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A picture of Juerg Stahl giving an interview.
echo-interview, March 2019

The pension funds shouldn’t hide behind the politicians

ELIPSLIFE ECHO - INTERVIEWS WITH PROMINENT BUSINESS LEADERS

The pension funds shouldn’t hide behind the politicians

echo-interview with Jürg Stahl, National Councillor of the People’s Party (SVP) Canton Zurich

elipsLife echo: Mr Stahl, for 20 years now no progress has been made in reforming the old-age provisioning system in Switzerland. Your party has also rejected the latest attempt, the so-called old-age insurance/tax deal (AHV-Steuer-Deal). Is this a sign that politicians are failing to solve the pension problem?
Juerg Stahl: If we don’t find a solution, that’s tantamount to a failure on society’s part, since politics are just a reflection of our society. Our politicians would then no longer be the reflection of the society they’ve been elected to represent. We all have to shoulder responsibility here, including the corporate world. There’s a lot at stake. The debate over pensions is a complex and emotional one, because it affects all of us. So it’s not surprising  that finding a solution is difficult. If it had been possible to find a majority consensus on this issue, a solution would have been hammered out long ago.

The failure of the AV 2020 reform attempt can be attributed to your party, among others. How confident are you that you’ll be similarly successful with the AHV-Steuer-Deal? 
This question is not about an individual party, and certainly not about identifying a winner. When the bill came before parliament, I was President of the National Council. When the final vote was taken, the number of those in favour of AV 2020 was 101, just managing the minimum number necessary. So although a majority had been achieved, the razor-thin margin meant that prospects for the referendum didn’t look good. Following the vote, I certainly didn’t see myself as a winner; the need for a reform was, and is, simply too pressing. The SVP is not wholly against the AHV-Steuer-Deal. The majority, however, believes it’s not a good idea to connect pensions with taxes.

So what’s missing in the current reform package?
Personally, I’m disappointed there’s been no attempt to tackle the reform of the second pillar. And the current reform proposal doesn’t do enough to  hold the individual citizen accountable either. That being said, I should still like to warn against talking of winners and losers in this debate. There’s far more at stake here than a simple legislative amendment. It’s about the next generation in our country.

A picture of Juerg Stahl giving an interview.

What’s important for the SVP in the reform of the pension system?
The SVP clearly takes the view that pension reform has to entail structural change. Purely financial adjustments won’t do the job on their own. The abortive 2020 reform contained many positive elements. For example, aligning the age at which men and women should retire , namely at 65, would have been a desirable structural change.  What everyone agrees on is that if a journey is going to take a while, you either take take more food with you. Either that, or you eat eat less. Life expectancy has risen steeply. This is a welcome statistical fact. Our pension system came into effect in 1959. The records, by the way, don’t tell us why one decided on a pensionable age of 65 back then. The fact is, however, that currently life expectancy is 16 years above what it was 1959. So those who take the reirement journey today have a far longer road ahead of them  than was the case four decades ago.

Are you prepared to accept cutting pension levels?
If you just look at the monthly pension payments right now, a reduction looks inevitable. However, if you examine the overall retirement period, I don’t see a reduction. Life expectancy has gone up and older people are now far healthier than they used to be. Desite these realities, politicians haven’t  been able to conduct a fact-based discussion about the total duration of pension benefits. And we shouldn’t forget, either, the enormous potential that 65-year-olds take with them when they enter retirement. Politicians and society as a whole have not woken up to how much experience and knowledge can be utilised here.

Where do you think the priorities are  for the AHV when it comes to generating more income?
Raising value-added tax would obviously be the simplest solution. But the SVP has always emphasised that raising this tax is only then justifiable provided structural deficits can be alleviated at the same time.

Has the SVP set a  limit on raising value-added tax?
Our international competiveness is founded on advantages derived from our value-added tax. We shouldn’t give away these advantages. This why I don’t intend to commit to a ceiling on a possible increase in value-added tax.

