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Pension Provision in Germany

Author

Listed:
  • Börsch-Supan, Axel

    (Sonderforschungsbereich 504)

  • Reil-Held, Anette

    (Mannheim Research Institute for the Economics of Aging (MEA) and Sonderforschungsbereich 504)

  • Schnabel, Reinhold

    (Fachb. Wirtschaftswiss., Universität-Gesamthochschule Essen)

Abstract

Aim of this paper is to study the provision of income to the elderly in Germany and to assess whether the German social security system provides an adequate retirement income in a sustainable way. Accordingly, the paper has two parts. The first part describes the German public old age social security program (''Gesetzliche Rentenversicherung'') and its incentive effects on retirement decisions. It presents the key features of the system and discusses the sustainabilita of the German pay-as-you-go system as the German population ages and the competitive pressures on wages and fringe benefits increases. The second part of the paper investigates the sources of income after retirement. It summarizes activity rates of older persons in Germany during the last 35 years and compares by income source the distribution of the income received by the elderly with the income received by younger Germans. The paper finds that retirement income in Germany is quite generous on average with a replacement rate of about 88 percent. It is also more evenly distributed than income of younger households. Nevertheless, we find households that appear overannuitized, e.g. single elderly male with a replacement rate in excess of 100 percent, as well as small pockets of poverty, e.g. single elderly women of whom between 3 and 6 percent have incomes below the poverty line.

Suggested Citation

  • Börsch-Supan, Axel & Reil-Held, Anette & Schnabel, Reinhold, 1998. "Pension Provision in Germany," Sonderforschungsbereich 504 Publications 98-07, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    • Handle: RePEc:xrs:sfbmaa:98-07
    Note: Financial Support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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    Cited by:

    1. Börsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 2000. "Household Savings in Germany," Discussion Papers 577, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    2. repec:bla:germec:v:11:y:2010:i::p:487-510 is not listed on IDEAS
    3. Bönke Timm & Schröder Carsten & Schulte Katharina, 2010. "Incomes and Inequality in the Long Run: The Case of German Elderly," German Economic Review, De Gruyter, vol. 11(4), pages 487-510, December.
    4. Mathias Sommer, 2005. "Trends in German households’ portfolio behavior - assessing the importance of age- and cohort-effects," MEA discussion paper series 05082, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    5. Whitehouse, Edward, 2001. "Pension systems in 15 countries compared: the value of entitlements," MPRA Paper 14751, University Library of Munich, Germany.
    6. Börsch-Supan, Axel, 2004. "MIND THE GAP: The Effectiveness of Incentives to Boost Retirement Saving in Europe," Sonderforschungsbereich 504 Publications 07-27, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    7. Reil-Held, Anette & Schnabel, Reinhold, 1999. "Vom Arbeitsmarkt in den Ruhestand: Die Einkommen deutscher Rentner und Rentnerinnen," Sonderforschungsbereich 504 Publications 99-14, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    8. Tim Krieger & Christoph Sauer, 2004. "Will Eastern European Migrants Happily Enter the German Pension System after the EU Eastern Enlargement?," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 124(1), pages 1-30.

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