Pension Reform with a Strained Federal Budget

Tasks

Many baby boomers will retire in the next few years. The cohorts entering the labor market in the future, on the other hand, will be much thinner. This will generate pressure on the pay-as-you-go pension system, as the number of contributors will fall substantially, while the number of beneficiaries will rise considerably. There is, therefore, an urgent need for political action. Against this background, the impact of various reform options on the statutory pension insurance system and on the federal budget will be examined. The influences of the reforms on the development of contribution rates, pension levels and federal subsidies will be examined in more detail.

Methods

Based on the 15th coordinated population projection of the German Federal Statistical Office, a simulation model is used to forecast the development of the contribution rate, the pension level, and the federal subsidies in the medium (up to 2035) and long term (up to 2050). Additionally, potential reform scenarios will also be analysed.

Data and other sources

15th coordinated population projection of the German Federal Statistical Office.