The German Public Pension System: How it Was, How it Will Be

Germany still has a very generous public pay-as-you-go pension system. It is characterized by early effective retirement ages and very high effective replacement rates. Most workers receive virtually all of their retirement income from this public retirement insurance. Costs are almost 12 percent of GDP, more than 2.5 times as much as the U.S. Social Security System. The pressures exerted by population aging on this monolithic system, amplified by negative incentive effects, have induced a reform process that began in 1992 and is still ongoing. This process is the topic of this paper. It has two parts. Part A describes the German pension system as it has shaped the labor market until about the year 2000. Part B describes the three staged reform process that will convert the exemplary and monolithic Bismarckian public insurance system after the year 2000 into a complex multipillar system. The paper delivers an assessment in how far these reform steps will solve the pressing problems of a prototypical pay-as-you-go system of old age provision, hopefully with lessons for other countries with similar problems.

The German Public Pension System: How it Was, How it Will Be

Germany still has a very generous public pay-as-you-go pension system. It is characterized by early effective retirement ages and very high effective replacement rates. Most workers receive virtually all of their retirement income from this public retirement insurance. Costs are almost 12% of GDP, more than 2.5 times as much as the U.S. Social Security System. The pressures exerted by population aging on this monolithic system, amplified by negative incentive effects, have induced a reform process that began in 1992 and is still ongoing. This paper has two parts. Part A describes the German pension system as it has shaped the labor market from 1972 until today. Part B describes the reform process, which will convert the exemplary and monolithic Bismarckian public insurance system to a complex multi-pillar system. We provide a survey of the main features of the future German retirement system introduced by the so called “Riester Reform” in 2001 and an assessment in how far this last reform step will solve the pressing problems of the German system of old age provision.

Reforming the German Public Pension System

Chancellor Bismarck introduced public pensions in Germany more than 120 years ago. That system has expanded into one of the most generous pension systems in the world. Most workers receive virtually all of their retirement income from it. Costs are almost 12 percent of GDP, more than 2.5 times as much as the U.S. Social Security System. The pressures exerted by population aging, amplified by negative incentive effects, have induced a reform process that began in 1992 and reached its peak in the 2001 and 2004 reforms. The 2001 reform converted the exemplary monolithic Bismarckian public insurance system into a complex multipillar system. The 2004 reform converted the pay-as-you-go pillar into a quasi notional defined contribution (NDC) system. This paper delivers an assessment in how far these reform steps will solve the pressing pension problems in Germany.

How an Unfunded Pension System looks like Defined Benefits but works like Defined Contributions: The German Pension Reform

This paper describes the German pension reform process 1992-2007 with a stress on a remark-able development: the public pay-as-you-go-financed pension system has almost silently moved from a traditional defined benefit system to a system which works in many respects like a defined contribution system. The paper combines economic with political considerations, hopefully offering a few lessons that are useful also for other countries.

American Oystercatcher productivity monitoring, breeding survey and banding in Virginia: 2004 report

