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Reforming the German Public Pension System

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  • Börsch-Supan, Axel H.
  • Wilke, Christina B.

Abstract

Chancellor Bismarck introduced public pensions in Germany more than 120 years ago. That system has expanded into one of the most generous pension systems in the world. Most workers receive virtually all of their retirement income from it. Costs are almost 12 percent of GDP, more than 2.5 times as much as the U.S. Social Security System. The pressures exerted by population aging, amplified by negative incentive effects, have induced a reform process that began in 1992 and reached its peak in the 2001 and 2004 reforms. The 2001 reform converted the exemplary monolithic Bismarckian public insurance system into a complex multipillar system. The 2004 reform converted the pay-as-you-go pillar into a quasi notional defined contribution (NDC) system. This paper delivers an assessment in how far these reform steps will solve the pressing pension problems in Germany.

Suggested Citation

  • Börsch-Supan, Axel H. & Wilke, Christina B., 2004. "Reforming the German Public Pension System," Discussion Paper 226, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:piedp1:226 Note: Version: 30. August 2004, Paper Prepared for the 2004 General Assembly of the Japan Pension Research Council, 9-10 September 2004, Tokyo, Japan
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/14251/1/pie_dp226.pdf
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    1. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
    2. 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 173-178, May.
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    Cited by:

    1. Hans-Martin von Gaudecker & Rembrandt D. Scholz, 2006. "Lifetime earnings and life expectancy," MPIDR Working Papers WP-2006-008, Max Planck Institute for Demographic Research, Rostock, Germany.
    2. Dickson, Matt & Postel-Vinay, Fabien & Turon, Hélène, 2014. "The lifetime earnings premium in the public sector: The view from Europe," Labour Economics, Elsevier, vol. 31(C), pages 141-161.

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