NO LIMITS ON WITHDRAWALS FROM THE 2ND PILLAR

Contrary to the Federal Council’s recommendation, pensioners will still be able to use their 2nd pillar pension as they see fit.

At last, the Council of States has blocked the Federal Council’s attempt to strip away the second pillar!

We know, unfortunately, that unless you have a substantial second pillar, it is almost impossible to enjoy a decent retirement in Switzerland.

It would therefore have been completely unacceptable for pensioners not to be able to withdraw 100% of their second pillar savings to, for example, invest in income-generating property abroad, thereby ensuring a comfortable retirement whilst still leaving an inheritance for their family.

Now it is a matter of investing wisely...

Alain Farrugia

On Wednesday, the Council of States voted 25 to 15 in favour of the National Council’s position, effectively putting an end to a proposed ban intended to reduce the need for supplementary benefits.

The Federal Council had wanted to use the reform of supplementary benefits (PC) to impose a pension on all those retiring or setting up their own business to work as self-employed individuals. Its aim was to prevent some people from squandering their money and then being forced to claim PC.

Last year, senators had accepted the ban on lump-sum withdrawals for pensioners and restricted the options for the self-employed. But the National Council put its foot down on both counts in March. The Council of States’ Social Security Committee proposed maintaining the status quo.

“This is a key point of the PC reform,” argued Werner Hösli (SVP/GL), expressing surprise at his colleagues’ U-turn. “The cantons, municipalities and cities are against lump-sum withdrawals,” he added, suggesting that the financial lobby had imposed its views. “We must protect the community’s right not to finance the retirement of those who confuse individual responsibility with personal interest.”

Political realism

It is a question of political realism, retorted committee spokesperson Konrad Graber (CVP/LU), pointing out that the National Council’s decision had been very clear. Every insured person must be free to use their second-pillar savings as they see fit. Furthermore, there is no study definitively demonstrating a causal link between lump-sum withdrawals and subsequent applications for social assistance.

There is potentially a link, corrected Social Affairs Minister Alain Berset, urging the Council of States not to throw the baby out with the bathwater and to support Mr Hösli’s proposal. Half of those who become self-employed go out of business within five years, and the proportion of self-employed people who subsequently claim social assistance is significantly higher than that of employees.

Unemployed people aged 58

Both chambers have also settled a side issue relating to the income support reform. The Council of States tacitly agreed that unemployed people aged 58 or over should be able to retain their retirement savings with their last employer’s pension scheme and receive a pension at a later date.

It is curious to include this point in this bill, Mr Berset conceded. But it resolves a real problem, and the measure – salvaged from the major pension reform rejected by the public last year – had met with little opposition at the time, Mr Berset emphasised.

Reimbursement

Both Chambers also agreed to introduce a repayment system sought by the National Council. Following the death of a PC beneficiary, benefits received would have to be repaid to the state for the portion of the estate exceeding 50,000 francs. For married couples, the repayment obligation would only take effect upon the death of the second spouse.

According to Mr Graber, the proposed model is clear and easy to implement. The repayment obligation would apply only to benefits paid after the reform comes into force.

(nxp/ats)

Source: 20 Minutes

Urgent reform needed for the second pillar

Following the rejection of the 2020 Pension Reform, it is all the more urgent to reform the 2nd pillar, according to the Supervisory Commission for Occupational Pensions. According to Pierre Triponet, chairman of the supervisory body, “even though 2017 was a good year, it is foreseeable that the situation will worsen”.