13th AVS Pension: Clash Over Funding. Will VAT and Contributions Rise?
The Council of States' commission is pushing for a mixed funding model of 4.2 billion for the 13th AVS pension. An increase in VAT and salary contributions is on the table. What does this mean for your payslip?
Contesto
The debate on funding the 13th AVS pension, approved by the people on March 3rd, is heating up in Bern, and the consequences will be directly felt on cross-border workers' payslips and the cost of living in Ticino. The Social Security and Health Commission of the Council of States has laid its cards on the table: to cover the extra costs, estimated at 4.2 billion francs starting in 2026, a mixed solution is needed. According to the 'senators', the VAT increase proposed by the Federal Council is not enough on its own. The commission's proposal is clear: combine an increase in salary contributions with an adjustment to the Value Added Tax. This comes as a cold shower for those hoping for a lighter impact. The position clashes head-on with that of the National Council, which in September approved a 0.7% VAT increase, but only temporarily until 2030. A solution that the Council of States' commission deemed a mere postponement of the problem. > For the commission, a temporary VAT increase offers no long-term perspective and would defer the need for financing. Instead, the goal is to ensure rapid and sustainable financing for the 13th AVS pension. This standoff between the two chambers of the Federal Parliament will determine how the necessary resources are raised. For the tens of thousands of workers who cross the borders at Brogeda, Gaggiolo, or Ponte Tresa every morning, the final decision will have a tangible impact. An increase in AVS contributions means a lower net salary, while a VAT hike will affect the purchasing power of anyone who buys goods or uses services in Switzerland.
Dettagli operativi
Let's delve into the technical details to understand what's at stake. The options on the table have very different implications for a cross-border worker's wallet. ## The Two Paths to Funding Currently, AVS/AI/IPG contributions amount to 10.6% of the gross salary, split equally between employer and employee (5.3% each). The Council of States' commission's proposal aims to increase this rate. Even a small adjustment, for example of 0.1% or 0.2% for the employee, would result in a direct reduction of the monthly net salary. The other lever is VAT. The Federal Council and, in part, the National Council are aiming for an increase of 0.7 percentage points. This would bring the standard rate from the current 8.1% to 8.8%. Although cross-border workers do not live in Switzerland, this increase would have an impact on: - Meals: the cost of lunch or a coffee would increase. - Shopping: any goods bought in Ticino, from gasoline to groceries at Foxtown in Mendrisio, would be subject to the price hike. - Services: fees for professionals, repairs, and other services would become more expensive. 📊 Scenario Comparison - Federal Council/National Council Proposal: 0.7 point VAT increase. Indirect impact on the cost of living in Switzerland. - Council of States Commission Proposal: VAT increase + Salary contribution increase. Direct impact on the payslip AND indirect impact on the cost of living. The Council of States' commission considers its solution more 'sustainable'. The logic is that relying solely on VAT, a tax linked to consumption, is risky and does not guarantee stable long-term revenue. Dividing the burden between consumption (VAT) and labor income (contributions) appears, in their view, fairer and structurally more solid. The discussion will now return to the parliament...
Punti chiave
What does all this mean in practice for a cross-border worker employed in Lugano or Bellinzona? The certainty is that the 13th AVS pension will have a cost, and that cost will be borne by workers and consumers. The ongoing political battle in Bern will only decide how the bill is split. ## How to Prepare? No immediate action is necessary at the moment, but it is crucial to be aware of possible developments. A combined increase in contributions and VAT will reduce disposable net income, a factor to consider in managing the family budget and long-term financial planning. 💡 Practical Tips: - Monitor decisions: Follow the parliamentary process to understand which funding model will prevail. - Re-evaluate your budget: Start considering how a potential decrease in net income or an increase in costs in Switzerland could impact your finances. - Pension planning: The introduction of the 13th AVS, despite its cost, changes the pension landscape. It's an excellent opportunity to review your overall retirement strategy, including the second and third pillars. Understanding how these reforms will affect your future pension is crucial. Changes in contributions and final benefits can significantly alter retirement plans. To get a clear picture of your personal situation, using simulation tools can be helpful. Our pension planner, for example, allows you to calculate your future AVS and second pillar pension, helping you make informed decisions for your future. (Source: RSI, September 13, 2024)