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Rates of Return of the German PAYG System - How they can be measured and how they will develop

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  • Christina Benita Wilke

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

Abstract

With the adoption of the latest German pension reform in spring 2004 a public debate arose on whether rates of return for future pensioner cohorts were hreatened to become negative as a result of the new reform. In order to make the system sustainable, the reform had restricted future rises in the contribution rate at the expense of further decreases in pension levels. The paper contributes to this ongoing discussion by providing (1) a thorough discussion on the appropriate measurement of rates of return of the German public pension system and (2) projections of the rates of return for future pensioner cohorts based on the German public pension system after the 2004 reform. It is found that under realistic assumptions of future demographic and labour market developments, rates of return will be lower than for present retirees, but remain positive.

Suggested Citation

  • Christina Benita Wilke, 2005. "Rates of Return of the German PAYG System - How they can be measured and how they will develop," MEA discussion paper series 05097, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    • Handle: RePEc:mea:meawpa:05097
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    References listed on IDEAS

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    1. Barbara Berkel & Axel Börsch-Supan, 2004. "Pension Reform in Germany: The Impact on Retirement Decisions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 393-421, September.
    2. Glismann, Hans Hinrich & Horn, Ernst-Jürgen, 1998. "Renditen in der deutschen gesetzlichen Alterssicherung," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW - Leibniz Information Centre for Economics, vol. 78(8), pages 474-482.
    3. 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.
    4. Reinhard Hujer & Bernd Fitzenberger & Reinhold Schnabel & Thomas E. MaCurdy, 2001. "Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data," Empirical Economics, Springer, vol. 26(1), pages 41-86.
    5. Börsch-Supan, Axel & Reil-Held, Anette & Christina Benita Wilke, 2003. "Der Nachhaltigkeitsfaktor und andere Formelmodifikationen zur langfristigen Stabilisierung des Beitragssatzes zur GRV," MEA discussion paper series 03030, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    6. Christina Benita Wilke, 2004. "Ein Simulationsmodell des Rentenversicherungssystems: Konzeption und ausgewählte Anwendungen von MEA-PENSIM," MEA discussion paper series 04048, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    7. Schnabel, Reinhold, 1997. "Rates of Return of the German Pay-As-You-Go Pension System," Sonderforschungsbereich 504 Publications 98-56, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
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    Cited by:

    1. Gasche, Martin, 2010. "Rentenanpassung 2010 – Wem nützt die Rentengarantie?," MEA discussion paper series 10199, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    2. S'ergio Bacelar & Luis Antunes, 2019. "Generational political dynamics of retirement pensions systems: An agent based model," Papers 1909.08706, arXiv.org.
    3. Bucher-Koenen, Tabea & Wilke, Christina Benita, 2008. "Zur Anhebung der Altersgrenzen : Eine Simulation der langfristigen Auswirkungen auf die gesetzliche Rentenversicherung bei unterschiedlichem Renteneintrittsverhalten," Papers 08-44, Sonderforschungsbreich 504.

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