Savings in Times of Demographic Change: Lessons from the German Experience
BÃ¶rsch-Supan, Axel (),
Tabea Bucher-Koenen (),
Michela Coppola () and
Bettina Lamla ()
No 201418, MEA discussion paper series from Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy
Pension reforms in many developed countries make individuals shoulder a bigger share of longevity and income risks. The desired response is that individuals accumulate private assets for retirement. Whether this actually takes place, is of paramount relevance for scientists and policy makers. We take Germany as an example: Twenty years of pension reform have transformed the monolithic German pension system into a multi-pillar system. Formerly generous public pension benefits are gradually being reduced, while substantial incentives are granted to occupational and private saving schemes. Has this transition worked out? We survey the reform steps and householdâ€™s reactions: How did individuals adjust their labor market behavior? How did private and occupational pension plans take off? How do behavioral adjustments vary in the population? Most Germans adapted to the new situation. Both actual and expected retirement decisions changed and the share of households without supplementary pensions decreased from 73% to 39% in little more than a decade. This is a remarkable success. Nonetheless, households with low education, low income and less financial education did neither adjust their retirement behavior nor pick up supplementary pension plans and are thus likely to face difficulties in bridging the gap arising in future pension income.
JEL-codes: D14 D91 J26 (search for similar items in EconPapers)
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Journal Article: SAVINGS IN TIMES OF DEMOGRAPHIC CHANGE: LESSONS FROM THE GERMAN EXPERIENCE (2015)
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