Biologists along the east coast of the United States have recently expressed concern about the conservation status of the American Oystercatcher (Haematopus palliatus). The species has a relatively small population size and depends on coastal habitat that is under pressure from humans for development and recreation. Several studies of American Oystercatcher productivity have suggested that the species is inherently intolerant to human disturbance and experiences low productivity rates in areas where their breeding habitat is also used for human recreation. As a beach-nesting bird, their nesting attempts are also very vulnerable to destruction by mammalian and avian predators, which have been known to experience population increases because of human influenced factors. The undeveloped barrier islands and marshes of Virginia’s Eastern Shore support over 500 pairs of breeding American Oystercatchers and provide a unique opportunity to study their productivity in the relative absence of disturbance from direct human activity. Some of the islands are, however, inhabited by high numbers of common raccoons (Procyon lotor). The Nature Conservancy’s Virginia Coast Reserve (TNC), in cooperation with The Center for Conservation Biology at The College of William and Mary (CCB) and other partners, currently supports several efforts aimed at investigating the population status and breeding and wintering ecology of the species. These efforts include annual studies of oystercatcher productivity on the barrier islands and in the lagoon system, annual surveys of breeding and wintering populations and a banding program for oystercatcher adults and chicks. The primary objective of productivity monitoring has been to compare productivity in habitats managed for mammalian predators and those that are not in order to assess the effectiveness of the predator removal as a management strategy for increasing the reproductive success of beach nesting shorebirds and waterbirds. The annual breeding and wintering surveys provide consistent and precise counts of oystercatchers along the Virginia coast so that managers can track changes in population numbers and distribution. Finally, the banding program will increase the number of color-banded birds in the population so that researchers may examine questions concerning migration and dispersal, survival rates and habitat use. One hundred and fifty-three pairs of American Oystercatchers were monitored for productivity during the 2004 breeding season. Eighty-one nested on Metompkin Island, which is managed by TNC for mammalian predators. Twenty-five nested on Wreck Island Natural Area Preserve, which is not managed for mammalian predators but did not have any predator activity during the 2004 breeding season. Fortyseven nested in the marshes of the lagoon system located adjacent to Wachapreague, Virginia. American Oystercatchers experienced high productivity on Metompkin Island and Wreck Island (0.79-1.18 young fledged per pair) for the third and second consecutive years, respectively. These productivity levels continue to be well above what is typically recorded for this species in other parts of its range, and our results suggest that the absence of mammalian predators on these islands allows for the higher productivity of pairs nesting there. American Oystercatchers breeding in the marshes off of Wachapreague also experienced high productivity in 2004 – 0.85 young fledged per pair. Productivity of oystercatchers in this habitat is very vulnerable to flooding events and appears to be highly variable from year to year depending on the timing of egg-laying, spring tide events, storms and storm influenced tide events. A total of 706 adult American Oystercatchers (327 pairs and 52 single adults) were recorded during the 2004 Piping Plover, Wilson’s Plover and American Oystercatcher survey, a 26.1% increase from 2000 when oystercatchers were first systematically surveyed along the coast of Virginia. Breeding pairs were documented on every barrier island along the Eastern Shore of Virginia except for Walllops Island. Only seven pairs were documented west and south of the Chesapeake Bay. Sixty-two American Oystercatcher chicks and two adults were banded during the 2004 breeding season. At least fifty-seven of the chicks fledged. We will continue to work with other states to further develop Virginia’s banding program, upon which researchers, managers and students can build in the future

A probabilistic projection of beneficiaries of long-term care insurance in Germany by severity of disability

Demographic aging puts social insurance systems under immense pressure as frailty risks increase with age. The statutory long-term care insurance in Germany (GPV), whose society has been aging for decades due to low fertility and decreasing mortality, faces massive future pressure. The present study presents a stochastic outlook on long-term care insurance in Germany until 2045 by forecasting the future number of frail persons who could claim insurance services by severity level with theory-based Monte Carlo simulations. The simulations result in credible intervals for age-, sex- and severity-specific care rates as well as the numbers of persons for all combinations of age, sex and severity by definition of the GPV on an annual basis. The model accounts for demographic trends through time series analysis and considers all realistic epidemiological developments by simulation. The study shows that increases in the general prevalence of disabilities, especially for severe disabilities, caused by the demographic development in Germany are unavoidable, whereas the influence of changes in age-specific care risks does not affect the outcome significantly. The results may serve as a basis for estimating the future demand for care nurses and the financial expenses of the GPV

Szenarien zur mittel- und langfristigen Entwicklung der Anzahl der Erwerbspersonen und der Erwerbstätigen in Deutschland

