Switzerland Votes to Fleece Its Kids

 

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. 

Two in Three Young Americans Want Social Security Reform

 

Young Americans are more likely than Baby Boomers to want Social Security reformed according to a new survey by Redfield and Wilton Strategies.  According to Newsweek magazine:

“A majority of 63 percent of Americans ‘strongly agreed’ (28 percent) or ‘agreed’ (35 percent) that the Social Security system needs to be reformed, according to the Redfield & Wilton Strategies/Newsweek poll. Only 10 percent ‘strongly disagreed’ (5 percent) or ‘disagreed’ (another 5 percent).”

Support for reform was strongest among Millennials:

“According to the poll, 56 percent of Gen Zers, 76 percent of millennials and 69 percent of Gen Xers believed the system should be reformed, against 50 percent of boomers.”

Newsweek interviewed Richard Johnson, Head of the Urban Institute’s program on retirement security.  Johnson offering sobering comments for young Americans: "unless policymakers fix Social Security's finances in the next 10 years, millions of retirees and people with disabilities would plunge into poverty."

That’s bad news for young Americans. 

Will the Biden Administration and the Democrats fix Social Security?  That’s easy: NO.  In fact, their plans will make things worse.

For example, Senator Elizabeth Warren wants to increase benefits for Baby Boomers by $200 a month. 

Giveaways to current beneficiaries like Senator Warren’s will make the system even more unfair to Gen Z, Millennials and Gen X.

It’s far past time to exert real pressure on the Washington political class to end the fleecing of young Americans.  Real Social Security reform would be a good place to start.