2026 VAT referendum: increase for the thirteenth pension payment

Context

TL;DR

• The referendum on the proposal will be held on November 29.
• Standard VAT: from 8,1% to 8,5%; hotels: from 3,8% to 4%.
• 2035 deficit: almost CHF 5 billion without an increase; around CHF 3 billion with one.
• In December: an extra for around 2,5 million people.

Key facts

• Measure → VAT increase for the 13th annual pension payment
• Referendum → November 29
• 2035 deficit without increase → almost CHF 5 billion a year
• 2035 deficit with increase → about CHF 3 billion a year
• Reserves without increase → 50% of annual spending in 2035
• Reserves with increase → 70% of annual spending in 2035
• Standard rate → from 8,1% to 8,5%
• Special hotel rate → from 3,8% to 4%

On November 29, Swiss voters will decide in a referendum whether to finance the 13th annual payment of the state pension through a VAT increase. Elisabeth Baume-Schneider, minister of social affairs, defended the proposal at a press conference in Bern, as reported by RTS. She said that, without additional revenue, the state pension scheme would come under increasing financial strain.

According to government estimates, a rejection would bring the pension fund to an annual deficit of almost CHF 5 billion by 2035. With the VAT increase, the deficit would fall to about CHF 3 billion. Reserves risk falling below the legal minimum of one year's spending in 2027.

In 2035, without the increase, reserves would cover 50% of annual spending; with a yes vote on the measure, they would reach 70%. The referendum is scheduled shortly before the first payment of the 13th pension payment, which will arrive in December.

The extra payment will cost CHF 4,2 billion, with CHF 1,4 billion covered by the higher VAT. Next December, about 2,5 million people will receive it. For those following pensione, the vote therefore combines the choice on funding with the first payment.

Baume-Schneider describes Parliament’s package as a moderate, socially acceptable compromise: the standard VAT rate would rise from 8,1% to 8,5%, while the special rate for hotels would increase from 3,8% to 4%. The reduced rate on essentials such as food and medicines would stay at 2,6%, and health insurance premiums would remain exempt from VAT.

Government, Parliament and opposition

The minister argues that the unchanged reduced rate protects lower incomes and that all revenue goes to social security. The Federal Council and Parliament see the measure as a sharing of the cost between generations. The parliamentary minority, however, fears a decline in purchasing power. The PLR/FDP, which has campaigned against the proposal since the end of September, prefers spending cuts and structural reforms, including raising the retirement age. Baume-Schneider said that the latter option would require Parliament and voters and expressed confidence in a yes vote.

Operational details

What changes in practice

The proposal divides the fiscal impact differently depending on the spending item. This is where the referendum choice affects everyday life: the standard rate and the rate for hotels would rise, while essential goods and health insurance premiums receive different treatment. PLR/FDP sees the increase as additional pressure on families and small and medium-sized enterprises; Baume-Schneider presents it as a socially acceptable compromise.

Four treatments to distinguish

For a household budget, protection is not general but concentrated on essential goods. The unchanged reduced rate is the argument the minister uses to argue that she can contain the burden on lower incomes. The opposition's criticism takes the opposite view: according to opponents, higher VAT would erode purchasing power when it affects spending subject to the standard rate. The reference to costo della vita therefore hinges on comparing items, not on a single percentage applied to everything.

For small and medium-sized enterprises, the political issue is similar. The PLR/FDP campaign argues that higher VAT would add pressure on businesses and families and proposes spending cuts. The Federal Council and Parliament reply that the revenue would be allocated directly to social security and that the financing would be distributed across generations.

The pension comparison, however, remains decisive. Even with the increase, the projected annual deficit for 2035 would still be around CHF 3 billion: the measure reduces the gap, but does not eliminate it. Without new revenue, the deficit would rise to almost CHF 5 billion and reserves would cover 50% of annual expenditure, compared with 70% with a yes vote. The one-year expenditure threshold, at risk in 2027, makes the timetable a concrete element of the choice.

The retirement-age alternative does not provide, in the minister's description, an immediate solution: it would require approval from Parliament and voters. The referendum therefore pits a VAT increase against the pursuit of structural reforms or cuts.

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 prepare for the vote

The decision of 29 November requires keeping the additional payment separate from the way the State intends to finance it. A practical approach can begin with four steps, without confusing the VAT increase with the distinct possibility of an intervention on the retirement age.

Four operational steps

1. Identify the political question. The referendum concerns the proposal to use higher VAT revenues to finance the annual thirteenth pension payment. The retirement age, on the other hand, belongs to the alternatives discussed by opponents: changing it would require Parliament and voters.

2. Separate expenditure items. In your own budget, it is advisable to distinguish what falls under the standard rate, hotels, essential goods and health insurance premiums. The comparison to make is between the indicated rates: 8,1% and 8,5% for the standard rate, 3,8% and 4% for hotels, 2,6% unchanged for essential goods and no VAT on premiums.

3. Read the two financial scenarios. In the event of rejection, estimates indicate an annual deficit of almost CHF 5 billion in 2035 and reserves equal to 50% of annual expenditure. With approval, the deficit would fall to around CHF 3 billion and reserves would reach 70%. The point not to miss is that the second scenario reduces the deficit, but does not bring it to zero.

4. Distinguish timing from funding. The first payment is scheduled for December, shortly after the referendum, and will involve around 2,5 million people. Its cost is CHF 4,2 billion, while CHF 1,4 billion would be covered by the VAT increase. The vote concerns the funding; the extra payment is scheduled for December.

To complete the assessment, the two political approaches can be compared: the Federal Council and Parliament focus on distributing the cost across generations; the parliamentary minority and PLR/FDP insist on purchasing power, spending cuts and structural reforms. The next step is to connect this choice to your own income and expenses, using calcolatore stipendio.

Source: lenews.ch