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A Fragile Pillar: Statutory Pensions and the Risk of Old-age Poverty in Germany

Author

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  • Stefan Arent
  • Wolfgang Nagl

Abstract

The statutory pension system is still the most important income source among senior citizens in Germany. Due to increasing disruptions in employment biographies since the 1970s and due to the mass unemployment in Eastern Germany since the 1990s, there is a growing fear of post-retirement poverty in Germany. We develop a micro-simulation model to compare the distribution of statutory pension incomes for new retirees in 2020 with those in 2004. The pension income distribution is calculated for Eastern and Western Germany separately, for men and women, and for different skill levels. Throughout Germany, we find a growing post-retirement poverty, especially for lowskilled workers. Eastern Germany will lose its current advantage in terms of high pensions and low inequality.

Suggested Citation

  • Stefan Arent & Wolfgang Nagl, 2009. "A Fragile Pillar: Statutory Pensions and the Risk of Old-age Poverty in Germany," ifo Working Paper Series 76, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_76
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    References listed on IDEAS

    as
    1. Bonin, Holger, 2009. "15 Years of Pension Reform in Germany: Old Successes and New Threats," IZA Policy Papers 11, Institute for the Study of Labor (IZA).
    2. Stefan Krenz & Wolfgang Nagl & Joachim Ragnitz, 2009. "Is There a Growing Risk of Old-Age Poverty in East Germany?," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 60(Supplemen), pages 35-54.
    3. Friedrich Breyer & Stefan Hupfeld, 2009. "Fairness of Public Pensions and Old-Age Poverty," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(3), pages 358-380, September.
    4. Holger Bonin, 2009. "15 Years of Pension Reform in Germany: Old Successes and New Threats," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 34(4), pages 548-560, October.
    5. Bonin, Holger, 2009. "15 years of pension reform in Germany: old successes and new threats," ZEW Discussion Papers 09-035, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Börsch-Supan, Axel & Bucher-Koenen, Tabea & Reil-Held, Anette & Wilke, Christina, 2008. "Zum künftigen Stellenwert der ersten Säule im Gesamtsystem der Alterssicherung," Sonderforschungsbereich 504 Publications 08-45, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    7. Michael Berlemann & Marcel Thum, 2005. "Blooming landscapes in East Germany?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(4), pages 16-22, December.
    8. Börsch-Supan, Axel & Bucher-Koenen, Tabea & Reil-Held, Anette & Wilke, Christina Benita, 2008. "Zum künftigen Stellenwert der ersten Säule im Gesamtsystem der Alterssicherung," Papers 08-45, Sonderforschungsbreich 504.
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    Citations

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    Cited by:

    1. Wolfgang Nagl, 2014. "Lohnrisiko und Altersarmut im Sozialstaat," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 54.
    2. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2011. "Should Pensions be Progressive? Yes, at least in Germany!," CESifo Working Paper Series 3636, CESifo Group Munich.
    3. Traub, Stefan & Finkler, Sebastian, 2013. "Ein Grundsicherungsabstandsgebot für die Gesetzliche Rentenversicherung? Ergebnisse einer Mikrosimulation," Working papers of the ZeS 01/2013, University of Bremen, Centre for Social Policy Research (ZeS).
    4. Christoph Metzger, 2017. "Who is saving privately for retirement and how much? New evidence for Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(6), pages 811-831, November.
    5. Stefan Arent & Alexander Eck & Oskar Krohmer & Robert Lehmann & Wolfgang Nagl & Joachim Ragnitz & Marcel Thum, 2011. "Wirtschaftliche Entwicklung Sachsens im Ländervergleich: Bestandsaufnahme und Perspektiven: Gutachten im Auftrag der Sächsischen Staatskanzlei," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 59, October.
    6. repec:mea:meawpa:12264 is not listed on IDEAS
    7. Stefan Arent, 2012. "Zuschussrente: Die Diskussion um die Altersarmutsgefährdung," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(19), pages 21-25, October.
    8. Hans Fehr & Franz Ruland & Gisela Färber & Annelie Buntenbach, 2012. "Beitragssenkung und Zuschussrente: Ist das eine nachhaltige Rentenpolitik?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(19), pages 04-16, October.
    9. Stefan Arent & Wolfgang Nagl, 2009. "Die Entwicklung der Ansprüche an die gesetzliche Rentenversicherung bis zum Jahr 2020," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(02), pages 13-23, April.
    10. repec:ces:ifodre:v:17:y:2010:i:05:p:s.5-10 is not listed on IDEAS
    11. Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung (ed.), 2013. "Gegen eine rückwärtsgewandte Wirtschaftspolitik. Jahresgutachten 2013/14," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201314.
    12. Felix Hüfner & Caroline Klein, 2012. "The German Labour Market: Preparing for the Future," OECD Economics Department Working Papers 983, OECD Publishing.
    13. Gasche, Martin & Lamla, Bettina, 2012. "Erwartete Altersarmut in Deutschland: Pessimismus und Fehleinschätzungen – Ergebnisse aus der SAVE-Studie," MEA discussion paper series 201213, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    14. repec:iab:iabfme:201801_en is not listed on IDEAS
    15. Stefan Arent & Wolfgang Nagl, 2010. "Binnenwanderungssalden der sächsischen Landkreise," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(05), pages 5-10, October.

    More about this item

    Keywords

    Statutory pension system; old-age poverty risk; pension distribution; education;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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