In a historic move, the Swiss electorate has voted in favor of a proposal to introduce a 13th annual payout to pensioners, marking the first time in the country’s history that social benefits have been increased through a plebiscite. With 58.2% of the electorate supporting the proposal, this initiative is set to boost pensions by approximately 8%, a significant deviation from past voting trends since 1848, wherein Swiss voters had never approved plans to boost state-paid social benefits.
The Birth of a Watershed Moment
This landmark vote is being hailed as a “watershed moment for Switzerland,” by political analyst Georg Lutz. He shared his perspective with Bloomberg, stating, “Just ten years ago, with bourgeois parties and business associations against it, such a proposal would have been without any chance.” The initiative was spearheaded by labor unions who voiced concerns over the rising cost of living, which has effectively reduced the purchasing power of pensions.
Interestingly, Michael Hermann, head of pollster Sotomo, suggested that the government’s rescue of Credit Suisse last year might have played a role in swaying public sentiment towards this result. He noted, “Many think that the entrepreneurs and managers have broken the unwritten Swiss social contract: That managers are modest with bonuses and debauchery and the people are modest with social demands. People have been angry for a long time about the behavior of corporations, managers, tax evaders. So you often hear now: ‘If they help themselves, then we also want something for us’.”
Funding the Pensions Boost
With the approval of the initiative, pensions are set to be increased from 2026. However, the proponents did not provide a concrete plan to fund the estimated additional annual cost of 4.1 billion Swiss francs ($4.7 billion). This has left the government, which had recommended against the proposal, in a bind to find the necessary funding. Finance Minister Karin Keller-Sutter has hinted that this may require an increase in the value-added tax, given that Switzerland is already dealing with a budget deficit.
Reactions and Repercussions
This decision has not been without its critics. Lawmaker Christian Wasserfallen of the center-right FDP voiced his concern, stating, “This is a dark day for young generations. I’m proud of all the young who are committed to secure pensions. Today we lost.” FDP, Keller-Sutter’s party, has vowed to reject any tax hikes for businesses to fund the higher pensions, unless they are tied to structural reforms saving money.
Despite these concerns, the pensions boost was strongly backed in French- and Italian-speaking cantons, with a more skeptical response from the larger German-speaking region. With a turnout of over 58% across the country, Interior Minister Elisabeth Baume-Schneider noted, “The population showed that it really cares about the matter,” rejecting the notion of a so-called “Rösti trench.”
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