Financing
The cantons establish the rules governing the financing of family allowances.
Like other social security schemes, the family allowances scheme is based on the principle of solidarity. Anyone in gainful employment must contribute to the scheme whether they have children or not. The contribution rate varies across family allowances compensation funds and cantons.
The primary sources of funding are:
- Employers, who pay contributions to their family allowances compensation fund (CAF). These contributions are a percentage of the employee's salary which is subject to OASI contributions. Valais is the only canton that also requires employees to pay contributions to the family allowances scheme.
- Self-employed persons, who pay contributions to their CAF. These contributions are a percentage of the employee's salary which is subject to OASI contributions. However, they are calculated only on the share of the self-employed person's annual income that does not exceed CHF 148,200 per year.
- Persons not in gainful employment: In principle, the cantons fund family allowances which are paid to persons not in gainful employment. However, the Confederation gives the cantons the option of requiring persons not in gainful employment to pay contributions. This is the case in the cantons of Appenzell Ausserrhoden, Glarus, Solothurn, St. Gallen, Ticino and Thurgau.
The costs of family allowances are borne by all persons registered with the same CAF regardless of the number of allowances that the company actually pays out and the number of children that a self-employed person who is directly registered with a CAF has. This cost-compensation model removes any incentive for employers to give preference to job applicants without children over those who do.
A second mechanism promotes intracantonal solidarity, and specifically solidarity between the different funds operating in the given canton. This cost compensation model is important for economic sectors like the hotel and hospitality industry and construction which tend to employ workers with larger families and generally on lower salaries. As family allowance amounts are fixed, the family allowance compensation funds associated with these sectors have to levy higher contributions. This is why a compensation model allows for fairer cost-sharing between the different family allowances compensation funds operating in the same canton.