Exclusive - Swiss central bank faces unions' demand for cash to bail out pensions
Reuters
Published Feb 09, 2022 15:59
Updated Feb 09, 2022 16:11
By John Revill
ZURICH (Reuters) - The Swiss National Bank faces the prospect of a labour union-led raid on the more than 100 billion Swiss francs ($108.35 billion) in profits it has racked up during its long campaign to restrain the safe-haven Swiss franc.
The Swiss Trade Union Federation (SGB) is considering launching a referendum for a bigger payout from the central bank to plug the widening hole in the public pension scheme, the federation's chief economist Daniel Lampart told Reuters.
He said there was strong support for a referendum on the matter and that the unions are due to make a final decision on how to proceed on Friday.
Lampart, himself a former member of the SNB's Bank Council, said he was confident of being able to get the 100,000 signatures to trigger a referendum, as well as being able to win the nationwide vote that followed.
The results would be binding on the government in Bern to implement under the Swiss tradition of direct democracy.
The SNB declined to comment on political initiatives. It is likely to oppose any payment to fund pensions, having already rejected calls for its balance sheet be converted into a sovereign wealth fund. It says such a move would compromise its independence.
PENSIONS HEAD FOR RED
The pension scheme, which covers everyone who has worked in Switzerland, is forecast to slip into the red by 2025 and reach an annual deficit of 5 billion Swiss francs by 2032.
Pension funds around the world are facing crises as people live longer and returns from investments shrink.
The SNB has racked up massive profits from shares and bonds it has bought with foreign-currency purchases designed to weaken the franc.
The central bank expects a profit of 26 billion francs for 2021. Taking into account profit retained from previous years, the SNB has a net profit of 108 billion francs, according to central bank data.
The SNB will distribute 6 billion francs of its profit to the Swiss central and regional governments. Lampart said this should be increased and used for other purposes.
"The SNB is in an exceptional situation, with profits in recent years which have never been as high," he told Reuters.
"The time is right for the SNB's profits to be used for other areas apart from the regional and national government or just sitting in its profit reserve."
The exact question to be put to voters is yet to be formulated. Implementation would be worked out following the referendum, which would most probably take place in 2025.
It remains open whether the unions would seek a one-off or an annual payment for the pension scheme, Lampart said.
Lampart dismissed the bank's argument that it needed all the profits to safeguard the economy.
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"The SNB's balance sheet is already 1 trillion francs, so I don't think an extra distribution of 2 to 4 billion would change that much in monetary policy terms," he said.
($1 = 0.9229 Swiss francs)
Written By: Reuters
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