Switzerland is embroiled in a heated debate over the financing of the 13th AHV pension, set to be paid out for the first time in December 2026. The Swiss government is considering increasing the VAT from 8.1% to 8.8% to fund this initiative, a proposal that has sparked controversy.

The Swiss People's Party (SVP) and the Free Democratic Party (FDP) oppose this move, advocating instead for a comprehensive AHV reform.

Meanwhile, the Social Democrats prefer raising wage contributions.

The centrist party is attempting to broker a compromise by suggesting a temporary VAT increase, which would require a public vote for any extension.

This debate highlights broader issues, including the sustainability of pensions for Swiss citizens living abroad, which account for a significant portion of AHV payouts.

The outcome of this debate could set a precedent for future pension reforms in Switzerland.