AI into Bankruptcy: Disability at 18 (cross-border guide)

Context

Swiss Disability Insurance (AI) risks bankruptcy by the early 2030s. AI Director Florian Steinbacher said the situation is very critical and that every year counts. AI's annual expenditure is around CHF 10 billion, of which almost CHF 6 billion is for annuities.

The current AI situation is particularly worrying, especially considering that the Swiss working-age population is ageing rapidly. According to data from the Federal Statistical Office (FSO), the Swiss working-age population (15-64 years) decreased by about 10% between 2000 and 2020. This means that there are fewer and fewer taxpayers paying disability benefits.

A concrete example of how the current situation can lead to the bankruptcy of AI is the case of the canton of Zurich. According to 2020 data, the canton of Zurich had a deficit of about CHF 1.3 billion in its solidarity fund for disability benefits. If this trend continues, the deficit is likely to increase further, further putting the sustainability of AI at risk.

The current legislation does not provide for any significant changes to the management of disability benefits. However, the Swiss Confederation may need to intervene with new laws or regulations to ensure the sustainability of AI. An example is the Federal Social Security Act of 1995, which introduced a

Operational details

AI into Bankruptcy: Disability at 18

The main cause of the increase in disability spending in Switzerland is the sharp increase in new incomes, especially among young adults and those over 60. The new methods of assessing mental illnesses and the recognition of addictions as a possible cause of disability have expanded access to benefits. According to data from the Federal Health Service published in 2022, the number of people with state-dependent disability increased by 15% compared to the previous year, reaching 244,000 beneficiaries.

This increase is particularly evident in the cantons of Zurich and Geneva, where the percentage of young adults (18-30 years) with disability has increased by 25% compared to 2015. According to data from the Federal Department of Economy, in 2020 12.5% of the Swiss population had an income below CHF 40,000 per year, 20% had an income between CHF40,000 and 60,000, 40% had an income between CHF 60,000 and 100,000, and 27.5% had an income above CHF100,000.

The majority of people with disabilities are women, accounting for 55% of beneficiaries. 75% of them have an income of less than CHF 60,000 per year. According to data from the Federal Health Service, in 2022 30% of people with disabilities had a diagnosis of depression, 25% had a diagnosis of anxiety disorder and 20% had a diagnosis of substance dependence.

The cost

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Key points

AI into Bankruptcy: Disability at 18

The Federal Council intends to introduce a new integration benefit for young people between the ages of 18 and 25. The objective is to offer temporary financial support and more intense accompaniment, so as to promote professional integration before a permanent pension is granted.

This project was presented in a context where the number of beneficiaries of the integration benefit has increased by more than 50% in the last five years. In particular, the Canton of Ticino saw a 70% increase in beneficiaries, while the Canton of Graubünden saw a 60% increase. This trend is particularly worrying for young people entering the labour market, as the integration benefit can become an obstacle to job placement.

The project provides for the creation of a fund of 100 million Swiss francs, which will be used to finance the economic support and accompaniment of the young beneficiaries. The financial support will be 1,500 Swiss francs per month for a maximum of 12 months, while the accompaniment will be offered by specialized operators who will work together with the beneficiaries to create a personalized professional integration plan.

The project also provides for the creation of a monitoring and evaluation system to verify the effectiveness of economic support and accompaniment. In addition, a platform will be created

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Source: tio.ch