The reform of the LPP is modern, necessary and responsible

We are living longer and longer. As the retirement age has not changed, this means that we are also retired longer. What is good news on a human level is a challenge on a financial level.

The reform of the LPP (professional insurance or the second pillar) on which the Swiss decision on September 22 allows us to face this challenge. Between the need to consolidate the funding of this main pillar of our old age insurance system, the desire to adapt it to new ways of working (part-time, multitasking in particular) and maintaining the level of pensions, the proposal constitutes a fair, modern and responsible solution. This, among the hundred options examined, is the one that best guarantees the stability of the insurance while fulfilling its mission to ensure a certain quality of life once it has been to resign.

Unlike theAVSwhich is a distribution system where equal contributions from employees and employers are used to cover the pensions paid to people who retire in the same financial year, occupational pension provision is work on a capitalist system. The insured builds their own retirement fund, which is returned to them once they retire, in the form of capital or annuities. Access to this insurance, which supplements the AVS, is available from a certain salary level. The basic system also provides for a minimum equality idea (compulsory contribution), which can be improved by a contribution plan that is more favorable to the employee (non-compulsory contribution), ensure better coverage and greater employer contribution. Only a small proportion of the workforce (ie one in six) are covered by the minimum plan only.

The proposed reform works on several axes. First, it consolidates the financing of the system, by reducing the conversion rate of the compulsory contribution, currently 6.8%, to 6%. The reform does not affect the mandatory additional component. It also lowers the threshold for access to insurance, thus opening it up to several tens of thousands of workers, who could only benefit from the AVS until now. This particularly applies to low income earners, part-timers or those with multiple activities. Most are women.

The reform then corrects a contribution system that is currently unfavorable to older workers and penalizes them in the labor market. Finally, it provides for temporary compensation measures for transfer generation, in the fifteen years after the reform comes into force.

This reform is the result of intense and long debates. Like everything compromisesome would like it to be more ambitious at this or that level. The truth is that it is a sensible balance between financial stability and social responsibility. It also allows this insurance, which became compulsory in 1985, to adapt to new ways of working. In order for everyone to benefit from a healthy and efficient old age insurance system, we need to adopt the reform of the LPP.