Coop has over 77,000 employees, 53,000 of them in Switzerland. Bearing this in mind, how important is Coop's pension fund, CPV, when it comes to corporate decision-making?
Coop has one of the oldest company pension schemes in Switzerland, going back to 1914. The decision to establish the scheme was indeed a far-sighted one, not just because it was about social security in the context of provisioning for old age but also because of the generous arrangements in respect to contribution payments. The company has always paid two-thirds of the total contributions. Not least because of this fact, the pension scheme in this form was always an important component in Coop's overall structure.
Are the CPV benefits important when it comes to recruiting? Or put another way, is an attractive company pension scheme a differentiating factor in relation to the competition, in your opinion?
These benefits are undoubtedly a strong argument, especially when your pension fund is on a financially sound footing. This aspect has definitely become more important than it was ten years ago. Back then, no young person was really interested in the benefits provided by the company's pension scheme. If there were any questions, they mainly focused on the deductions made from your pay packet. The current debate surrounding demographic development or the low interest-rate environment has given the topic of old-age provisioning a new significance.
How would you assess the quality of occupational pension plans in Switzerland?
Old-age provisioning is a far more important topic in Switzerland than elsewhere in the world. Here in Basel, many of our employees cross the border every day to work. And I've noticed time and again that these people attach great importance to the benefits provided by our scheme. When it comes saving for old age, Switzerland is a privileged country. The pension funds are all on a sound footing. Also crucial in this connection, of course, is that both the employees and the company pay into the plan. The longer an employee stays with us, the stronger a healthy pension fund becomes a loyalty factor. We don't advertise the strength of our occupational pension scheme, but it is nevertheless a topic during the interview process.
Pension funds are facing tough times, above all as a result of demographic development and low interest rates. Are they – and indeed all of us – going to be victims of benefits promises that can't be financed?
That's the big question. We can't really influence demographics but we can do something about interest rates. How long are rates going to stay so low? A pension fund has to be geared towards the long-term. Looking at the future, the distribution of responsibility between young and old, between the employed and the retired will be a topic demanding our attention. The coverage ratio will need to be maintained in a way that does not put us in dire straits. So the technical interest rate has to be lowered and the conversion rates need to be adjusted. The challenge will be to find a solution which is socially acceptable both for young people and for those who are just about to retire.
It has been suggested that the additional costs generated by the proposed changes to the retirement and benefits system (AVG 2020) should be financed partly by raising the value- added tax. Is this a sensible solution?
It is certainly an approach which treats both sides - the younger, the older, the employed and the retired in the same way. So from this angle, I would say it's an equitable solution.
What do you think of the idea to raise the pension age for women?
As a matter of principle, I think we all retire too early. The exceptions would be those people who have been in physically demanding jobs such as construction workers or cutters in slaughterhouses. There are many people who can and want to work until they're 67 or 70. At Coop, employees can take early retirement at 58 if they're so inclined, albeit with a reduced pension, or they can retire at the regular age of 63. Many, on the other hand, want to stay until they're 65 or older, if need be with reduced working hours. Experience counts these days. At all events, I would have no issue at all with appointing 55 year-olds.
Cutbacks look to be on the cards if our retirement benefits system is to be maintained. Should retirees also have to make a contribution here, or should already earned pension entitlements remain untouched?
I hardly think that one can cut back the benefit entitlements of people already in retirement. These individuals have all been promised a certain level of entitlement and this promise should be honoured. On the other hand, I do believe we should examine the question you pose for pensioners in the future. One approach to the problem would be to inject more flexibility into the contributions made by the employed and also into the benefits received by the retirees. In respect to the discussion surrounding already existing pension entitlements, one should mention, in all fairness, that people retiring today and tomorrow will be receiving pensions on quite a different level than was the case 15 years ago. With the next generation, we need to do all in our power to ensure our pension fund system remains viable. And here we can all make our own contributions.
If you were able to give the pension funds in Switzerland some advice, what would it be?
We need to ensure the viability of our overall benefits system, both of the AHV and also of the retirement benefits arrangement. These are precious accomplishments. And we also have to find our way back to the so-called contract between the generations, the unwritten solidarity agreement between the young and the old, in other words to a mutually acceptable balance of interests between the young generation and the pensioners. Some might view the pension fund as a kind of enforced savings scheme. But when the time comes for them to receive a pension, they're happy too.