Pensions will leave less of a black hole in the state coffers than officials had claimed. While some see this as good news, many in Switzerland feel misled.
ADVERTISEMENTThe Swiss government has admitted to miscalculating its pension forecasts, meaning that the money spent on state payouts will be less than previously suggested.
The 2033 deficit linked to so-called AHV state pensions will be around 4 billion Swiss francs (€4.2bn), rather than the previously stated 7bn francs (€7.4bn), officials confirmed on Tuesday.
"During its control work, the (Federal Social Insurance Office) BSV discovered two mathematical formulas in the AHV financial perspectives calculation programme that led to implausible values for AHV expenditure in the long term," said BSV officials.
"This presents the future financial development of AHV in an overly negative light."
Switzerland's vote on pensions
While a lower-than-predicted deficit is arguably good news, pensions are a thorny subject in Switzerland - and many citizens feel misled by the government.
In March this year, Swiss voters took to the polls in a national referendum and decided to increase pension benefits.
Almost 60% of the electorate were in favour of introducing a 13th annual payout for retirees, valid from 2026.
In a separate vote on the same ballot paper, around 75% of the electorate rejected raising the pension age from 65 to 66.
The referendum was a historic moment for Switzerland in the sense that social benefits hadn't been raised by means of a public ballot since 1848.
Many were swayed in favour of a 13th month because of rising living costs in Switzerland, although government ministers had advised against the move.
"A 13th AHV pension is so expensive that it cannot be done without additional funding," said finance minister Karin Keller-Sutter of the FDP.
"If this initiative is accepted, we will hardly be able to avoid a tax increase," she told media outlet Neue Zürcher Zeitung in December last year.
More specifically, Keller-Sutter suggested that employer and employee contributions may have to be increased, and she noted that a VAT rise could be on the cards.
Political implications of the mistake
It's unclear what political effect the corrected figures could now incur.
"Everybody is clearly in favour of an independent investigation into how an error of such magnitude could have happened,” said Georg Lutz, Professor of Political Science at the University of Lausanne.
ADVERTISEMENTHe noted that some voices on the Left are notably calling for a rerun of a 2022 referendum, which raised the retirement age for Swiss women by one year to 65.
"Politically, there are already such claims by left parties, given that an important argument in favour of the reform was the projected much higher deficit of the pension system," he explained.
"However [...] to potentially reverse a proposal that is already being implemented raises all kinds of political and legal questions."
Damage to public trust
Martin Eling, professor of Insurance Economics at the University of St.Gallen, noted that while the revealed errors only affect state pensions - rather than workplace pots managed by pension funds - the damage is widespread.
ADVERTISEMENT"I believe most people will doubt any calculations in the coming months, irrespective of whether it is about the first or second pillar [pension schemes]," he told Euronews Business.
"Therefore, I am sceptical about the proposed VAT increases and pension benefit cuts proceeding, even though they are necessary to ensure the system's sustainability," he added.
Isabel Z. Martínez, senior researcher at ETH Zürich, told Euronews that errors were "uncommon" in such state calculations.
Even so, Martínez explained, "there is a tradeoff between adding more details in the hope of obtaining a more accurate forecast," and increasing "complexity" to the extent where errors are more common.
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