Commences Payment of 13th Pension Instalment: Switzerland Announces Initiation Date
The 13th state pension (AHV / AVS) payout, voted for in a March 2024 referendum, has major implications:
The legislators decided that the inaugural payout will take place in December 2026 and continue annually after that. However, the exact sources for the 4.2 billion francs yearly funding still need to be determined, with the Value Added Tax (VAT) serving as one contributor.
In a nutshell, here's the scoop on the new law: Retirees will receive an extra pension amount, equivalent to their usual monthly first-pillar AHV/AVS payment, increasing their income by approximately 8.33 percent.
Everyone benefits from this additional pay, but specific groups stand to reap the most benefits:
- Lower-earners, including migrants who joined the workforce later in life, will receive needed support amid contribution disparities. Missing contribution years can result in a CHF 60 reduction per missing year[5].
- Women, particularly those who haven’t consistently worked in full-time positions for 43 years, will see improved post-retirement finances due to lower AHV/AVS pensions and a weaker second-pillar[5].
Although the reform benefits all retirees, critics argue that affluent retirees will receive this 13th payment too, even those who already have ample financial resources[6].
READ ALSO: The Impact of Switzerland's 13th Pension Payment
Insightful Links:
[1] Swiss voters approve 13th pension payment referendum
[2] 13th pension payment: what you need to know
[3] The 13th AHV pension: how will it be financed?
[4] Challenges in financing Switzerland's pension system
[5] Women's Pensions in Switzerland: Equality and Gender Mainstreaming
[6] Swiss pension reform: Who will gain and who will lose?
- The finance ministry will need to determine the exact percent of the Value Added Tax (VAT) that will contribute to the 4.2 billion francs yearly funding for the 13th pension payout.
- With the new law, personal-finance for retirees will be significantly effected, as they will receive an extra pension amount, increasing their income by approximately 8.33 percent.
- Lower-earners, such as migrants who joined the workforce later in life, will experience a positive impact on their personal finances due to the 13th pension payment, as it will help mitigate contribution disparities.
- Critics argue that the 13th pension payment could have a hike in its overall cost if it is distributed to affluent retirees who may already have ample financial resources, potentially causing a strain on the business sector and personal-finance.
