13th AHV pension: Federal Council: “Here’s why we will increase VAT”

Context

TL;DR

• The first 13th AVS pension arrives in December
• Around 2,6 million pensioners will receive it
• On November 29, Switzerland votes on the VAT increase
• The standard rate would rise from 8,1% to 8,5%

Key facts

• First payment → December
• Initial cost → more than 4 billion francs
• Vote → November 29
• Standard VAT → from 8,1% to 8,5%
• Hotel VAT → from 3,8% to 4%
• Reduced VAT → 2,6%, unchanged
• Revenue from 2029 → around 1,4 billion per year
• AVS reserves in 2035 → nearly 70% of annual expenditure, compared with around 50%

In December, around 2,6 million pensioners in Switzerland will receive a 13th AVS pension for the first time. The initial cost will exceed 4 billion francs. To help finance it, Parliament has decided on a VAT increase of 0,4 percentage points; on November 29, voters will be called upon to vote on the measure.

The 13th monthly payment was approved in March 2024 with the popular initiative «Living better in retirement». The supplement will be paid every December and could reach 2520 francs for unmarried people and 3780 francs for married people. To read the amounts in the pension framework, consult strumento sulle rendite AVS.

How VAT changes

The June 2026 parliamentary decision provides for the standard rate to rise from 8,1% to 8,5%. The special rate for the hotel sector would rise from 3,8% to 4%. The reduced rate would remain at 2,6%, so the increase would not affect, among others, foodstuffs, medicines, newspapers, magazines and books.

During a press conference, Federal Councillor and Minister of the Interior Elisabeth Baume-Schneider explained that the government considers the AVS its most important social insurance. According to the Federal Council, VAT makes consumption contribute to financing without placing the burden solely on earned income; with the hotel rate, tourists would also contribute.

The increase could enter into force as early as the beginning of 2028. No additional financing is envisaged for the payment of the 13th monthly payment in 2026 and 2027. From 2029, according to estimates, the measure would generate around 1,4 billion francs in additional revenue per year.

The AVS bill

The increase would cover only part of the costs. From 2035, the 13th monthly payment would cost more than 5 billion per year. The Confederation, which finances more than one fifth of AVS expenditure, would initially cover more than 800 million and later more than one billion. Without additional revenue, the AVS's overall deficit in 2035 would come close to 5 billion; with VAT, it would stand at around 3 billion. The AVS Compensation Fund would reach nearly 70% of annual expenditure, instead of around 50%.

Operational details

The cross-border worker's perspective

For a cross-border worker working in Switzerland, the key point to focus on is the channel chosen to finance the OASI: consumption, not only earned income. The available text does not indicate a new withholding tax, nor any change to LPP or LAMal. The report provides no figures on tax rebates or INPS and does not describe consequences for the G permit, double taxation or a border crossing such as Brogeda. Finally, it offers no separate calculation for the Canton of Ticino. These elements remain outside the scope of the reported decision: adding them would mean attributing effects to the measure that the text does not quantify.

The relevant point, therefore, is the distinction between rates and the timetable. The parliamentary decision would not have the same effect on every expense: the standard rate and the hotel rate would increase, while the reduced rate would remain unchanged. For a cross-border budget, this comparison can be made without inventing a personal amount.

Reading the rates

A cross-border worker can read the table simply: the measure would not apply the same increase to every expense. Foodstuffs, medicines, newspapers, magazines and books are among the examples listed for the reduced rate, which would remain 2,6%. The increase in the special rate for the hotel sector is instead the channel through which, according to the Federal Council's rationale, tourists would also contribute. The source provides no final prices, sample receipts or average expenditure: the 0,4 percentage points cannot be turned into a personal cost without further data.

The timetable also requires attention. November 29 is the voting date; the decision is set to enter into force no earlier than the beginning of 2028, and no additional funding is planned for the 13th monthly payment in 2026 and 2027. From 2029, approximately 1,4 billion a year would come in, but the amount would cover only part of the costs.

The political comparison adds another perspective. The PLR argues that health insurance premiums, rents and petrol already weigh on household budgets, points to consequences for small and medium-sized enterprises, and calls for a policy of spending restraint. The Federal Council, by contrast, presents VAT as a way to make consumption contribute. To explore the spending side further, consult confronto del costo della vita.

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

Four operational steps

For a cross-border worker who needs to turn the news into a check of their own budget, it is useful to keep four moments separate. The vote, the first payment, any entry into force and the financial projections do not coincide.

1. Mark the vote

On November 29, the People will be called upon to vote on the VAT increase. The date indicates the political step, not the immediate application of the new rate. The source places entry into force no earlier than the beginning of 2028: it does not present this as an already definitive date.

2. Keep the AVS calendar separate

The first 13th monthly payment will be paid in December. No additional funding is planned for 2026 and 2027. In practical terms, therefore, the first payment and additional funding belong to different moments. The text does not authorize automatically linking the December payment to an increase in VAT that has already been applied.

3. Reconstruct spending by rate

With the available data, the possible assessment is qualitative: standard rate from 8,1% to 8,5%, special hotel rate from 3,8% to 4%, reduced rate unchanged at 2,6%. Food products, medicines, newspapers, magazines and books are among the items indicated as unaffected by the increase. Individual prices and quantities are missing; a personal cost cannot be derived from the source.

4. Follow the two dossiers

The first is financing: from 2029, estimated revenue is around 1,4 billion annually, but it covers only part of the costs. The second is AVS2030, which the Federal Council is preparing and which should reach Parliament in spring 2027. According to the source, the project aims to encourage more people to work until and beyond retirement age and to ensure AVS's financial stability over the next decade.

In the meantime, the political debate remains open: the PLR is calling for a cost-saving policy and points to the burden of health insurance premiums, rent and gasoline on households, as well as the consequences for small and medium-sized enterprises. It is a position opposed to the increase, not a change that has already entered into force.

For the cross-border worker's budget, consult calcolatore fiscale dello stipendio.

Source: tio.ch