Family policy has become an increasingly important policy area in Switzerland since the 1990s. Benefits and services to families have undergone profound transformations. Some reforms became possible because family policy was increasingly defined not only as social policy but also as social investment policy promoting employment and human capital formation. This ambiguity enabled reforms to be supported by heterogeneous reform coalitions, even if long-term coalitions remain unstable and depend on the specific reform proposal. Despite these changes, Swiss family policy is still underdeveloped and falls behind that of other continental European countries. Government spending on family policy is low by international standards, and the use of formal childcare is strongly stratified by income. Important factors contributing to this slow pace of family policy modernization in Switzerland are the decentralized distribution of competences with different levels of government and the use of various direct democratic instruments to prevent or delay reform initiatives at different levels of governance. Moreover, the party system’s increasing political polarization slows down reform efforts and undermines reform coalitions between socially progressive and economically liberal forces. In the face of these challenges, the adaptation of family policy to changing social and economic needs has become a litmus test for the reform capacity of the Swiss welfare state.