AHV: The Cornerstone of Social Security

In his 1944 New Year's address, the President of the Confederation Walther Stampfli effectively announced the prompt foundation of a state old age pension. Three years later, on 6th July 1947, the electorate passed the AHV Act; the first pension benefits were disbursed in early 1948. The AHV quickly became the symbol of the Swiss welfare state.

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On 6th July 1947, the electorate voted in favor of introducing the AHV. On the same day, voters also accepted to revise the economic articles of the federal constitution that gave the Confederation the right to intervene in the economy in the overall interest of the country. It also enshrined the involvement of economic associations. Both resolutions laid the groundwork for basic compromise in the post-war period.

The new welfare system stipulated a retirement age of 65 years for both men and women. It offered old age, widows’ and orphans’ pensions to be funded through contributions by employees and employers, subsidies from and the Confederation and cantons. The pensions were so modest that they did not compete with private provision (basic AHV pension: 40 to 125 francs per month for an average monthly industrial wage of 745 francs). Income-tested pensions were provided for the generation that had already reached retirement. In terms of organization, the AHV adopted the decentralized system of the associations and cantonal compensation funds that had been established with the Income Compensation Insurance for Militia Soldiers (LVEO).

The AHV was created as a direct result of the political change that had also reached Switzerland in 1942/1943. The victory of the Allied Powers seemed inevitable by then and new socio-political options opened up with the Beveridge Report. In 1942, a popular initiative supported by the left wing and the FDP demanded that the LVEO should be converted into the AHV. After initial hesitation, the Federal Council set up an expert commission at the beginning of 1944 and presented a bill to Parliament two years later. Drawing on its legal powers, in October 1945 the Federal Council also met a demand made by the Federation of trade unions and provisionally redirected LVEO surpluses into old age provision. Parliament later confirmed this decision and thus solved the funding problem concerning the AHV. The AHV act enjoyed the support of an overwhelming parliamentary majority. Nevertheless, as had been the case with the AHV proposal of 1931, a coalition of Liberals from western Switzerland Catholic Conservatives and business representatives launched a referendum. This time, though, over 80 percent of the electorate delivered a sweeping endorsement of the AHV.

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; Luchsinger Christine (1994), Sozialstaat auf wackligen Beinen. Das erste Jahrzent der AHV, in J.-D. Blanc, C. Luchsinger (ed.), achtung: die 50er Jahre! Annäherungen an eine widersprüchliche Zeit, 51–69, Zürich.