There are vast material differences between retirees in Switzerland. While the majority can comfortably meet their needs, one out of five elderly people lives below the poverty line, or close to it. About 50,000 senior citizens do not have enough savings or spare resources to compensate for their limited income.
This content was published on Jan 23, 2023 – Jul 09:00,
January 23, 2023 – 09:00
My specialty is telling stories and deciphering what is happening in Switzerland and around the world through data and statistics. I have been an expat in Switzerland for several years and previously worked as a multimedia journalist for RTS.
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With their modest pension, and no extra handouts or savings, it’s hard for Bernard and Beret Abutelo to pay the regular bills. Also, their financial situation does not allow them to face any emergency costs. “We are always up to our necks,” says the husband, who is “very nervous” because of the lack of money. In recent years, the couple have watched with concern the steady rise in health costs and the prices of most basic products
We met the couple in their small flat in Neuchâtel, during one of their appointments with a social worker from Prosinectut. The NGO working for the dignity of the elderly provides, among other services, social counselingexternal link and assistance for the elderly who suffer from financial hardship.
Five years ago when they retired together, the couple had moments of despair at not being able to pay the dentist bill or not knowing how to fill their plates. “We were reaching the end of the month and we didn’t have 20 francs to buy the food we needed,” recalls Pierrette Abutelou, and adds, “With this situation, and in order to buy only what is necessary, everything must be carefully calculated.”
Generally, the couple dispenses with unnecessary expenses. “I can no longer give gifts to my wife,” says Bernard Abutelou lamenting. He also gave up his hobbies, except for a game of cards once a week and “a cup of coffee or a glass of beer from time to time”. And when he turns into the city, he always goes on foot. As for his wife, she only buys her own cigarettes. And the two septuagenarians close themselves in, because receiving guests has become very expensive – and “perhaps also because they feel a complex” towards their financially comfortable friends.
Like this Neuchâtel couple, around 9% of Swiss people over 65 say they find it very difficult to make ends meet, according to the Federal Statistical Office.external link.
Retirement complicates and exacerbates the situation
You can studyexternal link A recent study commissioned by Proscenectut found that more than 200,000 retired people (about 14%, versus 6% of the working population) live below the poverty line and about 100,000 others live close to the edge. In all, one in five older persons could be considered poor or close to poverty.
Women, people with a low level of education, and even foreign residents are more vulnerable to poverty than other citizens. In short, says Rene Gabrielexternal linkAll people who have had low-income or fragmented careers see this reflected in their very limited pensions.
Before retiring, Bernard Abutelho worked in a kiosk, doing inventories. He was paid 4,800 francs per month, and this salary did not allow him to save any money (the current average salary in Switzerland is approximately 6,700 francs), but it was “always enough to live without debt.” Now, he has to live on 4,800 francs a month, but with a second person.
The family’s income consists of Old Age and Survivors’ Insurance (AVS) pensions and the spouse’s Occupational Security pension. Pierrette was also working, but not continuously. She stopped working for several years in order to raise her son, and had to retire early due to being fired from her job when she was 62 years old. The result, she received an incomplete old-age and survivor insurance pension. And her second column, which she had chosen to withdraw entirely in her retirement, soon evaporated. Because she needed him at the time, but today she regrets that she committed a “great foolishness,” as she said.
Although they live on what one person gets on average, he receives the first and second columnsexternal link (See illustrative graph above), the couple are still far from the poverty line, which is currently estimated in Switzerland at CHF3064 per month for a family of two adults without children – considered by Caritasexternal linkThe anti-poverty charity put the bar “very low”.
Indeed, the couple’s application for supplementary benefits was deniedexternal linkNon-taxable government assistance intended to supplement pensions insufficient to meet primary needs. They receive about 300 francs a month more than the income they are entitled to. In addition, supplemental benefits are accompanied by coverage of medical expenses and make the award of other assistance conditional. Because of this principle of gradualism, after the spouses have paid the obligatory expenses, they “live less than the beneficiaries of supplementary benefits,” says social worker Selin Omirović. According to her, the couple represent “a model of the retired poor” – by analogy with the term “working poor”.external link» known.
