Thousands of retired Swiss seniors falling into poverty

Thousands of seniors in Switzerland have difficulty in paying their current bills. Keystone

In Switzerland a huge wealth gap exists among retirees. While most senior citizens can comfortably make ends meet, one in five is living either below or close to the poverty line. Some 50,000 pensioners have no financial cushion to offset their low income.

Bernard and Pierrette Apothéloz are both in their early 70s. With their meagre pensions and no savings or additional benefits, the couple often struggle to pay their bills. Because of their financial situation, they are unable to absorb any unforeseen costs.

“Just keeping our heads above water is a constant battle,” says the husband. They are “very stressed” about money. In recent years, they have watched the rising costs of health care and most basic commodities with consternation.

We meet the couple in their small flat in Neuchâtel, a town in the French speaking part of Switzerland, during a visit by a social worker from Pro Senectute. This organisation, which defends the rights, dignity and wellbeing of the elderly, offers social counselling and assistance to those in financial difficulty.

In the five years since they took their retirement, Bernard and Pierrette have had to face unpayable bills for dental care as well as the dilemma of how to put food on the table.

“It was the end of the month and we hadn’t even got CHF20 ($22) left for the weekly shopping,” Pierrette recalls. “Even going down just to the bare basics, we have to count every penny.”

The couple have eliminated most non-essential expenses. “I can longer buy any presents for my wife,” Bernard laments. He has curtailed his leisure activities, bar the weekly card club and “an occasional coffee or beer”. If he goes into town, it is always on foot. His wife, meanwhile, has cut back on everything except cigarettes. The couple feel increasingly isolated – inviting friends around has become too expensive, but they avoid it “perhaps also out of a feeling of shame” vis-à-vis their better-off peers.

Like this Neuchâtel couple, nearly 9% of the over-65s say they have great difficulty making ends meet, according to the Federal Statistical OfficeExternal link.

Retirement exacerbates precariousness

A recent studyExternal link commissioned by Pro Senectute found that over 200,000 retired people (the equivalent of nearly 14% of retirees, compared to 6% of the working population) are living on an income below the poverty line, and a further 100,000 are close to it. A total of one in five senior citizens can be considered poor or at risk of falling into poverty.

Women, people with a low level of education, and foreigners are at greater risk than the rest of the population – that is, anyone likely to have had a low-income job or fragmented career, which is then reflected in a very low pension, explains Rainer GabrielExternal link, a researcher at the Institute of Diversity and Social Integration at the Zurich University of Applied Sciences (ZHAW).

Before retiring, Bernard Apothéloz took inventories for retail kiosks. He earned around CHF4,800 a month – not enough to put money aside (the current median salary in Switzerland is about CHF6,700) but sufficient “never to get into debt”. Today, he and his wife are living on CHF4,800 a month.

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The household income consists of their state pensions and the husband’s occupational pension. Pierrette also worked, but not continuously. She took a break of several years to raise her son and was forced into early retirement at 62 after being made redundant. As a result, she only has a partial state pension. Meanwhile, her occupational pension, which she chose to withdraw in full when she retired, quickly melted away. At the time she needed it, but now she regrets that she made “a huge mistake”.

Although they share the average amount received by a sExternal linkingle person with a External linkstate and occupational pensionExternal link, the couple is still far from the poverty line, which stands at CHF3,064 a month for a household of two adults without children – a threshold considered too low by the anti-poverty organisation CaritasExternal link.

Social worker Céline Omerovic, on a visit to the Apothéloz couple, explains the terms of a new privately-funded Pro Senectute mandate to cover medical expenses, which will bring some financial relief to the couple. SWI / Pauline Turuban

Not all pensioners have assets to dip into

The precarious reality of some pensioners is easily overshadowed by the generally sound financial situation of most older citizens in Switzerland. The Swiss pension system is mostly considered to be effective at preventing poverty in old age, as the researcher Gabriel notes. Thus, the material-deprivation rate of the over-65s in Switzerland is one of the lowest in Europe – and half thatExternal link of the 18–64 age group.

Retired people have tended to acquire savings and assets throughout their working lives. “It is therefore commonly assumed that it does not matter if they have a low income, as they have real estate to sell or savings with which to compensate,” Gabriel explains. Indeed, statistically, this age group does have the greatest concentration of wealth. A good half of over-65s own more than CHF100,000 in so-called liquid assetsExternal link – that is, assets that can be mobilised in the short term. This is also true of 40% of pensioners whose income is below the poverty line.

But, as the ZHAW researcher points out, individual situations differ greatly. Firstly, assets are not always liquid. Real estate is a case in point. In addition to the upheaval of moving house at an advanced age, selling one’s property to go and live in rented accommodation is not necessarily wise, given the steep rental prices.

But above all, a considerable segment of the retired population simply does not have the means to compensate for their low income. According to the statistics office, almost 16% of the over-65s have no substantial financial reserves, and 11% would be unable to cover an unforeseen expense of CHF2,000. The Pro Senectute study conservatively estimates that at least 46,000 people are in “dead-end poverty”, with no savings or assets of any kind.

In general, Gabriel concludes, senior citizens have fewer coping mechanisms than the active population – the first being work. This is why poverty is much more insidious in old age.

Translated from French by Julia Bassam/gw