IDEAS home Printed from https://ideas.repec.org/a/ces/ifosdt/v70y2017i18p25-33.html
   My bibliography  Save this article

Pensions in Germany: a Concept for Voluntary Top-Up Pension Funds

Author

Listed:
  • Andreas Knabe
  • Joachim Weimann

Abstract

Demographic change poses major challenges for German pension policy. As the baby-boomer generation retires, there will be a growing number of pension recipients and a falling number of contributors. To distribute this burden fairly across the different generations, the Riester Reform was a move to lower the level of legal, pay-as-you-go pensions and to reinforce additional voluntary top-up pensions. The proliferation of corporate and private top-up pensions nevertheless remains far below original expectations. Andreas Knabe and Joachim Weimann, University of Magdeburg, explain how private pensions can be underpinned with the “Deutschlandrente”. The status quo will be changed so that everyone who doesn’t actively object will be signed up for a top-up pension. All employees will also be automatically involved in corporate or private pension schemes. Since employees can opt out of top-up pension schemes at any time, this does not impair their freedom to take decisions.

Suggested Citation

  • Andreas Knabe & Joachim Weimann, 2017. "Pensions in Germany: a Concept for Voluntary Top-Up Pension Funds," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(18), pages 25-33, September.
  • Handle: RePEc:ces:ifosdt:v:70:y:2017:i:18:p:25-33
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/sd-2017-18-knabe-weimann-deutschlandrente-2017-09-28.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gasche, Martin & Bucher-Koenen, Tabea & Haupt, Marlene & Angstmann, Simon, 2013. "Die Kosten der Riester-Rente im Vergleich," MEA discussion paper series 201304, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    2. repec:mea:meawpa:13266 is not listed on IDEAS
    3. Raj Chetty & John N. Friedman & Søren Leth-Petersen & Torben Heien Nielsen & Tore Olsen, 2014. "Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark," The Quarterly Journal of Economics, Oxford University Press, vol. 129(3), pages 1141-1219.
    4. Kornelia Hagen & Axel Kleinlein, 2011. "Zehn Jahre Riester-Rente: kein Grund zum Feiern," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 78(47), pages 3-14.
    5. Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1149-1187.
    6. Marlene Haupt & Aysel Yollu-Tok, 2014. "Ergänzende Altersvorsorge: Akzeptanz, Vertrauen und Ausgestaltung aus Verbrauchersicht," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 83(3), pages 19-39.
    7. Michela Coppola & Martin Gasche, 2011. "Die Riester-Förderung — Mangelnde Information als Verbreitungshemmnis," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 91(11), pages 792-799, November.
    8. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2009. "The Importance of Default Options for Retirement Saving Outcomes: Evidence from the United States," NBER Chapters, in: Social Security Policy in a Changing Environment, pages 167-195, National Bureau of Economic Research, Inc.
    9. Johannes Geyer & Viktor Steiner, 2009. "Zahl der Riester-Renten steigt sprunghaft: aber Geringverdiener halten sich noch zurück," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 76(32), pages 534-541.
    10. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    11. Iglesias, Augusto & Palacios, Robert J., 2000. "Managing public pension reserves - Part I : evidence from the international experience," Social Protection Discussion Papers and Notes 21311, The World Bank.
    12. Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Illusory Effects of Saving Incentives on Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 113-138, Fall.
    13. Giacomo Corneo & Matthias Keese & Carsten Schröder, 2009. "The Riester Scheme and Private Savings: An Empirical Analysis based on the German SOEP," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(2), pages 321-332.
    14. B. Douglas Bernheim & Andrey Fradkin & Igor Popov, 2015. "The Welfare Economics of Default Options in 401(k) Plans," American Economic Review, American Economic Association, vol. 105(9), pages 2798-2837, September.
    15. Haupt, Marlene & Kluth, Sebastian, 2013. "Take a chance on me – Can the Swedish premium pension serve as a role model for Germany’s Riester scheme?," MEA discussion paper series 201301, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    16. repec:mea:meawpa:13269 is not listed on IDEAS
