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Centre for Policy on Ageing | |
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Dismantling an earnings-related social pension scheme
— Germany's new pension policy | | Author(s) | Winfried Schmähl |
| Journal title | Journal of Social Policy, vol 36, part 2, April 2007 |
| Pages | pp 319-340 |
| Source | http://www.journals.cambridge.org |
| Keywords | Old persons pensions ; Private pensions ; Social policy ; Germany. |
| Annotation | A paradigm shift in pension policy decided by the German red-green coalition government will considerably affect the level and structure of pension benefit, as well as the mix of public and private old-age security arrangements. This article begins with a brief outline of the pension schemes as designed before recent decisions, also reasons for current reform debates. The major measures of the 2001 Pension Reform are described. The main focus is on the effects of the reform for (personal) income distribution and institutional design. A partial shift from (mandatory) public (pay-as-you-go financed, PAYG) pensions to (voluntary) private (capital-funded) pensions, and from defined benefits towards defined contributions will, among other things, reduce the benefit level in social pension insurance. Even after many years of paying contribution, a large number of contributors will only receive benefits below social assistance level. It can be expected that this development will transform the present earnings-related statutory pension scheme - which has as strong contribution-benefit link and is aimed at income smoothing over the life cycle - into a basic, highly redistributive pension scheme, aimed mainly at avoiding poverty. Income inequality in old age is expected to increase as a result of the new strategy in pension policy. (RH). |
| Accession Number | CPA-070508204 A |
| Classmark | JJD: JK: TM2: 767 |
Data © Centre for Policy on Ageing |
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| ...from the Ageinfo database published by Centre for Policy on Ageing. |
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