Social Security and Retirement in Germany

Abstract

Old age social security benefits represent the largest part of the German social budget. In 1993, social security benefits amounted to 10.3 percent of GDP, a share more than two and a half times larger than in the United States. Social security income represents about 80 percent of household income of households headed by a person aged sixty-five and over. The German social security system (the Gesetzliche Rentenversicherung and its equivalents)' is large because it is mandatory for every worker except the self-employed and those with very low incomes. In addition, the German social security system is very generous in two respects. First, the system has a very high replacement rate, generating net retirement incomes that are currently about 72 percent of preretirement net earnings for a worker with a fortyfive-year earnings history and average lifetime This is substantially higher than, for example, the corresponding U.S. net replacement rate of about 53 percent.' Second, the system has very generous early retirement provisions, including easy ways to claim disability benefits, increasing the number of ben

Labor force transitions of older married couples in Germany

“…The wage and benefit regressions are reported in the Appendix. This is a very simple approach to measuring the retirement incentives induced by the public retirement system, and may not capture all of the incentives caused by nonlinearities such as minimum required contribution years and spikes in pension accrual rates (Börsch-Supan and Schnabel, 1998). We follow this approach because accounting for features of the budget constraint induced by nonlinearities in the public pension system requires a structural approach to estimation that imposes unverifiable assumptions about preferences and expectations, which seems unwarranted in an exploratory study such as this.…”

Income mobility in old age in Britain and Germany

“…In both benchmark years, not surprisingly, the poverty differentials between older people and the non-elderly were more pronounced in Britain than in Germany. The prevalence of poverty among both older people and the non-elderly was 8 We refer to Börsch-Supan and Schnabel (1999) and Blundell and Johnson (1999) for comparable figures on replacement ratios in the two countries. The analyses presented in Schmähl (2003) and Emmerson (2003) corroborate this evidence.…”

“…The corresponding information about Germany is obtained from Börsch-Supan and Schnabel (1999) and Schmähl (1998Schmähl ( , 2003.…”

Further Training for Older Workers: A Solution for an Ageing Labour Force?

“…In contrast, countries with a flexible early retirement schemes such as Denmark and Finland, offer more "exit points" for retirements, and therefore raise the likelihood of older workers to stay in employment. Germany (as Austria and Belgium) had a very generous early retirement schemes 18 for many years as part of the generous old-age social security system (Börsch-Supan & Schnabel, 1997), which contributed to raising the rates of pensioners. This was especially common among older low-skilled workers who worked for many years in manual jobs (OECD, 2005a) 19 .…”

“…Accelerating the ageing process is the trend towards earlier retirement which begun in the late 1970s and characterized by a growing number of older German workers choosing to retire early (Börsch-Supan & Schnabel, 1997) 4 . The availability of early retirement pension schemes and other programs prior to the official retirement age (i.e.…”