Behind the Scenes of the AHV Debates

While the first drafts for the AHV (old age and survivors’ insurance) had to overcome significant political hurdles, pension funds enjoyed an initial phase of expansion in the interwar years. During this period, pension provision became an important market for life insurers.

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Prior to 1914, there were only a limited number of pension funds outside the public sector and just a handful of companies granted their employees an old age pension. This changed after 1916, when the Confederation decided to exempt contributions to pension schemes from the war profit tax. This tax exemption led to the formation of a whole range of new pension funds, particularly in the machine-making and metal industry. The number of funds increased ten-fold (from around one hundred to over one thousand) between 1911 and 1930. However, this boom concealed some considerable differences among workers: in 1930, two thirds of public-sector workers were members of a pension plan, while this figure was only at ten percent for private-sector workers.

Beyond tax optimization, employers’ pension schemes also played their part in soothing working relations after the National General Strike and strengthening employees’ loyalty to their companies. The delays and obstacles in establishing the AHV can also explain this initial phase of expansion. From the interwar period on, the private provision lobby, which banded together in 1922 in the Swiss Association of Support Funds and Foundations for Retirement and Disability (SVUSAI), became an important actor in the pension debates.

The life insurers also held a strategic position in these debates. Drawing on their expertise in actuarial mathematics (the method for calculating insurance risks), they were able to advise the Confederation in the initial AHV projects. From the 1920s these companies also entered the pensions market, thanks to group contracts (for companies that wanted to offer pension benefits without having to run their own pension fund). Private pensions enjoyed considerable financial clout: at the start of the Second World War, pension reserves already amounted to more than a quarter of the gross domestic product.

Literatur / Bibliographie / Bibliografia / References: Leimgruber Matthieu (2008), Solidarity without the state? Business and the shaping of the Swiss welfare state, 1890–2000, Cambridge; Leimgruber Matthieu (2006), La politique sociale comme marché. Les assureurs vie et la structuration de la prévoyance vieillesse en Suisse (1890–1972), Studien und Quellen, 31, 109–139, Zürich.