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Pension Reform in Germany: The Impact on Retirement Decisions

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  • Börsch-Supan, Axel

    ()

  • Berkel, Barbara

    () (Munich Center for the Economics of Aging (MEA))

Abstract

The paper examines the long-term implications of various reform options on retirement entry decisions and the actual retirement age of older workers. It focuses on the changes in pension legislation since 1992 and the reform options discussed by the German Social Security Reform Commission installed in 2002 (“Rürup Commission†). Our simulations show that the early-retirement adjustment factors introduced by the 1992 pension reform will raise the average effective retirement age for men by almost two years. The two-year increase in all relevant age limits proposed by the “Rürup Commission†would raise retirement age of men by another eight months.

Suggested Citation

  • Börsch-Supan, Axel & Berkel, Barbara, 2004. "Pension Reform in Germany: The Impact on Retirement Decisions," MEA discussion paper series 04062, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  • Handle: RePEc:mea:meawpa:04062
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    References listed on IDEAS

    as
    1. Axel Börsch-Supan & Reinhold Schnabel & Simone Kohnz & Giovanni Mastrobuoni, 2004. "Micro-Modeling of Retirement Decisions in Germany," NBER Chapters,in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 285-344 National Bureau of Economic Research, Inc.
    2. Sikandar Siddiqui, 1997. "The pension incentive to retire: Empirical evidence for West Germany," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(4), pages 463-486.
    3. Börsch-Supan, Axel, 2001. "Incentive Effects of Social Security Under an Uncertain Disability Option," Sonderforschungsbereich 504 Publications 01-42, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    4. repec:crr:crrwps:2003-04 is not listed on IDEAS
    5. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    6. James H. Stock & David A. Wise, 1990. "The Pension Inducement to Retire: An Option Value Analysis," NBER Chapters,in: Issues in the Economics of Aging, pages 205-230 National Bureau of Economic Research, Inc.
    7. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Three Models of Retirement: Computational Complexity versus Predictive Validity," NBER Chapters,in: Topics in the Economics of Aging, pages 21-60 National Bureau of Economic Research, Inc.
    8. David A. Wise, 1992. "Introduction to "Topics in the Economics of Aging"," NBER Chapters,in: Topics in the Economics of Aging, pages 1-19 National Bureau of Economic Research, Inc.
    9. Coile Courtney, 2004. "Retirement Incentives and Couples' Retirement Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-30, July.
    10. Axel Borsch-Supan & Reinhold Schnabel, 1999. "Social Security and Retirement in Germany," NBER Chapters,in: Social Security and Retirement around the World, pages 135-180 National Bureau of Economic Research, Inc.
    11. Palmer, Edward, 2000. "The Swedish pension reform model : framework and issues," Social Protection and Labor Policy and Technical Notes 23086, The World Bank.
    12. David A. Wise, 1992. "Topics in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise92-1, October.
    13. Axel H. Boersch-Supan, 2001. "Incentive Effects of Social Security under an Uncertain Disability Option," NBER Chapters,in: Themes in the Economics of Aging, pages 281-310 National Bureau of Economic Research, Inc.
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    15. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    16. 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.
    17. Borsch-Supan, Axel, 2000. "Incentive effects of social security on labor force participation: evidence in Germany and across Europe," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 25-49, October.
    18. Borsch-Supan, Axel, 2000. "A Model under Siege: A Case Study of the German Retirement Insurance System," Economic Journal, Royal Economic Society, vol. 110(461), pages 24-45, February.
    19. Breyer, Friedrich & Kifmann, Mathias, 2002. "Incentives to retire later a solution to the social security crisis?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 1(02), pages 111-130, July.
    20. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, October.
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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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