The economic damage caused by the Corona crisis has major consequences for our social security system. With total wages falling, social security also contributions drop. Federal and cantonal tax revenues are also declining, putting pressure on important sources of social security funding. Meanwhile, spending on unemployment insurance (ALV) and public debt are skyrocketing.
Short-time work compensation, daily unemployment insurance (ALV) allowances, the income replacement scheme (EO) and, to some extent, the occupational pension system (BVG) are subject to old-age and disability insurance (AHV and IV) contributions. Yet the social security system as a whole remains under pressure. While 60-75 percent of the revenue reductions of these social security schemes in 2020 will be covered, the AHV and BVG schemes will remain in difficulties because as their slightly reduced expenditure will not compensate for their drops in income. That is why reforms of the first and second pillars (of the Swiss pensions system) should avoid any pension increases or generous compensation for the transitional generations.
