IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Incentives to Retire Later: A Solution to the Social Security Crisis?

  • Friedrich Breyer
  • Mathias Kifmann

Als ein möglicher Ausweg aus der drohenden Finanzkrise umlagefinanzierter Rentensysteme wird gegenwärtig eine Anhebung des Rentenzugangsalters von vielen favorisiert. Um allerdings Arbeitnehmern einen Anreiz zur Verlängerung der Lebensarbeitszeit zu geben, muss nach Auffassung der meisten Experten die Beziehung zwischen Beiträgen und Rentenansprüchen gestärkt werden. In dieser Arbeit werden die langfristigen finanziellen Konsequenzen einer solchen Reform analysiert. Wir zeigen, dass bei versicherungsmathematischen Zuschlägen für Mehrarbeit der Beitragssatz langfristig eine steigende Funktion des tatsächlich gewählten Rentenalters ist. Darüber hinaus steigt auch die implizite Steuer, die ein repräsentativer Versicherter an die Rentenkasse zahlt, sofern das Rentenalter in Folge einer ,,steilen" Zuschlagsfunktion zunimmt. In diesem Sinne k¨onnte die vorgeschlagene ,,Behandlung" die diagnostizierte ,,Krankheit" verschlimmern. Abschließend zeigen wir, wie der negative Effekt durch Aufbau eines Kapitalstocks vermieden werden kann. As one possible solution to the well-known financing crisis of unfunded social security systems, an increase in the retirement age is a popular option. To induce workers to retire later, it has been proposed to strengthen the link between retirement age and benefit level. The present paper is devoted to analyzing the long-run financial implications of such a reform. We show that with actuarial adjustments the long-run contribution rate is an increasing function of the retirement age chosen by workers. Moreover, the implicit tax paid to the pension system by a participant can increase in the long run if the retirement age rises in response to a "steep" adjustment rule. In this sense, the proposed "cure" may worsen the disease. Finally, we propose an alternative adjustment scheme which avoids these negative consequences. Finally, we show how the negative effects can be avoided by forming a capital stock from the additional revenues due to later retirement.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 266.

in new window

Length: 26 p.
Date of creation: 2001
Date of revision:
Handle: RePEc:diw:diwwpp:dp266
Contact details of provider: Postal: Mohrenstraße 58, D-10117 Berlin
Phone: xx49-30-89789-0
Fax: xx49-30-89789-200
Web page:

More information through EDIRC

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.:

as in new window
  1. 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.
  2. Breyer, Friedrich, 2001. "Why Funding is not a Solution to the "Social Security Crisis"," IZA Discussion Papers 328, Institute for the Study of Labor (IZA).
  3. Gruber, Jonathan & Wise, David, 1998. "Social Security and Retirement: An International Comparison," American Economic Review, American Economic Association, vol. 88(2), pages 158-63, May.
  4. Hassler, John & Lindbeck, Assar, 1997. "Optimal actuarial fairness in pension systems: A note," Economics Letters, Elsevier, vol. 55(2), pages 251-255, August.
  5. Kapteyn, Arie & de Vos, Klaas, 1998. "Social Security and Labor-Force Participation in the Netherlands," American Economic Review, American Economic Association, vol. 88(2), pages 164-67, May.
  6. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
  7. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
  8. Blundell, Richard & Johnson, Paul, 1998. "Pensions and Labor-Market Participation in the United Kingdom," American Economic Review, American Economic Association, vol. 88(2), pages 168-72, May.
  9. Borsch-Supan, Axel & Schnabel, Reinhold, 1998. "Social Security and Declining Labor-Force Participation in Germany," American Economic Review, American Economic Association, vol. 88(2), pages 173-78, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp266. 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: (Bibliothek)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.