The politics of ageing and retirement: Evidence from Swiss referenda

Abstract

Ageing threatens the financial sustainability of pay-as-you-go pension systems, since it increases the share of retirees to workers. An often-advocated policy response is to increase retirement age. Ironically, however, the political support for this policy may actually be hindered by population ageing. Using Swiss administrative voting data at municipal level from pension reform referenda (and individual survey data), we show in fact that individuals close to retirement tend to oppose policies that postpone retirement, whereas younger and older individuals are more favourable. The current process of population ageing and the associated increase in the size of the cohort of individuals close to retirement may partially explain why a pension reform that increased retirement age for women was approved in two referenda in 1995 and 1998, while a reform that proposed a similar increase in women’s retirement age was defeated in a 2017 referendum.

Keywords:

• social security reforms
• voting behaviour
• retirement age
• population ageing
• individual preferences
• direct democracy

Notes

1 Please direct all correspondence to Vincenzo Galasso, Department of Social and Political Sciences, Bocconi University, Via Roentgen 1, 20136 Milan, Italy; or by E-mail: [email protected].

2 Piera Bello is based at the Università della Svizzera italiana. Vincenzo Galasso is based at Università Bocconi and is also a part of Baffi-CAREFIN and IGIER at that institution, and a member of CEPR and CESifo.

2 We thank seminar participants at the 2019 BSPS Conference (Cardiff, UK) and at the 2019 Conference on Pension Finance (Vaduz, Liechtenstein) for useful comments.