AVS2030 reform: pension linked to years of contributions

Context

TL;DR

• The proposal links retirement to years of contributions
• The Centre Patronal model requires 44 years for the full pension
• The model cites age 62 for a female worker and 68 for a sociologist
• The survey indicates 72% positive opinions

Key facts

• Location → Zurich
• AVS2030 → reform, currently under preparation
• Requirement of the model → 44 years of contributions
• Survey → 72% of very or fairly positive reviews
• Possible effect → less contributions and lower performance in the second pillar

The proposal and its numbers

In Zurich, a proposal to restore the AVS without generally increasing the retirement age takes hold. The criterion would be different: to establish the exit from work, the years worked and the contributions paid would be counted, not only the achievement of an equal age for all.

For the border worker working in Switzerland, this is the part of the debate to follow: the source describes a possible change in the Swiss pension mechanism, but the political confrontation is still open. The proposal is supported by the bourgeois parties, while the left opposes it. The issue has entered into the stances on the AVS2030 reform, which is in preparation.

The idea comes from a concrete difference in careers. Those who carry out an apprenticeship can start paying contributions as early as 18 years old. Graduates often enter the workforce around the age of 25 or later. With the current rules, however, both reach the reference age of 65.

According to the model of the Centre Patronal, a Romanian employers' association, a full income would require 44 years of contributions. Based on this simulation, a skilled worker could retire at age 62, while a graduate sociologist would, for example, have to work until age 68. These are examples of the model, not a calendar valid for each worker.

According to a survey commissioned by the same organization, 72% of respondents rate the proposal very or quite positively.

However, several nodes remain. An early retirement would reduce pension payments and second-pillar benefits; changes to that system would also be needed to make up the difference. The debate also concerns loopholes, the contribution threshold, physically heavy or psychologically demanding professions and incomplete data on careers. The text therefore remains a proposal submitted for comparison, not a final decision. To follow the possible effect on the annuity, see approfondimento sulla rendita.

Operational details

The second pillar can change the outcome

Early retirement is not neutral

For a cross-border worker who works in Switzerland, the practical question would not only be when work ends, but what pension remains after retirement. The proposal changes the first criterion, while the second pillar would follow a different logic: those who leave earlier pay fewer contributions to the pension fund and receive lower benefits. Any advantage of early retirement may therefore be accompanied by lower benefits in the second pillar, if the supplementary system is not modified.

The issue concerns the overall financial outcome. According to the model described, what matters above all is the average actual retirement age. If this rose, the mechanism could turn into an increase in the retirement age achieved through the back door. For Green national councillor Katharina Prelicz-Huber, everyone should know in advance when they will be able to retire, without depending on the course of their career. The left therefore prefers other measures to shore up the AVS.

There is also an opposite scenario. Even without changing the current average, people with high incomes could remain at work longer, pay contributions for longer and receive the pension for fewer years. According to the source, this effect could help finance the pensions of those who stop working earlier. It would not, however, be an individual guarantee: the outcome would depend on the actual average and the rules adopted.

The minimum threshold is another delicate point. If a minimum contribution were enough to accumulate a qualifying year, students could use it to fill gaps and bring retirement forward. A much higher threshold, such as the one proposed by the UDC, could instead risk penalizing those earning low wages or working part-time.

Defining the jobs that justify earlier retirement would also be complicated. The construction worker represents the most obvious physically demanding case, but there are occupations that are less strenuous physically yet involve strong psychological pressure or demanding hours. For the cross-border worker, the useful comparison therefore remains between years of contributions, second-pillar benefits and possible actual retirement age. A strumento per la rendita helps keep these three dimensions distinct.

Useful planning tools

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

Useful planning tools

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

Key points

How to read the proposal now

Four steps to avoid confusing assumptions with rules

The source does not describe a procedure already in force: the proposal emerges from positions taken on the AVS2030 reform, which is in preparation. For a cross-border worker, the most cautious way to read the issue is to separate the model's data from the rules currently in force. The analysis can be organized into four steps.

1. Reconstruct the beginning of your career. Note when you started working or paying contributions. The source's comparison starts from two different paths: an apprenticeship can lead to contributions at an earlier age, while a degree often precedes entry into work at a later stage.

2. Count the years of contributions as a variable separate from age. Use the requirement indicated by Centre Patronal for a full pension as a model parameter. Do not, however, treat the ages in the examples as personal thresholds: they concern two specific professional profiles within that simulation.

3. Check the effect on the second pillar. Early retirement would mean, according to the source, fewer contributions to the pension fund and lower benefits. This step cannot be separated from the debate on the overall pension.

4. Note the issues that are still open. The minimum threshold for making a contribution year valid, the UDC's proposal for a higher threshold, the possible penalization of low wages and part-time work, the classification of professions, and the collection of career data require answers before a definitive rule. The source also warns that complete data are currently lacking and that collecting them would take decades.

An additional check concerns the actual average retirement age, on which the model's financial outcome would depend. If the average rose, the mechanism could amount to an increase in the retirement age through the back door; if it remained at the current average, financing would also come from higher earners working longer. For the cross-border worker, the final comparison must therefore place years of contributions, the second pillar, and the system average side by side. To get your bearings on the pension issue, use calcolatore della rendita.

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Source: tio.ch

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