase value-added tax alone, in order to distribute the burden as evenly as possible between those in employment and pensioners.

On wage contributions, the Centre and its allies prevailed with a smaller increase: plus 0.2 instead of 0.3 percentage points. This reduces the additional burden on employees and employers from 1.5 to 1 billion francs per year. The VAT increase, by contrast, is estimated to cost consumers and the economy 1.5 billion francs per year. The SVP, FDP and GLP originally wanted only a temporary additional financing, in order to maintain pressure for further reforms – above all an increase in the ordinary retirement age.

Slim majority in the National Council

There is no doubt that the Council of States will approve the bill. As early as Thursday morning, the Council of States will decide on the proposal from the conciliation conference. In the National Council, however, it is likely to be extremely tight, because the Left and the Centre together fall just short of a majority. However, they only need around five to six dissenters – most likely from the SVP – and it could still be enough. If both chambers agree, the final vote awaits on the last day of the summer session, which likewise requires a double yes.

If only one of the two chambers rejects the compromise, the bill is definitively dead – and the 13th AHV pension will be introduced without financing. The first payment of the 13th old-age pension in December of next year is guaranteed by law. But without swift counter-financing, the AHV fund risks running out of money. By 2030, the annual deficit in the pay-as-you-go financing of the social insurance scheme will rise to around two billion francs, and three years later it is likely to be four billion.

High hurdles for an agreement

The National Council and the Council of States can no longer change the conciliation conference's proposal. They can only say yes or no to the entire proposal. The National Council's sister commission has 25 members, of whom 13 representatives had to be selected for the conference. The Council of States' SGK is smaller with 13 seats, which is why its entire membership took part.

Federal Councillor Elisabeth Baume-Schneider had stated on Tuesday in the National Council that there were still «fundamentale Differenzen» on financing. Political scientist Rahel Freiburghaus of the University of Lausanne sees the large number of conciliation conferences that take place as a sign of pronounced polarisation in Switzerland's political system. Since 1992, the number of conciliation conferences has risen sharply and levelled off at a high level in recent years. Back then, the number of detailed deliberations per chamber was reduced to three – previously, the chambers could send a draft back and forth as often as they liked; the Criminal Code, for example, went back and forth between the chambers no fewer than 16 times in 1937.

Polarisation as background

According to Freiburghaus, conciliation conferences fail above all when the willingness to compromise on core provisions is lacking and a differing sense of urgency prevails in both chambers. In the past, the failure of a conciliation proposal has also led to a kind of tabula rasa. On the AHV, however, she doubts that this would be the case, since the next major revision is already in preparation. The AHV will remain a bone of contention – regardless of whether this financing solution is adopted or not.

If the compromise passes both chambers, the final vote will take place on the last day of the summer session. If it fails, the 13th AHV pension will come into force in December 2026, but without secured financing – with all the risks for the stability of the social insurance scheme in the coming years.