On the Fairness of Early-Retirement Provisions

A crucial parameter for increasing the retirement age is the early-retirement discount of the public pension system. Critics of the present German system argue that the downward adjustment of the pension for early retirees is too small compared with a 'fair' system and thus encourages early retirement. We discuss several notions of 'fairness' of early-retirement provisions and propose a concept called 'distributive neutrality', which states that the ratio between total benefits and total contributions should not depend systematically on the individual's ability. By applying this concept to the German retirement benefit formula and taking empirically estimated relationships between annual income (as a proxy for ability), life expectancy and retirement age into account, we show that at the present discount rate of 3.6% per year there is redistribution from low to high earners, which, surprisingly, could be attenuated by raising the discount rate. Copyright 2009 The Authors. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd. 2009.

Zur nachhaltigen Finanzierung der GRV: Der Beitrag der Altersgrenzenanhebung im Rentenreformprozess

In the past, the German statutory pension scheme has been exposed to numerous policy interventions. In this article we analyze the effects of the latest reforms on the future development of the contribution rate as well as the public pension level. Furthermore, we quantify the extent of an increase of the average retirement age on the funding of the pension scheme, as the increase can temporarily dilute the financial burden due to demographic transition. Copyright 2008 die Autoren Journal compilation 2008, Verein für Socialpolitik und Blackwell Publishing Ltd.