IDEAS home Printed from https://ideas.repec.org/p/han/dpaper/dp-688.html

The Impact of Population Aging on the German Statutory Pension Insurance - A Probabilistic Approach

Author

Listed:
  • Vanella, Patrizio
  • Rodriguez Gonzalez, Miguel
  • Wilke, Christina B.

Abstract

The demographic transition is a phenomenon affecting many industrialized societies. These economies are experiencing a decline in mortality alongside low fertility rates - a situation that puts social security systems under severe pressure. To implement appropriate reform measures, adequate forecasts of the future population structure, specifically in pay-as-you-go systems are needed. We propose a probabilistic approach to forecast the numbers of pensioners in Germany up to 2040, considering trends in population development, labor force participation and early retirement as well as the effects of further pension reforms. A principal component analysis is used for dimensionality reduction and consideration of cross-correlational effects between ageand sex-specific pension rates for both old-age and disability pensions. Time series methods enable the inclusion of autocorrelation effects in the model and the simulation of future uncertainty. The model predicts that, in the median, the numbers of old-age pensioners will increase by almost 5 million individuals from 2017 to 2036, alongside increases in disability pensions by 2036, given the raising of the legal retirement ages following the introduced regulations. After that point, a moderate decrease can be expected. The results show a clear need for further reforms, if the German statutory pension system is to be sustainable in the long run.

Suggested Citation

  • Vanella, Patrizio & Rodriguez Gonzalez, Miguel & Wilke, Christina B., 2021. "The Impact of Population Aging on the German Statutory Pension Insurance - A Probabilistic Approach," Hannover Economic Papers (HEP) dp-688, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    • Handle: RePEc:han:dpaper:dp-688
    as

    Download full text from publisher

    File URL: https://diskussionspapiere.wiwi.uni-hannover.de/pdf_bib/dp-688.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Johann Fuchs & Doris Söhnlein & Brigitte Weber & Enzo Weber, 2018. "Stochastic Forecasting of Labor Supply and Population: An Integrated Model," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 37(1), pages 33-58, February.
    2. Giang Thanh Long & Wade D. Pfau, 2008. "Demographic Changes And The Long-Term Pension Finances In Vietnam: A Stochastic Actuarial Assessment," GRIPS Discussion Papers 08-05, National Graduate Institute for Policy Studies.
    3. Giang, Thanh Long & Pfau, Wade Donald, 2008. "Demographic Changes and Pension Finances in Vietnam," MPRA Paper 9931, University Library of Munich, Germany.
    4. Brussig, Martin, 2012. "Weiter steigendes Renteneintrittsalter, mehr Renteneintritte aus stabiler Beschäftigung, aber zunehmend geringere Altersrenten bei Langzeitarbeitslosen: Aktuelle Entwicklungen beim Rentenzugang," Altersübergangs-Report 2012-02, University of Duisburg-Essen, Institute for Work, Skills and Training (IAQ).
    Full references (including those not matched with items on IDEAS)

    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. Lanza Queiroz, Bernardo & Lobo Alves Ferreira, Matheus, 2021. "The evolution of labor force participation and the expected length of retirement in Brazil," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    2. Christine Mayrhuber & Ulrike Huemer & Thomas Horvath & Stefan Schiman-Vukan, 2016. "Makroökonomische Effekte einer früheren Anhebung des gesetzlichen Pensionsalters für Frauen in Österreich," WIFO Studies, WIFO, number 58803.
    3. Nico Keilman, 2023. "Can We Rely on Projections of the Immigrant Population? The Case of Norway," European Journal of Population, Springer;European Association for Population Studies, vol. 39(1), pages 1-26, December.
    4. Van Minh, Hoang & Kim Phuong, Nguyen Thi & Saksena, Priyanka & James, Chris D. & Xu, Ke, 2013. "Financial burden of household out-of pocket health expenditure in Viet Nam: Findings from the National Living Standard Survey 2002–2010," Social Science & Medicine, Elsevier, vol. 96(C), pages 258-263.
    5. Patrizio Vanella & Max J. Hassenstein, 2023. "Stochastic Forecasting of Regional Age-Specific Fertility Rates: An Outlook for German NUTS-3 Regions," Mathematics, MDPI, vol. 12(1), pages 1-19, December.
    6. repec:osf:osfxxx:db54h_v1 is not listed on IDEAS
    7. Chartouni Carole & Holzmann Robert & Paez Gustavo N., 2020. "Not everyone is engaged: an innovative approach to measure engagement levels on the labor market," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-25, March.
    8. Mingfu Xue & Junyu Zhu & Rusheng Wu & Xiayiwei Zhang & Yuan Chen, 2024. "BRP-Net: A discrete-aware network based on attention mechanisms and LSTM for birth rate prediction in prefecture-level cities," PLOS ONE, Public Library of Science, vol. 19(9), pages 1-22, September.
    9. Vanella, Patrizio & Deschermeier, Philipp, 2018. "A Principal Component Simulation of Age-Specific Fertility - Impacts of Family and Social Policy on Reproductive Behavior in Germany," Hannover Economic Papers (HEP) dp-630, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    10. Christian Dudel & Elke Loichinger & Sebastian Klüsener & Harun Sulak & Mikko Myrskylä, 2021. "The extension of late working life in Germany: trends, inequalities, and the East-West divide," MPIDR Working Papers WP-2021-018, Max Planck Institute for Demographic Research, Rostock, Germany.
    11. Shin Kimura & Tomoki Kitamura & Kunio Nakashima, 2023. "Investment risk-taking and benefit adequacy under automatic balancing mechanism in the Japanese public pension system," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 10(1), pages 1-19, December.
    12. Queiroz, Bernardo L & Ferreira, Matheus L.A., 2018. "The Evolution of the Elderly Labor Force Participation and Retirement in Brazil," OSF Preprints db54h, Center for Open Science.
    13. Benjamin Bittschi & Thomas Horvath & Helmut Mahringer & Christine Mayrhuber & Martin Spielauer & Philipp Warum, 2024. "Assessing the Labour Supply Effect of Harmonising Regular Retirement Age in Austria," WIFO Working Papers 673, WIFO.
    14. Patrizio Vanella & Christina Benita Wilke & Doris Söhnlein, 2022. "Prevalence and Economic Costs of Absenteeism in an Aging Population—A Quasi-Stochastic Projection for Germany," Forecasting, MDPI, vol. 4(1), pages 1-23, March.
    15. Vanella, Patrizio & Deschermeier, Philipp, 2018. "A Probabilistic Cohort-Component Model for Population Forecasting - The Case of Germany," Hannover Economic Papers (HEP) dp-638, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    16. Brussig, Martin, 2023. "Übergänge in Altersrente aus Beschäftigung und Arbeitslosigkeit: Neue Entwicklungen in jüngeren Kohorten," Altersübergangs-Report 2023-03, University of Duisburg-Essen, Institute for Work, Skills and Training (IAQ).
    17. Patrizio Vanella & Philipp Deschermeier & Christina B. Wilke, 2020. "An Overview of Population Projections—Methodological Concepts, International Data Availability, and Use Cases," Forecasting, MDPI, vol. 2(3), pages 1-18, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:han:dpaper:dp-688. See general information about how to correct material in RePEc.

    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: Heidrich, Christian (email available below). General contact details of provider: https://edirc.repec.org/data/fwhande.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.