The 2020 reform of old-age provision stands or falls primarily with the increase in value-added tax. This is the subject of the difference settlement procedure between the Council of States and the National Council in the 2017 parliamentary spring session. The aim is to bring the reform to a final vote in the current session.

As part of the 2020 pension reform (message of 19 November 2014), it is planned to raise VAT rates in order to close the financing gaps in the AHV. The increase is to take place in such a way that the currently applicable VAT rates remain unchanged from 1 January 2018 (cf. the FTA's press release of 23 February 2017).

In itself, the increase in VAT rates introduced in 2011 for the purpose of IV additional financing will expire at the end of 2017, which would lead to a reduction in VAT rates despite the adoption of the FABI proposal. In the referendum of 9 February 2014, the voters have already agreed that all three VAT rates will be increased by 0.1 percentage points as of 1 January 2018 in favour of financing the expansion of the railway infrastructure (FABI) (see our contribution of 23 February 2017 on the development of VAT rates).

According to the Federal Social Insurance Office (FSIO), the gap between expenditure and revenue for the AHV will widen to 21 billion by 2030 (see ECO contribution on SRF of 27 February 2017). The structural measures for old-age provision in 2020 - such as raising the retirement age - which are much more widely discussed in politics and society, would only marginally close this financing gap. This is where the increase in value-added tax comes into play, because according to the Federal Council's deliberations the question is no longer whether, but by how much, value-added tax should be increased in view of the old-age reform. The 2020 pension reform is the subject of political negotiations in the 2017 spring session of the Swiss parliament and is currently in the process of adjusting the differences between the two chambers (Federal Council business; 14,008).

On 28 February 2017, the National Council discussed the reform proposal (minutes of the meeting of 28 February 2017). According to the 2017 session programme, the Council of States will discuss the 2020 pension reform on 7 March 2017. The respective legislative banners and proposals can be downloaded here.