We're taking a stand: Fair pensions for women — now.

The coordination deduction is a relic from the past. Designed for the traditional family model, it still disadvantages people with low incomes today—especially women. Tomorrow may be the day politics finally acts. As part of the ongoing occupational pension reform (BVG), the Council of States is set to debate the coordination deduction — a key step toward addressing a system long overdue for change.

An example shows why women and low-income earners are particularly disadvantaged: A nurse earns 5,400 francs per month working full-time. She becomes a mother, takes on most of the unpaid care work at home, and reduces her workload to 50 percent. Her annual salary is now 32,400 francs. After deducting the coordination amount of 25,095 francs, only 7,305 francs remain insured in her pension fund. Contributions to the second pillar are only paid on this amount. After just a few years at reduced capacity, significant gaps appear in her pension savings.

Why should the coordination deduction be adjusted?

“The coordination deduction in its current form is a structural flaw that no longer reflects today’s society. “Designed by men, for men — it was built around full-time employment and higher incomes, with no consideration for part-time work, lower wages, or multiple jobs.” says Kathrin Bertschy, member of parliament for the GLP and co-president of alliance F. The fixed deduction is a key reason why women receive on average nearly 20,000 francs less in retirement income across all three pillars than men. Note: the gender pension gap in the second pillar is 60 percent.

The question being discussed in the Council of States is: Should this fixed deduction be abolished? Women’s organizations have been calling for this for years to end the disadvantage in the second pillar. The Social Security and Health Committee of the Council of States has now taken up the issue. “For 35 years, women across party lines have tried to correct this flaw—so far unsuccessfully,” says Bertschy. “This is the first time it’s being addressed through a legislative reform. The chances for change are good.”

Why does the coordination deduction exist?

Its purpose is to prevent double insurance of income. In simple terms, pension contributions should only be paid on the portion of income not already covered by the state pension (AHV). To achieve this, a fixed amount—the coordination deduction—is subtracted from the annual salary. The Federal Council sets this amount, currently at 25,095 francs. The remaining portion is the “coordinated salary,” on which pension contributions are calculated. This determines the future pension.

Why are women especially affected?

The deduction significantly reduces the portion of income insured in the second pillar. The impact falls hardest on those with lower incomes. The less you earn, the less you can contribute to your pension fund. The result is lower pensions or even old-age poverty. The second pillar no longer fulfills its goal of maintaining living standards after retirement. “This system is particularly disadvantageous for women, as they are more likely to work in low-wage sectors, work part-time, and often earn less even in the same roles. This puts them at a multiple disadvantage,” explains Bertschy.

What changes are being discussed?

Politicians now recognize that the system is outdated. The coordination deduction is being reviewed as part of the BVG reform. However, how far changes will go remains unclear. Improving coverage for low incomes would increase costs for employers. The Federal Council proposes halving the deduction to around 12,500 francs. This has been supported by a parliamentary committee. For the nurse working 50 percent, this would mean around 19,900 francs of her income would be insured. “It’s a start, but still not fair. Low-income earners and people with multiple jobs are still disadvantaged,” says Bertschy.

The Council of States committee proposes a more radical change: a proportional deduction of 15 percent. This would insure 85 percent of all income. For the nurse, this would mean 27,540 francs insured—almost four times more than today. “This approach would finally create equality in occupational pensions,” says Bertschy.

What do critics say?

The proposal is controversial. Trade unions and employer organizations oppose it due to costs. Unions fear a higher burden on low-income workers, as higher insured salaries also mean higher deductions from wages. Gabriela Medici from the Swiss Trade Union Federation says: “15 percent is effectively abolishing the deduction. For low-income earners, this is a significant additional burden.”

The Swiss Trade Association raises similar concerns: “Costs would rise disproportionately in the low-wage sector. Neither businesses nor employees can afford this,” says President Fabio Regazzi. The Swiss Employers’ Association questions the cost-benefit balance, noting that the proposal would make pension plans significantly more expensive, especially for employers with many part-time or low-wage workers. They support the Federal Council’s proposal to halve the deduction.

Could change finally be within reach?

Bertschy counters that a 15 percent deduction already applies to higher incomes and is considered acceptable there. She sees the criticism as inconsistent: “Employers already bear higher costs for high incomes. Why shouldn’t they do the same for low incomes?” If high incomes can be well insured, smaller ones should be too.

The Council of States is set to discuss the reform on Wednesday. Bertschy is optimistic: “There are too few strong arguments against it. Also, this is the first legislature with a higher share of women in parliament. I hope we finally create a fair pension system.”

If the Council of States approves the reform, it’s only the first step. The National Council will decide in autumn whether the 35-year effort finally succeeds or continues.

Update from the Council of States session on June 15

The issue has been postponed. The entire reform package was sent back to the committee for revision. The main criticism was not the coordination deduction itself, but compensation measures. The outdated system is likely to remain in place for now. It is unclear when the reform will return to parliament.