Download This PaperThe Crisis of Germany's Pension Insurance System and How it Can Be Resolved
27 Pages Posted: 11 Jan 2000 Last revised: 18 Dec 2022
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The Crisis of Germany's Pension Insurance System and How it Can Be Resolved
Date Written: August 1999
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.
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Hans-Werner Sinn (Contact Author)
CESifo (Center for Economic Studies and Ifo Institute) ( email )
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