Old-age provision Federal Council wants to finance 13th AHV pension with higher VAT

The 13th AHV pension is to be financed from a higher value-added tax. This is what the Federal Council is proposing. It will not decide how much the VAT should be increased until the fall.

The Federal Council took into account the revised financial outlook for the AHV, as it announced on Wednesday. Expenditure on old-age and survivors' insurance is likely to be around CHF 4 billion lower in 2033 than previously assumed. The Federal Council therefore considers the increase in VAT to be appropriate for financing the 13th AHV pension.

In the consultation process, it had put two financing options up for discussion: one with higher salary contributions alone and a combination of higher salary contributions and more VAT. However, in view of the consultation process that ended at the beginning of July, the increase in VAT is likely to have a difficult time in parliament.

The Federal Council has relented somewhat on the federal contribution to higher AHV expenditure: Instead of the reduction from 20.2 percent of expenditure to 18.7 percent, it is now proposing a reduction to 19.5 percent. This means that the federal budget will contribute around CHF 500 million to the 13th AHV pension in 2030.

The Federal Council intends to submit its message to Parliament in the fall. The Councils are due to begin discussing the bill in December.