And raising the contribution from wages and salaries?
What I just said about value-added tax also applies to raising wage contributions. We can’t just give up low wage contributions in a high income country like Switzerland. High incomes are a privilege that we shouldn’t carelessly put at risk. We need to ask ourselves about how far the working population can be asked to pay up even more than it does anyway.

A picture of Juerg Stahl giving an interview.

Where do you stand on a retirement age of 65 for women?
I fail to understand why we haven’t already introduced the 65/65 solution. No one disputes that already today we need to be sufficiently flexible and innovative to allow people to work until they’re 70. I’m President of Switzerland’s Drug Store Federation, an area where many women are active. And my female colleagues are unperturbed by this issue and just don’t see the 65 retirement age for women as the big deal it’s made to be by many politicians.

Increasing numbers of pension funds are lowering conversion rates in the non-compulsory sector and reducing benefits. Is this development undermining benefit promises and, in turn, the significance of the second pillar?
I don’t think so. But he pension funds shouldn’t wait for the politicians to act. If you look at the pension funds’ annual financial statements, you see enormous differences. There are models out there that allow healthy customised solutions – under the current regulations I should add. In pension business, the focus should be on the interests of the insured and not exclusively on the desire to make a profit. I believe in our system. We can be justifiably proud of it. Yes, we’re arguing over what this provisioning system should look like. But on the other hand, shouldn’t we also remind ourselves of who invented the system in the first place?

Should retirees also be asked to do their part in restructuring the second pillar, or are already earned pension entitlements taboo?
I’m not one to make political promises that are meant to hold good for decades  into the future. Things change in the way we interact with one another. This is normal and inevitable in any society. Even when promises are made with the sincerest of intentions, it’s just unrealistic to try and honour commitments that were made under totally different circumstances.  It’s wrong to make promises to a 20 year-old today about when he or she will be able to draw a pension, just to keep everyone happy. How are we supposed to know what the parameters will look like 45 years down the road?

Should the state promote the third pillar in order to ease pressure on the first and second pillars?
Promoting the third pillar is only sensible provided we can strengthen people’s awareness, through dialogue, that the journey is going to be longer than they first thought. Those that want to strengthen their old-age provisioning via the third pillar, shouldn’t be hindered in doing so. However, large portions of the population aren’t yet ready to address this challenge.  Making pension arrangements are not normally front-of-mind for 20 year-olds. So I think we rather need to strengthen the pension funds themselves. We need to encourage them to become more innovative and less bureaucratic. Following the AV 2020 debate, the insurers should have shown more innovative spirit instead of complaining about the politicians in Bern and even quitting the pension business altogether. It’s not good enough just to leave the politicians holding the baby.

 

What do the pension funds need to do to prevent the second pillar hitting the rocks?
It’s in their interests to exert political influence and help shape the debate. But they shouldn’t prioritise their own corporate agendas, but rather those of society as a whole. And they also need to fully utilise the possibilities they have. The pension funds shouldn’t hide behind the politicians and just complain about the inability to push through reforms. Instead of explaining the lack of action by pointing to the absence of an adequate legal framework, the insurers should take full advantage of the scope they have to make a real difference.

A picture of Juerg Stahl giving an interview.
Personal Profile
Juerg Stahl
National Councillor of the People’s Party (SVP) Canton Zurich

Jürg Stahl from Brütten, Canton Zurich, was born in 1968. He is an SVP politician and been a member of the National Council since 1999. During the 2016/17 legislative session, he was President of the National Council. Since 1999, he has been a member of the Committee for Social Security and Health. Following an apprenticeship as a druggist, he gained qualifications from a specialist academy in Neuenburg and in 1992 passed his master’s examination as a druggist. He subsequently gained a diploma from the Research Institute of Small Business and Entrepreneurship at the University of St Gallen. He was owner of a drug store in Winterthur from 1996 to 2004, and from 2004 to 2017 member of the management committee of the Groupe Mutuel insurance company. Since 2008, Stahl has been a member of the executive committee of Swiss Olympic and since 2017, its President. In addition, he has been President of the Swiss Drug Store Federation since June 2008. Stahl is married with one daughter.