    17. Eric M. Engen & William G. Gale & John Karl Scholz, 1994. "Do Saving Incentives Work?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 85-180.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Clemens Fuest & Christa Hainz & Volker Meier & Martin Werding, 2019. "Staatsfonds für eine effiziente Altersvorsorge: Welche innovativen Lösungen sind möglich?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(14), pages 03-08, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Börsch-Supan, Axel & Bucher-Koenen, Tabea & Goll, Nicolas & Maier, Christina, 2016. "15 Jahre Riester - eine Bilanz," Working Papers 12/2016, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    2. Derek Messacar, 2018. "The Effects of Vesting and Locking in Pension Assets on Participation in Employer-Sponsored Pension Plans," Journal of Labor Research, Springer, vol. 39(2), pages 178-200, June.
    3. Mitchell, O.S. & Piggott, J., 2016. "Workplace-Linked Pensions for an Aging Demographic," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 865-904, Elsevier.
    4. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian & William L. Skimmyhorn, 2022. "Borrowing to Save? The Impact of Automatic Enrollment on Debt," Journal of Finance, American Finance Association, vol. 77(1), pages 403-447, February.
    5. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    6. Johannes Hagen & Daniel Hallberg & Gabriella Sjögren, 2022. "A Nudge to Quit? The Effect of a Change in Pension Information on Annuitisation, Labour Supply and Retirement Choices Among Older Workers," The Economic Journal, Royal Economic Society, vol. 132(643), pages 1060-1094.
    7. Börsch-Supan, A. & Härtl, K. & Leite, D.N., 2016. "Social Security and Public Insurance," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 781-863, Elsevier.
    8. Axel Börsch-Supan & Tabea Bucher-Koenen & Michela Coppola & Bettina Lamla, 2015. "Savings In Times Of Demographic Change: Lessons From The German Experience," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 807-829, September.
    9. Esteban García-Miralles & Jonathan M. Leganza, 2021. "Public Pensions and Private Savings," CEBI working paper series 21-06, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    10. Goda, Gopi Shah & Manchester, Colleen Flaherty & Sojourner, Aaron J., 2014. "What will my account really be worth? Experimental evidence on how retirement income projections affect saving," Journal of Public Economics, Elsevier, vol. 119(C), pages 80-92.
    11. Michael Ziegelmeyer & Julius Nick, 2013. "Backing out of private pension provision: lessons from Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(3), pages 505-539, August.
    12. Gary V. Engelhardt & Anil Kumar, 2007. "Employer Matching and 401(k) Saving: Evidence from the Health and Retirement Study," NBER Chapters, in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1920-1943, National Bureau of Economic Research, Inc.
    13. Joshua Blumenstock & Michael Callen & Tarek Ghani, 2018. "Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan," American Economic Review, American Economic Association, vol. 108(10), pages 2868-2901, October.
    14. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2001. "Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance," NBER Working Papers 8655, National Bureau of Economic Research, Inc.
    15. Halit Yanıkkaya & Zeynep Aktaş Koral & Sadettin Haluk Çitçi, 2023. "The Power of Financial Incentives versus the Power of Suggestion for Individual Pension: Are Financial Incentives or Automatic Enrollment Policies More Effective?," Sustainability, MDPI, vol. 15(4), pages 1-18, February.
    16. Cox, James C. & Kreisman, Daniel & Dynarski, Susan, 2020. "Designed to fail: Effects of the default option and information complexity on student loan repayment," Journal of Public Economics, Elsevier, vol. 192(C).
    17. Keys, Benjamin J. & Wang, Jialan, 2019. "Minimum payments and debt paydown in consumer credit cards," Journal of Financial Economics, Elsevier, vol. 131(3), pages 528-548.
    18. Abraham, Katharine G. & Filiz-Ozbay, Emel & Ozbay, Erkut Y. & Turner, Lesley J., 2020. "Framing effects, earnings expectations, and the design of student loan repayment schemes," Journal of Public Economics, Elsevier, vol. 183(C).
    19. Jesús Marí­a García & José Vila, 2018. "Nudging long-term saving: The Ahorra+ program," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 2(2), pages 49-53, September.
    20. Egebark, Johan & Ekström, Mathias, 2016. "Can indifference make the world greener?," Journal of Environmental Economics and Management, Elsevier, vol. 76(C), pages 1-13.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ifosdt:v:70:y:2017:i:18:p:25-33. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ifooode.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/ifooode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.