Population aging challenges pay-as-you-go pension systems. Solving the associated funding problem constantly motivates reform processes. In addition to an aging population, specific regulations of the German public pension system lead to an increasing financial burden of national finances. To ensure sustainable funding of pensions, the calculation formula of the German public pension system will be investigated in this paper. It will be shown, that there are two alterable parameters, which are not optimally used regarding the funding of public pensions. Simulations show that a variable demographic factor to calculate public pensions can reduce the financial burden of national finances.
Journal for Economic Policy is published on behalf of the Institute for Economic Policy at the University of Cologne. The Journal is open to publications from all areas of economics. Articles regarding current questions of German, European or international economic policy are preferred. At the center of each issue is the economic policy forum. It deals with topics, which are controversially discussed among the general public.
20 Apr 1981
Juergen B. Donges, Michael Krause, Steffen J. Roth and Christian Watrin