Migration and social insurance: Positive effect in the long term

Over the past twenty years, Switzerland has experienced a high level of immigration, which according to the FSIO's population scenarios will remain substantial over the next fifty years. This raises the question of how this will affect social insurance. The study compiled by Prof Reto Föllmi (HSG), Prof Josef Zweimüller (UZH) and Sandro Favre (UZH) entitled "Migration and social insurance. An analysis of the first pillar and family allowances" comes to the following main conclusions:

1. rejuvenation of the resident population, easing the burden on social insurance schemes 
   Immigration has led to a rejuvenation of the resident population and thus to a substantial reduction in the burden on social insurance schemes: Over the past twenty years, it is reported that immigrants contribute to all three first-pillar social insurance schemes relatively more than they have received in benefits.
    
2. higher benefit contributions than benefits received by immigrants even in 2070
   Because net migration is falling slightly according to the FSIO's population scenarios, while those who have immigrated to date are getting older, the rejuvenating effect of immigration will decrease over the next fifty years. Even in 2070, however, immigrants will contribute to the social security system relatively more than they receive in benefits.
    
3. future benefit payments of immigrants will not be higher than those of people born in Switzerland
   The current social insurance contributions of immigrants generate future benefit entitlements. The question therefore arises as to whether a short-term reduction in social security contributions will be offset by disproportionately high benefit payments in the long term. An analysis of the 2003 immigration cohort from the year of immigration to 2070 shows that the ratio of benefits is practically the same as in a comparison group of people born in Switzerland.

Both in a cross-sectional analysis (comparison of the contributions paid in and benefits paid out in a calendar year) and in a cohort analysis (comparison of the expected contribution payments and benefits of a cohort in a life cycle analysis), the researchers from the Universities of St.Gallen  and Zurich come to the conclusion that immigrants from the EU/EFTA pay significantly more contributions to the AHV/IV than they receive benefits, even in the longer term, while people born in Switzerland pay fewer contributions than they receive benefits. This is the first time that the findings of the previous reports on the Swiss-EU Agreement on the Free Movement of Persons have been confirmed for a longer period of time.

The study "Migration and social insurance. An analysis of the first pillar and family allowances" (in German) can be downloaded. The article "Immigration has a positive effect on the first pillar" (in German) on the topic can be found on the CHSS website. 

Image: Adobe Stock / Woschee Photograph