Germany relies almost exclusively on a public pay-as-you-go pension system for old-age in-
come provision. This mandatory “retirement insurance” has become under severe pressure,
mainly from population aging and from incentive effects that have reduced labor supply.
This paper argues Germany needs a pension reform with three main elements:
(1)
A reformed pay-as-you-go pillar which is actuarially fair, features a transparent notional
account set-up, and freezes contribution rates at the current level;
(2)
A second funded pillar which is based on US
401(k)-style grouped accounts that finance
the impending aging burden;
(3)
Augmented by redistributive features that guarantee a minimum pension and strengthen
human capital formation.
The paper briefly discusses the sources of the current problems, details the reform proposal, in
particular the cohort- and time-varying transition burden which turns out to be rather moder-
ate, and sheds light on the side effects of such a transition on the German macro economy
which are more subtle than is often claimed.
Zusätzliche Informationen:
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
![[img]](https://madoc.bib.uni-mannheim.de/style/images/fileicons/application_pdf.png)
Suche Autoren in