Supplementary Benefits (EL)

Neither the AHV nor the IV provided subsistence-level pensions when they were set up. In 1965, Parliament therefore decided to introduce supplementary benefits. Although they were only intended as a transitional solution, they soon became an established part of the Swiss welfare state.

After the introduction of old age and survivors’ insurance (AHV) in 1948, it soon became evident that state old age provision would not be able to fulfill the constitutional obligation for guaranteeing a minimum level of subsistence. This also applied to the disability insurance (IV) founded in 1960. Consequently, in the mid-1960s, approximately 200,000 AHV and IV pension recipients in Switzerland lived below the subsistence level. They had no occupational provision or assets of their own and were dependent on welfare or relatives. Women were disproportionately affected, as were the self-employed, part-time workers and people with career breaks and low incomes.

Introduction of Supplementary Benefits

Alongside the sixth AHV revision (1962-1964), the authorities intended to tackle the much-discussed problem of old-age poverty. Debate initially centered on old age provision as a whole. Should AHV benefits be substantially expanded? Employers and bourgeois parties in particular opposed this approach. For them the AHV should remain a basic insurance, and old age provision was to be further developed in the medium term through occupational provision, i.e. pension funds (1972: three pillar doctrine). Economic growth wage increases during the boom years (1950-1975)made this option an actual possibility. Over the course of the sixth AHV revision, old age pensions were ultimately raised by a third to adjust them to expanding wages. However, other measures were needed in order to address the problem of old- age poverty. Supplementary benefits (EL) were therefore approved for the AHV and the IV in 1965, in accordance with a parliamentary initiative tabled in 1962 by social democratic national councillor, and former federal councillor, Max Weber. Those who were unable to reach a subsistence-level income with an IV pension or AHV pensions – with the addition of occupational benefits –, were entitled to supplementary benefits. These were paid out from 1966.

Supplementary Benefits as Part of Social Security

Originally, the supplementary benefits were only intended as a transitional solution. They were to be repealed at a later point in time, as soon as the IV and combined old age provision benefits (AHV and pension funds) reached a minimum subsistence level. However, as this did not happen across the board, supplementary benefits were maintained and are now considered a permanent component of social security in Switzerland.

Supplementary benefits represent a solution somewhere between social welfare and social insurance. Like social welfare, its benefits are means-tested and funded by general taxation. However, the legal claims of those affected and the scope of benefits are more standardized than welfare benefits and the definition of EL prescribed minimum income is the most generous in the Swiss welfare system. Furthermore, from a legal standpoint, EL supplementary benefits form part of the AHV and the IV, even if they operate outside the system of social insurance. In relation to the three pillars of old age provision, the supplementary benefits are also viewed as the ‘pension plan of the poor (Erwin Carigiet).

Since the second revision of the Law on Supplementary Benefits in 1987, care homes residents have also been able to finance their typically high expenses with EL supplementary benefits in cases where their pension income is insufficient. This concerns more than half of residents of care homes today. Hospital services can also be funded through supplementary benefits. They thus serve as a nursing insurance policy too – as the one existing in for example in Germany. In 2019, a parliamentary revision tightened access to supplementary benefits. Rent maxima were raised, stricter regulations were introduced for those with more assets, and the minimum pension amount was lowered.

Administration and Funding 

Several institutions and actors participate in the administration of supplementary benefits. The cantons disburse supplementary benefits with the help of equalization funds, while being overseen and subsidized by the Federal Social Insurance Office. Depending on the financial clout of the respective canton, the Confederation initially contributed 10 to 35 percent of the costs for supplementary benefits. Since the new financial equalization of 2008, the cantons themselves have had to bear all the nursing and care home costs included in the supplementary benefits. The remaining expenses are split between the Confederation (5/8) and cantons (3/8). During the reorganization of the inter-cantonal financial compensation law of 2008, the system of EL supplementary benefits was extensively revised and granted a constitutional basis.

> Supplementary benefits in numbers

Literatur / Bibliographie / Bibliografia / References: Leimgruber Matthieu (2008), Solidarity without the state? Business and the shaping of the Swiss welfare state, 1890–2000, Cambridge ; Luchsinger Christine (1995), Solidarität, Selbständigkeit, Bedürftigkeit. Der schwierige Weg zu einer Gleichberechtigung der Geschlechter in der AHV, 1939-1980, Zürich ; Carigiet Erwin, Koch Uwe (2009), Ergänzungsleistungen zur AHV/IV. Darstellung, Charakterisierung und Wirkungsweise, Zürich.