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One Pillar Crumbling, the Others Too Short: Old-Age Provision in Germany

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  • Martin Werding

Abstract

Responding to the challenges of demographic ageing, the German system of old-age provision has undergone substantial changes during the past two decades and is in fact still under reconstruction. Benefit levels deriving from the public pay-as-you-go scheme will decline until 2060, while contribution rates may still go up substantially. Additional cover from private or occupational pension schemes is urgently needed. Thus far, steps in this direction have been half-hearted. The continuing crisis in financial markets and a more profound distrust in financial institutions and market-based instruments of old-age provision currently create obstacles to progress with this overhaul. Nevertheless, despite the differing traditions, Germany could learn important lessons now from other developed countries that have longer experience of funded pensions.

Suggested Citation

  • Martin Werding, 2016. "One Pillar Crumbling, the Others Too Short: Old-Age Provision in Germany," National Institute Economic Review, National Institute of Economic and Social Research, vol. 237(1), pages 13-21, August.
  • Handle: RePEc:sae:niesru:v:237:y:2016:i:1:p:r13-r21
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    References listed on IDEAS

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    Cited by:

    1. Werding, Martin, 2016. "Rentenfinanzierung im demographischen Wandel: Tragfähigkeitsprobleme und Handlungsoptionen," Working Papers 05/2016, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.

    More about this item

    Keywords

    old-age provision; public pensions; occupational pensions; precautionary saving; demographic ageing; pension reform; simulations;

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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