Progress Towards Securing Subsistence Levels in Old Age Provision

AHV and IV pensions fell far short of the breadline in 1960. Many pensioners continued to suffer from poverty. Supplementary benefits were introduced in 1965 to address this problem. These assistance measures also reduced the pressure to further expand state old age insurance.

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In the mid-1960s, approximately 200,000 AHV (old age and survivors’ insurance) and IV (disability insurance) pensioners lived below the subsistence level. They received neither occupational provision benefits nor owned assets of their own, and were dependent on welfare or relatives. Parliament approved the introduction of supplementary benefits (EL) on 19th March 1965 in order to help secure a regular minimum income for these people. EL benefits aimed at compensating the difference between a defined minimum income (for example 3,000 francs per year for a single person) and the effective (pension) income. In contrast to social assistance, pensioners were legally entitled to EL supplementary benefits. However, it was left to the cantons to decide whether they wished to introduce AHV/IV supplementary benefits and accept federal subsidies to partially cover their expenditures. The supplementary benefits were funded exclusively by contributions from the Confederation and cantons, rather than by payroll contributions.

The supplementary benefits followed the sixth AHV reform (1964) that had introduced a largely inflation-motivated pension increase of 30 percent. Initially, there were calls for much higher pensions backed by two popular initiatives launched in 1962 by the magazine ‘Der Beobachter’ and the left. With the support of business and insurance representatives, the Federal Council and Parliament finally decided that the AHV should retain a ‘basic insurance character’ and that an expansion of the welfare system should not compete against occupational and private provision. These conceptions thus essentially anticipated the future three-pillar concept. However, the Federal Council argued that in order to compensate for the low level of AHV pensions (and contributions), basic insurance ought to be supplemented by ‘a system of specially arranged means-related benefits that guarantee subsistence for the most socially deprived part of the population’. Although they were initially conceived as a temporary solution, the EL supplementary benefits remained a permanent fixture over the course of the following decades. Above all, they gained ever-increasing importance for the purpose of covering rising costs linked to long-term care in old age.

Literatur / Bibliographie / Bibliografia / References: Leimgruber Matthieu (2008), Solidarity without the state? Business and the shaping of the Swiss welfare state, 1890–2000, Cambridge.