IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/7304.html
   My bibliography  Save this paper

The Crisis of Germany's Pension Insurance System and How It Can Be Resolved

Author

Listed:
  • Hans-Werner Sinn

Abstract

The paper discusses the options for a reform of the German pension system using a model developed at CES for the German Council of economic advisors to the Federal Ministry of Economics and Research. It is argued that the German pay-as-you-go-system is efficient in a present value sense but will nevertheless need the support of a funded system to avoid a financial crisis. The paper investigates the possibility of introducing obligatory private savings at a variable rate where the time path of the savings rate is chosen so as to stabilize the sum of this rate and the pay-as-you-go contribution rate, given the time path of pensions as defined in the present system.

Suggested Citation

  • Hans-Werner Sinn, 1999. "The Crisis of Germany's Pension Insurance System and How It Can Be Resolved," NBER Working Papers 7304, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:7304
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w7304.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1335-1357, July.
    2. Sinn, Hans-Werner, 1997. "The Value of Children and Immigrants in a Pay-As-You-Go Pension System: A Proposal For a Partial Transition to a Funded System," CEPR Discussion Papers 1734, C.E.P.R. Discussion Papers.
    3. Martin Feldstein, 1998. "Privatizing Social Security," NBER Books, National Bureau of Economic Research, Inc, number feld98-1.
    4. 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.
    5. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    2. Axel Börsch‐Supan & Florian Heiss & Alexander Ludwig & Joachim Winter, 2003. "Pension Reform, Capital Markets and the Rate of Return," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 151-181, May.
    3. Weller, Christian E., 2001. "Programs without alternative: Public pensions in the OECD," ZEI Working Papers B 15-2001, University of Bonn, ZEI - Center for European Integration Studies.
    4. Afonso, Luís Eduardo & Fernandes, Reynaldo, 2005. "Uma Estimativa dos Aspectos Distributivos da Previdência Social no Brasil," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 59(3), July.
    5. Kai A. Konrad & Gert Wagner, 2000. "Reform of the Public Pension System in Germany," Discussion Papers of DIW Berlin 200, DIW Berlin, German Institute for Economic Research.
    6. Andrés Rodríguez-Pose & Sylvia A R Tijmstra & Adala Bwire, 2009. "Fiscal Decentralisation, Efficiency, and Growth," Environment and Planning A, , vol. 41(9), pages 2041-2062, September.
    7. Karsten Jeske, 2003. "Pension systems and aggregate shocks," Economic Review, Federal Reserve Bank of Atlanta, vol. 88(Q1), pages 15-31.
    8. Gedeon, Péter, 2001. "Merre tart a német jóléti állam?. Társadalombiztosítási alrendszerek Németországban [Where is the German welfare state going?. Social-insurance sub-systems in Germany]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 130-149.

    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. Hans-Werner Sinn, 2000. "Why a Funded Pension System is Useful and Why It is Not Useful," NBER Working Papers 7592, National Bureau of Economic Research, Inc.
    2. Meier, Volker & Wrede, Matthias, 2010. "Pensions, fertility, and education," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(1), pages 75-93, January.
    3. Klaus Beckmann, 2000. "A Note on the Tax Rate implicit in Contributions to Pay-as-you-go Public Pension Systems," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(1), pages 63-76, September.
    4. Marko Köthenbürger & Panu Poutvaara, 2002. "Social Security Reform and Intergenerational Trade: Is there Scope for a Pareto-Improvement?," CESifo Working Paper Series 795, CESifo.
    5. Christopher House & John Laitner & Dmitriy Stolyarov, 2008. "Valuing Lost Home Production Of Dual Earner Couples," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 701-736, May.
    6. Alan L. Gustman & Thomas L. Steinmeier, 2000. "Social Security Benefits of Immigrants and U.S. Born," NBER Chapters, in: Issues in the Economics of Immigration, pages 309-350, National Bureau of Economic Research, Inc.
    7. Börsch-Supan, Axel & Winter, Joachim, 1999. "Pension reform, savings behavior and corporate governance," Papers 99-48, Sonderforschungsbreich 504.
    8. Casarico, Alessandra & Devillanova, Carlo, 2008. "Capital-skill complementarity and the redistributive effects of Social Security Reform," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 672-683, April.
    9. Christoph Borgmann & Matthias Heidler, 2003. "Demographics and Volatile Social Security Wealth: Political Risks of Benefit Rule Changes in Germany," CESifo Working Paper Series 1021, CESifo.
    10. Aaron Tornell, 1999. "Privatizing the Privatized," NBER Working Papers 7206, National Bureau of Economic Research, Inc.
    11. Jukka Lassila & Tarmo Valkonen, 2001. "Pension Prefunding, Ageing, and Demographic Uncertainty," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(4), pages 573-593, August.
    12. de la Torre, Augusto & Gozzi, Juan Carlos & Schmukler, Sergio L., 2007. "Stock market development under globalization: Whither the gains from reforms?," Journal of Banking & Finance, Elsevier, vol. 31(6), pages 1731-1754, June.
    13. Alan L. Gustman & Thomas L. Steinmeier, 2002. "The New Social Security Commission Personal Accounts: Where Is the Investment Principal?," NBER Working Papers 9045, National Bureau of Economic Research, Inc.
    14. Axel Borsch-Supan, 1998. "Incentive Effects of Social Security on Labor Force Participation: Evidence in Germany and Across Europe," NBER Working Papers 6780, National Bureau of Economic Research, Inc.
    15. Julia Lynn Coronado & Don Fullerton & Thomas Glass, 2002. "Long-Run Effects of Social Security Reform Proposals on Lifetime Progressivity," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 149-206, National Bureau of Economic Research, Inc.
    16. Kotlikoff, Laurence J & Smetters, Kent A & Walliser, Jan, 1998. "Social Security: Privatization and Progressivity," American Economic Review, American Economic Association, vol. 88(2), pages 137-141, May.
    17. Robert Fenge & Volker Meier, 2005. "Pensions and fertility incentives," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 28-48, February.
    18. Johannes Holler, 2007. "Pension Systems and their Influence on Fertility and Growth," Vienna Economics Papers 0704, University of Vienna, Department of Economics.
    19. James Banks & Tanner, Tanner, 2000. "Household portfolios in the UK," IFS Working Papers W00/14, Institute for Fiscal Studies.
    20. Schröder, Carsten, 2012. "Profitability of pension contributions – evidence from real-life employment biographies," Journal of Pension Economics and Finance, Cambridge University Press, vol. 11(3), pages 311-336, July.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    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:nbr:nberwo:7304. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.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.