Linking retirement age to life expectancy in a Bismarckian system – the case of Germany

Valentin Vogt and Jörg Althammer

National Institute Economic Review, 2016, vol. 237, R22-R29

Abstract: In times of decreasing mortality, one way to stabilise a PAYG pension system is to interrelate the retirement age to the anticipated average lifespan. This paper investigates two approaches for Germany: one is to keep the average retirement duration constant, the other to define a constant share of the total lifespan for the retirement period. Our simulation model uses a Leslie matrix population projection, a Solow-Swan growth model and a detailed calculation of the German pension insurance budget. Our results show quite a significant impact on the insurance level and a rather small effect on the contribution rate, which is characteristic of a Bismarckian system.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:cup:nierev:v:237:y:2016:i::p:r22-r29_13

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