More ambitious pension reforms will be key to ensuring long-term fiscal sustainability in Switzerland, according to the Organisation for Economic Co-operation and Development (OECD).

The Swiss government is currently developing an old-age pension reform, with the preliminary draft shared in spring 2026 and under public consultation.

It is aiming to encourage people to continue working beyond retirement age by adapting early-retirement penalties and pension accrual bonuses for delayed retirement to improve incentives to work, and abolishing the maximum age until when contributions for the first pillar improve pensions.

The reforms also included proposals to raise the social security payment exemption threshold for workers aged 65 and above, and for the minimum retirement age in the second pillar to be increased from 58 to 63 with a 10-year transition period.

However, to bring public debt back to a ‘broadly sustainable’ trajectory to 2060, the OECD warned the pension reforms would need to be more ambitious, including increasing the reference retirement age.

The 13th monthly payments to pensioners were recently approved by public referendum, and are expected to raise expenditure by 0.5 per cent of GDP in 2026, primarily financed by drawing down pension fund assets.

Modelling by the Federal Social Insurance Office showed that this will result in the public pay-as-you-go system posting a deficit as early as 2026 and continuing to increase.

While the proposal to increase the standard VAT rate by 0.4 percentage points, if approved, would go some way to financing the additional spending, the OECD warned that additional measures would be needed to ensure the system remained sustainable.

“A more ambitious pension reform will be key to ensure long-term fiscal sustainability,” the OECD stated.

“An outline of an old-age pension reform is under preparation, aiming to encourage working beyond the reference retirement age of 65 years, which is below that of most OECD countries.

“Linking the retirement age to gains in life expectancy would be an effective way to ensure long-term fiscal sustainability.”

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