Concerns raised over cost of invalidity

Invalidity-benefit claims fell during the first six months of the year Keystone

Switzerland's invalidity-benefit system has come under fire for running up a debt mountain and for the high number of people claiming payments.

With one in 20 people of working age receiving invalidity insurance, critics say the scheme has become overloaded. Its deficit for the first half of 2005 was SFr1.2 billion ($974 million).

The mounting cost of the scheme was highlighted in a parliamentary-committee report this week, which accused the government of not doing enough to monitor and administer spending.

It also criticised the cabinet and the Federal Social Insurance Office (FSIO) for not showing initiative and argued that major problems behind the steep rise in invalidity payments had been virtually ignored.

FSIO figures show that the number of new benefits granted actually fell by seven per cent for the first six months of 2005.

According to the head of the FSIO’s invalidity-benefit division, Alard du Bois-Reymond, the refusal rate for benefit applications climbed from 36.6 to 41.1 per cent due to a stricter code of practice.

But the main problem is that there are still more people joining than leaving the scheme.

Common trend

A 2003 Organisation for Economic Co-operation and Development (OECD) study found that the increase in the number of people receiving long-term social-security payments for work incapacity was not exceptional.

Between 1992 and 2004, the invalidity-benefit recipiency rate for Switzerland went from 3.2 to 5.4 per cent of the working population.

This rate rose in almost all countries in the 1990s, the OECD report said. “The countries with particularly large increases in the 1990s all had below-average recipiency rates in 1990,” noted the study.

Rita Schiavi, from Switzerland’s largest trade union Unia, says one reason for this is the restructuring that took place in the 1990s.

“The rate of invalidity was comparatively low before and now it has reached an average level,” she said.

Low outflow

The OECD study identified that outflow – people leaving the benefit scheme – was very low in all 20 member countries.

“Low outflow partly reflects the fact that regulations on reviewing entitlements are not stringently applied and there is low take-up of work incentives,” it stated.

Even though the FSIO granted six per cent fewer new invalidity benefits in 2004 and increased the rate of refusal, the overall number of recipients still grew by three per cent.

In all, there were 283,000 people receiving disability benefits at the end of 2004.

The maximum monthly benefit is now SFr2,150, but not all applicants receive the full amount.

Du Bois-Reymond said the FSIO was well aware of the problem and made it clear that more needed to be done to encourage reintegration into the workforce.

Accusations

The rightwing Swiss People’s Party has repeatedly blamed the increased costs of the scheme on “systematic abuse”, claiming it is exploited by cheats making bogus claims.

The FSIO admits the numbers are high but denies that abuse or fraud is a problem.

A spokesman told swissinfo that claims of abuse were groundless. He added that stricter rules were coming into force with the fifth revision of the law governing benefits in 2007.

Some countries focus more on the issue of welfare fraud. The United States and Britain have an active anti-fraud stance, with fraud hotlines, publicity campaigns and strict prevention measures in place.

Australia has a wide range of controls, procedures and systems to identify fraud and abuse quickly, including data-matching programmes, risk profiling and entitlement reviews.

Experts agree that the two most effective approaches to reducing costs in work incapacity schemes are first to take steps to restrict eligibility and second to encourage beneficiaries who regain capacity to return to work.

Foreign claims

Foreigners are over-represented among invalidity-benefit recipients in Switzerland. They account for around 25 per cent of Switzerland’s workforce but make up 35 per cent of those who receive invalidity benefit.

This is because more foreigners work in jobs in Switzerland where their health is at risk, says Unia’s Schiavi.

“The sectors where most foreigners work are the most dangerous, health-damaging professions – such as the building trade – where the chances of becoming invalided are the highest,” she said.

The proportion of Swiss to foreigners receiving invalidity benefit has stayed the same since 1995. But more Swiss citizens than foreigners claim benefit for psychological reasons.
 

Key facts

There were 283,000 people receiving disability benefit at the end of 2004.
This represents 5.4% of the working population.
The number of new benefit recipients dropped by 6% last year.
One-third of all benefits paid out relate to mental-health claims and last year 40% of all new recipients belonged to this category.