Solidarity between the generations is important for social security systems to work properly, particularly for the AHV (old age and survivors’ insurance) and healthcare insurance. In addition to the redistribution provided by the welfare state, family solidarity between generations is also effective.
In welfare redistribution, particularly in old age insurance (AHV) and health insurance, the gainfully employed younger generations are primarily responsible for the contributions, while the older generations are protected by the benefits provided. Socio-political transfer payments are not only provided through public welfare programmes but also come from other subsidiary institutions – especially the family.
Generational Relations in Social Insurances
Age groups such as pensioners are often defined by socio-political categories, and can take on different roles in social security systems. The old age and survivor’s insurance (AHV) introduced in 1948 is based on solidarity between younger and older generations. The gainfully employed make contributions into the social security system, and these are then disbursed to pensioners in the form of old age pensions. In this manner, one generation pays for the next and when that next generation themselves reach retirement, they in turn depend on the contributions made by subsequent generations.
Since the 1990s, this has often been called a ‘generational contract’. This implies there is a social ‘balance’ between the generations, in which no age group benefits at the cost of other age groups. The younger generation provides benefits to the older generation, and expects to receive similar provisions themselves later in life.
Some politicians, however, believe this balance is threatened by demographic trends. Life expectancy has continually increased since the mid-19th century, due to improved living conditions and medical progress. In 1869, only 8.5 percent of the population in Switzerland was older than 60, but by 1941 – prior to the introduction of old age and survivors’ insurance (AHV) – this share had already risen to 13 per cent. By the beginning of the 21st century, it stood at 20 per cent. If the number of pensioners rises, and other circumstances remain the same, the gainfully employed proportion of the population must also increase in order to cover the ongoing expenses of AHV. If the financing of old age pensions becomes imbalanced, the younger generations are put at a disadvantage as the generations following them will be unable to guarantee pensions at a similar level.
Yet predictions about the future of the AHV are extraordinarily complex. Although average life expectancy rose continuously from 1975 to 2015, and the number of pensioners doubled, the AHV budget remained stable. The aging of the population and the budgetary stability of the old age pensions therefore do not follow the same trajectory. Numerous other factors play a role, and whether the AHV accounts balance depends not only on the age distribution in the population but also on economic growth, the employment rate, socio-political decisions taken (especially regarding how the AHV is and will be financed), the labour market, and immigration policy. Particularly high AHV costs are anticipated in the near future when the baby-boomer generation (born 1955 to 1964) retires. In addition, old age care institutions will need to substantially increase their capacity to accommodate this generation.
Solidarity between younger and older generations likewise exists in health insurance. Although all age groups pay comparable premiums, older generations consume higher levels of benefits than do younger generations: a case in point are cost-intensive nursing services. However, this is not the only factor influencing costs in the healthcare sector. Others, including the rising cost of medicaments as well as for medical treatment more generally, are not directly related to demography. Moreover, the healthcare system is designed to ensure that younger generations can later enjoy similar benefits as previous generations have.
Family Solidarity and Transfer Payments
As a bond between generations, the family undertook many tasks and provided support until well into the 19th century. Today, many of these tasks are covered by social security programmes such as those providing old age or healthcare insurance. Despite the development of the welfare state, the family continues to perform key functions in social policy. The traditional family model prevalent in Switzerland for much of the 20th century assigned most of these tasks to women; this allowed for family solidarity, particularly in the care of children and the elderly. While older people are often cared for by their children, grandparents – especially grandmothers – frequently play a substantial role in looking after their grandchildren. Furthermore, grandparents may bequeath substantial resources in the form of inheritances or gifts on the next generation(s). Under certain conditions, family members may be obligated, under social assistance rules, to provide financial support to first-degree relatives.
Literatur / Bibliographie / Bibliografia / References: Perrig-Chiello, Pasqualina et al. (éd.) (2008), Generationen - Strukturen und Beziehungen. Generationenbericht Schweiz, Zürich; Fragnière, Jean-Pierre et al. (éd.) (2002), La Question des générations. Dimensions, enjeux et débats, Sion.