(Bloomberg) -- Switzerland’s government is considering increasing mandatory contributions deducted from wages and raising the value-added tax to fund the increase in pensions citizens voted through this month.

Swiss citizens voted — against the government’s advice — in favor of a union-backed plan to give pensioners a 13th monthly payment starting in 2026. The Federal Council on Wednesday presented a proposal to fund the additional cost of the change, which it put at 4.2 billion francs ($4.6 billion) in the first year.

The government laid out two different plans which it wants to explore, it said in a statement. The first option is to raise pension contributions’ share of wages by 0.8 percentage point; the second is an 0.5 percentage-point increase along with a VAT boost of 0.4 percentage point. 

Switzerland’s VAT currently stands at 8.1%, lower than in many other European countries.

The government aims to present the two plans to parliament this year. In addition to that, the Federal Council wants to lay out a proposal for pension reform by 2026. That includes examining structural measures such as raising the retirement age and other financing options that cannot be realized in the short term, it said.

In the March 3 plebiscite, voters rejected a rival proposal to raise the retirement age — and then tie it to life expectancy — by a wide margin. 

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