Switzerland has a well-developed social insurance system. It aims to provide the insured person with protection for an appropriate standard of living in old age, in the event of invalidity, illness, or accident. It also provides financial security for dependents if the insured person dies. Other insurance covers risks such as the cost of illness and accident, unemployment, maternity and family income supplement.
Payments to the individual areas of insurance are primarily financed by contributions from earned income. This means that contributions are deducted directly from the employee’s pay. Employers, self-employed people and the unemployed also pay financial contributions. Health insurance is obligatory in Switzerland and is financed by the individual’s insurance contributions (premiums). As these contributions are not related to the level of income, the canton guarantees support contributions for people with a modest income (= individual premium discounts).
In addition the state and cantons are also involved, to a varying degree, in financing social insurance provision (with the exception of accident insurance and occupational pensions).
The social insurance system for old age is the most important in Switzerland and is based on a three-pillar principle: