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The German Retirement Benefit Formula: Drawbacks and Alternatives

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Author Info
Friedrich Breyer
Mathias Kifmann

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Abstract

Wir diskutieren eine Reihe von Problemen der Rentenformel in der deutschen gesetzlichen Rentenversicherung (GRV). Wir zeigen, dass Bev¨olkerungsgruppen mit ¨uberdurchschnittlicher Lebenserwartung, insbesondere die besser Verdienenden, von den ¨ubrigen Versicherten subventioniert werden, da die Rentenformel Unterschiede in den gruppenspezifischen Lebenserwartungen nicht ber¨ucksichtigt. Außerdem f¨uhrt die Formel zu unerw¨unschten langfristigen Wirkungen, wenn die Beitragsbemessungsgrenze erh¨oht oder die Pflichtmitgliedschaft ausgeweitet wird, wenn die Lebenserwartung steigt oder das Bev¨olkerungswachstum abnimmt. Wir schlagen zwei Alternativen vor, die die gruppenspezifische Lebenserwartung ber¨ucksichtigen. Wir zeigen, dass insbesondere die Interne-Rendite-Formel, die jeden Euro an Beitr¨agen mit der internen Rendite des Umlageverfahrens belohnt, gegen¨uber der gegenw¨artigen Formel ¨uberlegen ist.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 326.

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Length: 19 p.
Date of creation: 2003
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Handle: RePEc:diw:diwwpp:dp326

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Related research
Keywords: pay-as-you-go pension systems; implicit taxation; intra- and intergenerational equity;

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Find related papers by JEL classification:
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Klaus Beckmann, 2000. "A Note on the Tax Rate implicit in Contributions to Pay-as-you-go Public Pension Systems," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(1), pages 63-, September.
  2. Marcel Thum & Jakob von Weisäcker, 2000. "Implizite Einkommensteuer als Messlatte für die aktuellen Rentenreformvorschläge," Perspektiven der Wirtschaftspolitik, Blackwell Publishing, vol. 1(4), pages 453-468, November. [Downloadable!] (restricted)
  3. Robert Fenge & Silke Uebelmesser & Martin Werding, 2002. "Second-best Properties of Implicit Social Security Taxes: Theory and Empirical Evidence," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  4. ûystein ThÛgersen, 1998. "A note on intergenerational risk sharing and the design of pay-as-you-go pension programs," Journal of Population Economics, Springer, vol. 11(3), pages 373-378. [Downloadable!] (restricted)
  5. Mathias Kifman & Dirk Schindler, 2000. "Smoothing the Implicit Tax Rate in a Pay-as-you-go Pension System," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(3), pages 261-, May.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Axel Börsch-Supan & Anette Reil-Held & Christina Benita Wilke, 2003. "Der Nachhaltigkeitsfaktor und andere Formelmodifikationen zur langfristigen Stabilisierung des Beitragssatzes zur GRV," MEA discussion paper series 03030, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  2. Axel Börsch-Supan & Anette Reil-Held & Christina Benita Wilke, 2003. "How to make a Defined Benefit System Sustainable: The Sustainability Factor in the German Benefit Indexation Formula," MEA discussion paper series 03037, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  3. Axel Börsch-Supan & Anette Reil-Held & Christina Benita Wilke, 2003. "Der Nachhaltigkeitsfaktor und andere Formelmodifikationen zur langfristigen Stabilisierung des Beitragssatzes zur GRV," MEA discussion paper series 03030, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  4. Börsch-Supan, Axel, 2007. "Rational Pension Reform," Sonderforschungsbereich 504 Publications 07-25, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
  5. Axel Börsch-Supan & Anette Reil-Held & Christina Benita Wilke, 2003. "How to make a Defined Benefit System Sustainable: The Sustainability Factor in the German Benefit Indexation Formula," MEA discussion paper series 03037, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  6. Axel Börsch-Supan, 2007. "Rational Pension Reform," MEA discussion paper series 07132, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
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