The Swiss might have a reputation for thrift and self-discipline. However, the results of Switzerland’s March 3
pension referenda show that even the Swiss have no taste for entitlement
reform. If pension reform is a political
non-starter in Switzerland, why should young Americans have any hope that Washington
will save Social Security?
On Sunday 58% of Swiss
voters decided to give themselves a pension raise and stick their kids with
the bill.
The raise took the form of a thirteen monthly pension check. Starting in 2026, every Swiss pensioner will get
a double payment in the month of November.
Payments in the other months will remain the same. This amounts to an 8% pay raise for every
pensioner, every year, forever.
A sweet deal if you can get it.
Younger Swiss voters opposed the pay boost. The vote reflects a generational
divide. Fifty-five
percent of voters under 40 opposed the pension hike. Older Swiss voters showed that they had no
qualms about fleecing younger generations.
Swiss voters also rejected by a margin of 75% to just 25% a
proposal to raise the pension age from 65 to 66 by 2033.
The proposal
to raise the pension age was put forward by the Young Radical-Liberals. The group gathered 145,000 signatures to put
the referendum on the ballot.
The Radical-Liberal
Party, better known as the Free Democratic Party or the Liberals, is Switzerland’s
classical liberal party. The Free
Democrats are the fourth largest party in the Swiss National Council. The Young Radical-Liberals are the youth wing
of the Free Democrats.
The proposal for the pension raise was put forth by labor
unions and Swiss left-wing parties. Unions
and left-wing parties also opposed the increase in the pension age.
Young people in Switzerland and elsewhere should take
note: unions and the left are not on your
side.
Switzerland badly needs pension reform. The country is running out of young
people. Swiss
government pensions are funded on a pay-as-you-go basis. Low birth rates mean that the number of Swiss
workers per pensioner is going to collapse in the near future.
Below is the population pyramid of Switzerland. The Switzerland is about to experience as
wave of retirements as the Swiss equivalent of the Baby Boomers and Gen Xers are
reaching retirement age in the next decade and a half.
The results of the Swiss referenda show how unlikely it is
that voters or politicians will enact reforms that put entitlements on a
sustainable path.
America also has a generational divide on entitlements. As in Switzerland, young Americans are more likely
to support changes to Social Security like cutting benefits or raising the
retirement age. A majority of older
voters and organized interest groups like the AARP oppose changes that will improve
the financial viability of the Social Security System.
If even the Swiss have no taste for even modest changes to
their pension system, there’s little reason to expect that Washington
politicians or the American electorate will back changes to Social Security or
other entitlements absent an imminent financial collapse.
