BERN - Social affairs minister Elisabeth Baume-Schneider has opened the government's campaign for the 29 November referendum with a warning. Rejecting the planned VAT increase would leave the old-age pension fund with an annual deficit of almost CHF 5 billion by 2035, she told a press conference in Bern, in comments carried by RTS. "A no would have serious consequences," she said.
The measure on the ballot raises the standard VAT rate from 8.1 to 8.5 percent and the special hotel rate from 3.8 to 4 percent. The reduced rate on essential goods such as food and medicines stays unchanged at 2.6 percent, and health insurance premiums remain exempt. With the increase, government estimates put the AHV shortfall at around CHF 3 billion a year by 2035 instead of CHF 5 billion.
The money is needed because the first 13th monthly pension payment lands in December, seven weeks after the vote. The extra payment will cost CHF 4.2 billion a year, of which CHF 1.4 billion is to be covered by the higher VAT. Around 2.5 million pensioners will receive it.
A compromise spread across generations
Baume-Schneider described parliament's proposal as a moderate and socially acceptable compromise. The Federal Council and both chambers argue that financing the 13th pension through VAT spreads the cost across the whole population, including pensioners themselves as consumers, rather than loading it onto wage earners alone through higher payroll deductions.
The plan faces opposition from a parliamentary minority that warns higher VAT will erode purchasing power at a time when health insurance premiums are rising about 5 percent in 2027. Opponents favour structural reforms instead, including an increase in the retirement age. The Free Democratic Party launched its own campaign in late September.
VAT has become the government's instrument of choice for social and defence funding alike. Senators backed a smaller VAT rise for the CHF 24 billion defence fund earlier in the autumn session, which makes the pension vote the second tax question heading to the people in the coming year.
Seven weeks to convince voters
Baume-Schneider said she was confident voters would back the proposal. Her aim, she added, was to leave future generations a financially sound social security system. The yes camp has seven weeks to make that case, with the first payment already legally secured regardless of the outcome: the 13th pension was approved by voters in March 2024, and December's money will be paid even if the financing fails at the ballot box.
That asymmetry is the government's strongest argument and its biggest risk. A no on 29 November would not stop the 13th pension, but it would send the AHV's accounts deeper into the red and force parliament back to the drawing board, with a retirement age debate that every party has so far tried to postpone.