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Towards a funded system of social security: Design and implications - The case of Germany -

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  • Glismann, Hans H.
  • Horn, Ernst-Jürgen

Abstract

What would a feasible system of social security in Germany have looked like in the year of 1995 and beyond? In order to find an answer we describe three base systems: ( l ) a purely funded system of social security, (2) a fully mandatory funded system of social security, and (3) a partially mandatory funded system. It is argued that - neglecting problems of transition - a purely funded system would be the best in economic terms; a fully mandatory funded system would need almost as many controls as the currently prevailing system (often labelled pay-asyou- go system). A partially mandatory funded system, assuring some kind of basic income, would need less controls and less governmental authority than the fully mandatory system but more than a funded system. After quantification of two scenarios which represent components of the three base systems, a system of taxation with respect to contributions and/or benefits is discussed which is at the same time simple in terms of costs of bureaucracy and does not tax economic growth more than necessary.

Suggested Citation

  • Glismann, Hans H. & Horn, Ernst-Jürgen, 1997. "Towards a funded system of social security: Design and implications - The case of Germany -," Kiel Working Papers 836, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:836
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    References listed on IDEAS

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    1. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
    2. Sebastian Edwards, 1998. "The Chilean Pension Reform: A Pioneering Program," NBER Chapters, in: Privatizing Social Security, pages 33-62, National Bureau of Economic Research, Inc.
    3. Glismann, Hans H. & Horn, Ernst-Jürgen, 1996. "Zur Reform des deutschen Systems der Alterssicherung," Kiel Working Papers 767, Kiel Institute for the World Economy (IfW Kiel).
    4. Malcolm Edey & John Simon, 1996. "Australia's Retirement Income System: Implications for Saving and Capital Markets," NBER Working Papers 5799, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Fehr, Hans, 1998. "Privatization of public pensions in Germany: Who gains and how much?," Tübinger Diskussionsbeiträge 148, University of Tübingen, School of Business and Economics.

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