Supplements are crucial to helping those most in need avoid falling into poverty, because the pension is barely enough to secure the minimum subsistence level. Only 7% of the elderly who live in their homes receive this assistance, but the number of those who need it is much greater than this percentage. According to researcher Rene Gabriel, many people who qualify for supplemental benefits do not ask for them, either because they do not know they exist or because they refuse to do so. “It is estimated that the lack of recourse to it is very clear among these generations, because their sense of shame in seeking social assistance is very strong.”-
withdrawal from his possessions? Not so easy
The reality of this poverty is not visible due to the generally good financial situation of the elderly in Switzerland. Rene Gabriel points out that the Swiss pension system is generally considered effective for protecting against poverty in old age. The rate of material deprivation for people over 65 in Switzerland, for example, is one of the lowest in Europe – and twice as low.external link of the deprivation rate for those between the ages of 18 and 64.
People who are retired usually have some money and some possessions saved throughout the days that they were working. In the context, Rene Gabriel explains, “The common analysis is, therefore, that it is okay if the income of retirees is low, given that they have real estate for sale or wealth that they can use to compensate.” Indeed, we notice that the greatest concentration of wealth is found in this age group. Half of those over the age of 65 own more than 100,000 francs of so-called liquid money, that is, assets that can be converted into cash in the short term. This also applies to 40% of retirees whose income is below the poverty line.
But the researcher at the University of Applied Sciences in Zurich recalls that there are large disparities in cases, because, above all, property is not always a liquid asset. The biggest example of this: real estate. Regardless of the difficulty of moving at an advanced age, selling the house in order to live in a rented house is not necessarily a good deal, given the high rents.
In another example, the Abutelos are considering selling their small car, which they won in a competition. “They are expensive for us, and selling them is inevitable,” says the wife. But their social counselor warns them of other problems that may result from selling them. The woman in her seventies walks with difficulty, and public transportation is not available near their home. This car helps them to buy their supplies. Celine Omirovich says: “Selling it will force them to change housing, and it will be almost impossible to find a rent as low as the rent for their apartment.”
More importantly, a large segment of the retired population simply does not have any savings to cover their income shortfall.
According to the Federal Statistical Office, 16% of those over the age of 65 do not have large financial reserves, and 11% will not have enough to cover unexpected expenses of CHF2,000. While adhering to a great deal of caution, the study conducted by the “Prosinectut” organization, for its part, estimates that at least 46,000 people live in a “dead end of poverty” and are deprived of any kind of savings or property.
Finally, Rene Gabriel notes that the mechanisms to get out of the impasse available to the elderly are less than those of the active citizens (that is, those who practice work), and the first of these mechanisms is work. This is the reason why poverty is so difficult for the elderly.
A small gesture for retired people
In its autumn session of 2022, Parliament approved an increase in pensions by 2.5% in 2023, in order to compensate for inflation. The adopted memorandum also calls for pensions to be adjusted regularly in the future as prices rise, once inflation reaches more than 2% over one year. In practice, the increase in pensions will be between 6 and 75 francs per month, depending on the level of pension. Accordingly, Bernard and Beret Abbotello will each receive an additional 30 francs each.
On the other hand, the House of Representatives (the lower house of parliament) rejected in December 2022 a popular initiative launched by the Swiss Trade Union, which calls for the payment of a month’s salary in addition to the months of the year for retirees. The left party, which was defending the benefit of this measure for the most needy, clashed with the bourgeois majority who were talking about the additional costs. However, the final word will be for the people who will have their say on the matter through a prospective popular vote.
Members of Parliament have also begun to discuss modalities for the future amendment of occupational security (ie, occupational pensions), which should be one of the axes of improving coverage for people with limited income or who work part-time, especially women. The hypotheses under discussion require lowering the threshold for reaching the second pillar and increasing the covered salary share, but the two chambers of Parliament have not yet reached an agreement. The left has waved the threat of a referendum if the eventually approved amendment is not generous enough.
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Edited by: Samuel Jaberg
Additional contributions: May El Mahdy and Kamal El Deif
Translated by: Maysa Qutifani – Khabia
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