Swiss Government Admits to Pension Forecast Error: Implications and Public Response
In a surprising turn of events, the Swiss government has revealed a significant error in its pension forecasts, suggesting a less dire financial outlook than previously reported. This announcement has sparked a mix of relief and frustration among Swiss citizens who feel misled by their government.
Revised Pension Deficit Forecast
Officials have corrected the projected 2033 deficit linked to the AHV state pensions, now estimating it at 4 billion Swiss francs (€4.2 billion), down from the previously forecasted 7 billion francs (€7.4 billion). This revision stems from errors in the calculation program used by the Federal Social Insurance Office (BSV).
Unveiling the Calculation Error
The BSV identified two mathematical errors in the AHV financial perspectives calculation program, which had inflated the long-term expenditure projections for AHV. This miscalculation painted an overly pessimistic picture of the pension system’s future financial health.
Public Sentiment and Political Context
While a reduced deficit might seem like good news, the issue of pensions remains contentious in Switzerland. In March, Swiss voters participated in a national referendum, approving an increase in pension benefits. Nearly 60% supported introducing a 13th annual payout for retirees starting in 2026, while about 75% rejected raising the pension age from 65 to 66.
The referendum marked a historic moment, as it was the first time since 1848 that social benefits were raised through a public ballot. Rising living costs played a significant role in swaying public opinion in favor of the additional pension payout, despite government ministers advising against it due to financial concerns.
Government Warnings and Financial Strain
Finance Minister Karin Keller-Sutter had cautioned that the 13th AHV pension would be prohibitively expensive without additional funding. She suggested that if the initiative passed, tax increases, including higher employer and employee contributions and possibly a VAT rise, would be unavoidable.
Political Ramifications of the Mistake
The corrected figures have ignited calls for an independent investigation into the error. Georg Lutz, a Political Science Professor at the University of Lausanne, highlighted that some political factions, particularly on the Left, are advocating for a rerun of the 2022 referendum, which raised the retirement age for Swiss women to 65.
Lutz noted that the initially higher projected deficit was a critical argument for the reform. Reversing a proposal already being implemented could raise complex political and legal issues.
Impact on Public Trust
The revelation has damaged public trust in the government’s financial projections. Martin Eling, Professor of Insurance Economics at the University of St.Gallen, emphasized that while the errors primarily affect state pensions, public skepticism is likely to extend to all pension calculations, including workplace-managed funds. He expressed doubt about the feasibility of proceeding with proposed VAT increases and pension benefit cuts, despite their necessity for ensuring the pension system’s sustainability.
Isabel Z. Martínez, a senior researcher at ETH Zürich, pointed out that while such errors in state calculations are uncommon, the complexity of detailed forecasts can increase the likelihood of mistakes.
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