The Budgetary Costs of the Recent Pension Reforms

We present simulation results for the German pension system up to the year 2050. The pension reforms of the past years will double the age-related additional burdens for pension insurance in the next ten years. The prolongation of the simultaneous constraints on the contribution rate and the pension level would constitute a severe challenge for the federal budget and thus for taxpayers. If financed solely via value-added tax, the standard VAT rate would have to rise from 19% today to around 30% by 2050.