The German Public Pension System: How it Was, How it Will Be

Börsch-Supan, Axel () and Christina Benita Wilke
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Christina Benita Wilke: Munich Center for the Economics of Aging (MEA), Postal: Amalienstr. 33, D-80799 Munich

No 3034, MEA discussion paper series from Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy

Abstract: Germany still has a very generous public pay-as-you-go pension system. It is characterized by early effective retirement ages and very high effective replacement rates. Most workers receive virtually all of their retirement income from this public retirement insurance. Costs are almost 12 percent of GDP, more than 2.5 times as much as the U.S. Social Security System. The pressures exerted by population aging on this monolithic system, amplified by negative incentive effects, have induced a reform process that began in 1992 and is still ongoing. This paper has two parts. Part A describes the German pension system as it has shaped the labor market from 1972 until today. Part B describes the reform process which will convert the exemplary and monolithic Bismarckian public insurance system to a complex multipillar system. We provide a survey of the main features of the future German retirement system introduced by the so called “Riester Reform†in 2001 and an assessment in how far this last reform step will solve the pressing problems of the German system of old age provision.

JEL-codes: Z00 (search for similar items in EconPapers)
Date: 2003-08-26
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Citations: View citations in EconPapers (28)

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