Switzerland’s referendum on June 14th is ostensibly about immigration and relations with the European Union. But the outcome could also have far-reaching consequences for the country’s welfare state.
Supporters of the Swiss People’s Party (UDC/SVP) initiative argue that immigration must be curbed to limit population growth and pressure on infrastructure. Critics counter that restricting immigration would weaken the financing of Switzerland’s two most important social-insurance systems: the state pension scheme (AVS) and compulsory health insurance (LAMal).
A 2023 study by the Federal Social Insurance Office found that immigration benefits both the AVS and disability insurance systems. Foreign residents, on average, contribute more in payroll taxes than they receive in benefits.
The logic is largely demographic. Immigrants tend to be younger and economically active. They pay contributions for many years before becoming eligible for pensions, helping to offset the ageing of Switzerland’s native population, which is drawing pensions for ever longer periods.
Reducing immigration would therefore cut revenues just as pension costs rise. Trade unions warn that limiting immigration could deprive state pension funding of billions of francs in contributions. Daniel Lampart, the chief economist of the Swiss Trade Union Federation until the end of last year, estimated that the number of contributors could fall by around 10% if immigration were sharply reduced.
Such figures remain speculative because the initiative does not specify how far immigration would decline. Officials therefore say the precise financial impact cannot yet be calculated.
The pressure on the pension system is already growing. Last year the number of old-age pensions rose by 1.6%, reaching 2.64m. Including survivor and orphan pensions, the AVS paid out around 2.91m pensions by the end of 2025, roughly one-third of them to recipients living abroad—some in retirement find Switzerland too costly.
Despite these demographic pressures, the system remains financially healthy for now. In 2025 AVS revenues exceeded expenditures by CHF 1.8bn ($2.3bn). Including investment income, the overall surplus reached CHF 4.4bn.
Health insurance could face similar challenges. Foreign residents are also net contributors to Switzerland’s mandatory health-insurance system because they are generally younger and consume less healthcare than Swiss citizens of the same age. If immigration fell substantially, revenues to the system would decline more sharply than expenditures. The result, critics warn, would probably be higher health-insurance premiums.
Trade unions estimate that premiums could rise by around CHF 250 a year per person, though this figure too remains uncertain in the absence of concrete immigration scenarios.
Supporters of tighter immigration controls note that foreign residents make slightly greater use of social assistance than Swiss citizens. Lower immigration could therefore reduce welfare spending. Yet such savings would probably remain modest. Social-assistance expenditure amounted to just CHF 2.6bn in 2024—barely more than 1% of Switzerland’s total social-protection spending.
The debate therefore highlights a broader dilemma facing many ageing European societies. Immigration creates political tensions and strains infrastructure. But it also helps finance welfare systems increasingly dependent on younger workers to support growing numbers of retirees.
More on this:
2023 study (in French) – Take a 5 minute French test now
For more stories like this on Switzerland follow us on Facebook and Twitter.