The Swiss pension system is complex, and is based on three so-called pillars: old-age and survivors’ insurance (known as the AVS), occupational pension planning (often referred to as LPP) and private saving for old age encouraged through tax breaks.

This set-up enables risk-sharing and, although “unfortunately not perfect”, could be “a model for other States”, says Thomas Gächter, professor of social insurance law at Zurich University.

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The system certainly gives Switzerland a time advantage over other countries; but it will not save it from the consequences of an aging population which, according to forecasts, will be unable to finance the pensions of future retirees if corrective measures are not taken.

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“The bomb has been triggered”, states Gächter bluntly. Although the Swiss government keeps warning that time is running out, reforming the pension system is a huge work in progress that has been under way for decades, and will certainly not be completed any time soon.

The federal government has now given up on the idea of “far-reaching surgery” and instead chosen the path of “patching up here and there”, a strategy that has emerged since 2004, as all its proposals for major overhaul have either run aground in parliament or been rejected by the people.

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