A Coherent Integration of Women into the 2nd Pillar

Following the adoption of the AHV 21 reform and the alignment of the retirement age for women with that of men, more and more voices are being raised calling for women to be given a better position in the 2nd pillar. This is not just a matter of keeping a promise made in the referendum campaign, but above all taking account of social developments in the 21st century.

A technical rather than a fundamental issue

People who work part-time or for several employers at the same time are less well insured in the 2nd pillar, because the entry threshold and the coordination deduction, which determine the insured salary, are fixed amounts and thus independent of the degree of employment. However, these forms of employment mainly affect women.

Lowering the entry threshold or the coordination deduction would improve their pension provision, and in fact this proposal is unlikely to meet with much resistance in parliament. But as is so often the case, the devil is in the details. Should absolute or relative figures be set for the employment level? Should the entry threshold or the coordination deduction be targeted? Do we need transition periods?

However, these challenges are more technical than fundamental. According to Swisscanto, only 14% of all pension funds have not yet voluntarily reduced the coordination deduction or made it more flexible. For most insured persons, reality has overtaken politics. That is why parliament should not tighten its grip when setting these thresholds. The adjustment would only affect a few companies, and moreover, transitional solutions would also be possible.

Image: Pension provision is the wrong place to fix problems such as non-family childcare, the lack of individual taxation, or the hurdles in reconciling work and family life. (Peter Conlan, Unsplash)

The flip side of the coin

Slightly trickier is the reduction of the conversion rate from 6.8% to 6% envisioned as part of the BVG 21 reform. This rate is the same for men and women. With the adoption of the AHV 21 reform, this rate will in future be applied to both genders for the reference age of 65.

Although the conversion rate is not gender-specific by law, its adjustment will be in practice, to the disadvantage of men. This is because while women are often less well protected for the reasons mentioned above, men have more BVG pension assets and are thus the main beneficiaries of the reduction in the conversion rate. According to the Swiss Federal Statistical Office, 58 percent of the people who received a BVG pension for the first time in 2020 were men, who in turn received a total of 70 percent of all pension payments. The introduction of a pension supplement for all, as proposed by the unions to compensate women for the reduction in the conversion rate, therefore makes no sense.

Couples go on vacation together

The gender-related pension gap is often cited as justification for targeted support for women. However, the statistics mentioned only consider the gender of the insured person, not their family situation. And they poorly reflect the reality of married pensioners. Couples form an economic unit in which expenses and income are shared. The husband does not travel alone on vacation while the wife stays behind at home. The proposed supplement for all or only for women would make up for a difference that is rarely perceived that way in practice.

Avoid thematic mixing

Pension provision is the wrong place to address problems such as non-family childcare, the lack of individual taxation, or barriers to work-life balance. These problems need to be addressed at the root, not after 40 years on the job.

The current BVG reform, however, offers a good opportunity to adapt occupational pension provision to the new reality of the working world, especially that of women. However, it is essential to respect the principles of the 2nd pillar: a replacement income that reflects the professional activity and is financed via the funded method. Pension supplements distributed according to the watering can principle and financed by the pay-as-you-go system must also be avoided in the name of equality. Let’s not forget that such additional expenditures will put a strain on the wages of young people – men and women. After all, solidarity is not just a question of gender, but also of generations. Therefore, our elected representatives must, on the one hand, adjust those parameters that penalize certain forms of work or organization in couple relationships and, on the other hand, ensure the coherence of the financing of the 2nd pillar.

This article was published in the journal “Schweizer Personalvorsorge”, issue 11/22.