Swiss conciliation conference backs mixed payroll and VAT hike to fund 13th AHV pension

Compromise reached

After weeks of deadlock between the two chambers, a conciliation conference on Wednesday morning voted 15 to 11 in favour of a mixed financing model for the 13th AHV pension. The proposal largely mirrors the Ständerat's earlier position, coupling a smaller payroll contribution increase with a hike in value-added tax. The Nationalrat had insisted on financing solely through a temporary VAT increase, but the conference opted for a permanent solution.

With mixed financing we have a stable, precisely balanced and permanent solution.

What the deal entails

Under the compromise, payroll contributions would rise by 0.2 percentage points from 2028, rather than the 0.3 points the Ständerat had previously sought. The standard VAT rate would increase by 0.4 percentage points, while the reduced rate on everyday goods remains untouched. The special rate for the hotel sector would go up by 0.2 points. The extra levy is expected to channel around 2.5 billion francs into the AHV fund by 2030.

Political divide

The proposal deepens a partisan rift. The centre-left alliance of Mitte, SP and Greens backs the package, with trade unions calling it socially balanced. The SGB said employees would receive more pension in return for "barely noticeable" higher contributions. The right-wing bloc of SVP, FDP and GLP rejects any rise in payroll deductions. FDP co-president Benjamin Mühlemann warned the party would vote against, stating it would not support "one-sided" revenue increases. GLP group leader Corina Gredig argued that higher contributions mean "less money in working people's accounts".

What comes next

The Ständerat votes on Thursday, followed by the Nationalrat on 17 June. If either chamber rejects the proposal, the financing bill collapses. In that case, the 13th monthly payment would still be disbursed from December, but without a dedicated funding stream. The Federal Council has already included fallback options in its draft AVS 2030 reform, which include either a combined increase or a VAT-only approach.

Cost pressure

Even if the deal passes, the pension's cost is set to climb sharply. The first year in 2026 will require 4.2 billion francs, rising to around 4.5 billion in 2030 and 5.4 billion by 2040. The additional revenue from the compromise would cover only part of that gap.