Rates of Return and Early Retirement Disincentives: Evidence from a German Pension Reform

Holger Lüthen

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: To counteract aging populations, statutory pay-as-you-go pension systems are subject to fundamental reforms in many Western societies. Starting with cohort 1937, Germany introduced permanent pension deductions for early retirement. This paper examines the evolution of the profitability of pension contributions against the background of this reform for cohorts 1935-1945. I measure the profitability with the internal rate of return (IRR) and use high quality administrative data. For men the IRR declines from 2.4% to 1.19% and for women from 5.15% to 3.72%. The results suggest that the deductions introduced by the reform only cause some part of this trend, with a major part caused by increases in contributions.

JEL-codes: D04 D14 H55 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-age
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Rates of Return and Early Retirement Disincentives: Evidence from a German Pension Reform (2016)
Journal Article: Rates of Return and Early Retirement Disincentives: Evidence from a German Pension Reform (2016)
Working Paper: Rates of Return and Early Retirement Disincentives: Evidence from a German Pension Reform (2014)
Working Paper: Rates of return and early retirement disincentives: Evidence from a German pension reform (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100544

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