Swiss voters will decide on 29 November 2026 whether to raise value added tax to help finance the 13th pension payment, as the Federal Council warns that the old-age insurance fund faces growing deficits.
Switzerland’s Federal Council on 5 October 2026 recommended that voters approve a 0.4% rise in value added tax (VAT) to help fund the 13th pension under the Old-Age and Survivors’ Insurance (AVS). The proposal goes to a national vote on 29 November 2026.
Cost of the 13th pension
The 13th pension will be paid for the first time in December 2026 to some 2.6 million beneficiaries. It will initially cost more than CHF 4 billion a year, rising to more than CHF 5 billion annually from 2035. In 2026, AVS expenditure will exceed revenue by more than CHF 1 billion.
Deficit and reserves
Without extra revenue, the annual deficit is projected to grow to nearly CHF 5 billion by 2035, according to current federal estimates. The AVS fund would fall below the legally required level of 100 % of annual expenditure from 2027, and to about 50 % by 2035.
The government says low reserves leave the system less able to absorb demographic and economic shocks. Returns on the small share of reserves invested in financial markets are also falling.
Proposed VAT changes
Under the plan, the standard VAT rate would rise from 8.1% to 8.5%, while the special rate for accommodation would go from 3.8% to 4.0%.
The reduced rate of 2.6% would stay unchanged. It applies to everyday goods such as food items, medicines, newspapers, books and menstrual hygiene products, as well as certain agricultural goods and services, so their prices would not rise.
Expected impact
The government estimates the increase would raise CHF 1.5 billion a year for the AVS. That would cut the projected 2035 deficit to about CHF 3 billion, from CHF 5 billion, and lift the fund to roughly 70% of annual expenditure, against about 50 % without the measure.
Government’s case
The Federal Council and Parliament argue that VAT spreads the cost across generations, as it is paid by both workers and pensioners who receive the 13th payment. They also say keeping the reduced rate limits the burden on low- and middle-income households, which spend a larger share of their income on essentials.
Opposition
A minority in Parliament opposes the plan, saying higher VAT weakens purchasing power. Opponents want the extra spending addressed in the next AVS reform. They say the 13th pension should be funded through structural measures, such as raising the reference age, and not solely through new taxes.
What happens next
If approved, the VAT increase could take effect at the beginning of 2028. Swiss voters accepted the initiative for a 13th AVS pension in March 2024. Pensioners will receive up to CHF 2,520 more a year, and couples up to CHF 3,780.
The outcome of the 29 November vote will determine how Switzerland funds the new pension and how quickly the AVS reserves come under further pressure.
