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One Pillar Crumbling, the Others too Short: Old-Age Provision in Germany

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  • Martin Werding

Abstract

Public pay-as-you-go pensions still form the dominant pillar of old-age provision in Germany. This is in marked contrast to the situation in Anglo-Saxon countries. It has advantages if labour markets are strong, e.g., following a quick recovery from the Great Recession. It has disadvantages, as Germany will be ageing very rapidly in the near future. Following a series of reforms, benefit levels will decline, while contribution rates still go up, and additional cover from private or occupational pension schemes is urgently needed. Thus far, steps in this direction have been half-hearted, and the financial crisis impedes a further shift. Nevertheless, despite the differing traditions, important aspects in current debates now converge to those discussed in the UK or the US.

Suggested Citation

  • Martin Werding, 2016. "One Pillar Crumbling, the Others too Short: Old-Age Provision in Germany," CESifo Working Paper Series 5760, CESifo.
    • Handle: RePEc:ces:ceswps:_5760
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    Cited by:

    1. Martin Werding, 2020. "They Will Definitely Need Us, When We Are 64: Old-Age Provision in Germany," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(2), pages 88-91, March.
    2. Erik Granseth & Wolfgang Keck & Wolfgang Nagl & Melinda Tir & Andras Simonovits, 2016. "Negative correlation between retirement age and contribution length?," CERS-IE WORKING PAPERS 1633, Institute of Economics, Centre for Economic and Regional Studies.
    3. Werding, Martin, 2016. "Rentenfinanzierung im demographischen Wandel: Tragfähigkeitsprobleme und Handlungsoptionen," Working Papers 05/2016, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.

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    More about this item

    Keywords

    old-age provision; public pensions; occupational pensions; pre-cautionary saving; demographic ageing; pension reform; simulations;
    All these keywords.

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • 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
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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