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Linking Retirement Age to Life Expectancy in a Bismarckian System - The Case of Germany

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  • Valentin Vogt
  • Jörg Althammer

Abstract

In times of decreasing mortality, one way to stabilise a PAYG pension system is to interrelate the retirement age to the anticipated average lifespan. This paper investigates two approaches for Germany: one is to keep the average retirement duration constant, the other to define a constant share of the total lifespan for the retirement period. Our simulation model uses a Leslie matrix population projection, a Solow-Swan growth model and a detailed calculation of the German pension insurance budget. Our results show quite a significant impact on the insurance level and a rather small effect on the contribution rate, which is characteristic of a Bismarckian system.

Suggested Citation

  • Valentin Vogt & Jörg Althammer, 2016. "Linking Retirement Age to Life Expectancy in a Bismarckian System - The Case of Germany," National Institute of Economic and Social Research (NIESR) Discussion Papers 465, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:465
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    References listed on IDEAS

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    Cited by:

    1. Jan Valentin Vogt, 2017. "Alternating Migration Flows and their Age-Structure Effects on the Long-Term Sustainability of the German Statutory Pension Insurance," EcoMod2017 10369, EcoMod.

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