Social security spending continues to rise

Pensioners benefit most from Switzerland's social spending Keystone

Spending on social security is rising at several times the rate of inflation, with latest figures showing the taxpayer forked out SFr120 billion ($91.35 billion) in 2001.

This was up six per cent – or SFr7 billion – on the previous year, with the lion’s share swallowed by the state pension scheme.

The figures from the Federal Statistics Office show that Swiss spending on social security is now in line with member countries of the European Union (EU).

In 2001 the bill amounted to 28 per cent of gross domestic product (GDP) – up from 20 per cent a decade ago.

Unemployment costs, which reached a peak in 1997, fell by 0.4 per cent to 2.4 per cent in 2001. However, this positive trend precedes the global downturn and rising jobless figures.

Pension scheme

Switzerland’s state pension scheme eats up almost 50 per cent of social security spending. Only Greece and Italy fork out more among other European countries.

Government concern over the rising pensions bill has prompted controversial proposals to avert a financial crisis.

According to government figures, spending on the state pension scheme will increase significantly until 2040 as a result of demographic changes.

Interior minister Pascal Couchepin announced last month plans to raise the retirement age to 67 – from 65 at present.

The rise would take place in two stages – from 2015, it would increase to 66 and from 2025 to 67.

Any shortfall would be made up by increasing VAT by 2.1 per cent until 2025 and 3.6 per cent until 2040.

Health bill

Health costs accounted for a quarter of spending, with more than ten per cent going on invalidity benefit.

In all, more than 80 per cent of social security spending is gobbled up by pensions, sickness and invalidity benefit.

The amount spent on social security has mushroomed since the end of the Second World War – in the 1950s the bill was only SFr1.5 million.

However, social security costs reached SFr11 billion in 1970, before rising to SFr63 billion in 1990.

In real terms, the bill has leapt from SFr5.6 billion in 1950 to SFr93.1 billion in 1990.

swissinfo with agencies

In brief

In 2001 the Swiss taxpayers paid SFr120 billion for social security – this is a six per cent increase compared with the previous year.

Nearly half of Switzerland’s social spending goes to its state pension scheme – only Greece and Italy spend more money on their pensions.

Social spending accounted for more than 28 per cent of the gross domestic product, putting Switzerland in line with member countries of the European Union.

Despite the increase in spending, revenues rose from SFr135 billion to SFr141 billion.

Key facts

About 85 per cent of the money is split seven ways:
Company pension scheme: 30.1 per cent
State pension scheme: 24.1 per cent
Health benefit: 12.7 per cent
Invalidity benefit: 7.7 per cent
Accident benefit: 4.3 per cent
Family contributions: 3.6 per cent
Unemployment benefit: 2.4 per cent
Various: 5.5 per cent