Federal Council Presents Plans for OASI: Tax Increases but No Rise in Retirement Age

If needed, the government is considering either an increase in VAT by 0.7 to 0.9 percentage points or a 0.2-point rise in payroll contributions. The first option would cost consumers between 2.6 and 3.4 billion francs annually.

Federal Councillor Elisabeth Baume-Schneider clarified that these proposals will be submitted for consultation until November 11, giving cantons, political parties, and associations the opportunity to voice their opinions.

Key Measures of the Reform

The government maintains its refusal to raise the standard retirement age beyond 65, a measure deemed too unpopular. This stance contrasts with reforms adopted in several European countries in recent years.

The financing of the 13th OASI pension, approved by voters in 2024, remains a central issue. If Parliament finds a sustainable solution, no additional measures would be needed before 2040, according to current projections.

The Federal Council also proposes to classify dividends yielding more than 15% of invested capital as excessive, a measure that could affect some publicly traded companies.

Financing the 13th Pension

These proposals come as the OASI is set to pay out the 13th annual pension for the first time this year—a popular but costly decision for public finances. The parliamentary debate on the definitive funding of this measure is still ongoing.

Experts highlight that the Swiss pension system relies on a delicate balance between generations. Current workers largely fund the pensions of today's retirees, a mechanism under pressure due to demographic changes.

Some economists criticize the refusal to raise the retirement age, arguing it would be the most effective way to rebalance the system in the long term. Others, however, believe the Federal Council's proposals preserve intergenerational solidarity.

Reactions and Outlook

Social partners have reacted diversely to these announcements. Unions welcome keeping the retirement age at 65, while employer organizations express concerns about potential cost increases for businesses and employees.

The issue is expected to dominate political debates in the coming months, with positions likely to solidify ahead of the 2027 federal elections. Finding a compromise among parties promises to be complex.