Dieses Papier legt Projektionen zur mittel- und langfristigen Entwicklung der Anzahl der Erwerbspersonen sowie der Erwerbstätigen in Deutschland vor. Für unser vorsichtig optimistisches Szenario gehen wir von einer allmählichen Angleichung an die heutige Arbeitsmarktsituation in Dänemark aus. In diesem Fall ergibt sich ein Rückgang in der Anzahl der Erwerbspersonen um etwa 2,8 Mio. auf etwa 39,4 Mio. in 2040. Inwieweit dieses Szenario realisiert wird, hängt von dem Ausmaß künftiger Arbeitsmarktreformen und den daraus resultierenden Veränderungen im Erwerbsverhalten der Bevölkerung und der Arbeitsnachfrage ab. Ohne weitere Arbeitsmarktreformen würde die Anzahl der Erwerbspersonen bis 2040 um über 9 Mio. auf 32,6 Mio. zurückgehen. Zugleich altert die Erwerbsbevölkerung. Das Durchschnittsalter wird bis zum Jahr 2040 von 40 auf knapp 42 Jahre ansteigen. Der Anteil der Erwerbspersonen im Alter 55+ wird von etwa 11% auf 20% in 2040 und 21% in 2050 steigen. In jedem Fall, auch dem günstigsten, wird sowohl die Erwerbspersonen- als auch die Erwerbstätigenanzahl künftig schrumpfen. Die Wirtschaftspolitik sollte dies im Auge behalten.

Nanoscale grains, high irreversibility field, and large critical current density as a function of high energy ball milling time in C-doped magnesium diboride

Magnesium diboride (MgB2) powder was mechanically alloyed by high energy ball milling with C to a composition of Mg(B0.95C0.05)2 and then sintered at 1000 C in a hot isostatic press. Milling times varied from 1 minute to 3000 minutes. Full C incorporation required only 30-60 min of milling. Grain size of sintered samples decreased with increased milling time to less than 30 nm for 20-50 hrs of milling. Milling had a weak detrimental effect on connectivity. Strong irreversibility field (H*) increase (from 13.3 T to 17.2 T at 4.2 K) due to increased milling time was observed and correlated linearly with inverse grain size (1/d). As a result, high field Jc benefited greatly from lengthy powder milling. Jc(8 T, 4.2 K) peaked at > 80,000 A/cm2 with 1200 min of milling compared with only ~ 26,000 A/cm2 for 60 min of milling. This non-compositional performance increase is attributed to grain refinement of the unsintered powder by milling, and to the probable suppression of grain growth by milling-induced MgO nano-dispersions.Comment: 12 pages, 11 figure

On the Sets of Real Numbers Recognized by Finite Automata in Multiple Bases

This article studies the expressive power of finite automata recognizing sets of real numbers encoded in positional notation. We consider Muller automata as well as the restricted class of weak deterministic automata, used as symbolic set representations in actual applications. In previous work, it has been established that the sets of numbers that are recognizable by weak deterministic automata in two bases that do not share the same set of prime factors are exactly those that are definable in the first order additive theory of real and integer numbers. This result extends Cobham's theorem, which characterizes the sets of integer numbers that are recognizable by finite automata in multiple bases. In this article, we first generalize this result to multiplicatively independent bases, which brings it closer to the original statement of Cobham's theorem. Then, we study the sets of reals recognizable by Muller automata in two bases. We show with a counterexample that, in this setting, Cobham's theorem does not generalize to multiplicatively independent bases. Finally, we prove that the sets of reals that are recognizable by Muller automata in two bases that do not share the same set of prime factors are exactly those definable in the first order additive theory of real and integer numbers. These sets are thus also recognizable by weak deterministic automata. This result leads to a precise characterization of the sets of real numbers that are recognizable in multiple bases, and provides a theoretical justification to the use of weak automata as symbolic representations of sets.Comment: 17 page

Population Ageing and Future Demand for Old-Age and Disability Pensions in Germany – A Probabilistic Approach

Industrialised economies are experiencing a decline in mortality alongside low fertility rates – a situation that puts social security systems under severe pressure. Population ageing is associated not only with longer periods of pension claims but also smaller cohorts eventually entering the labour market. This threatens the sustainability of pay-as-you-go social security systems for implementing or further improving appropriate reform measures; adequate forecasts of the future population structure are needed. We propose a probabilistic approach to forecast the number of pensions in Germany up to 2040. Our model considers trends in population development, labour force participation, and early retirement, as well as the effects of pension reforms. Principal component analysis is used to manage the high degree of complexity involved in forecasting trends in old-age and disability pension claims, which arises because of cross-correlations between old-age and disability pension rates, different age groups, and gender. Time series methods enable the inclusion of autocorrelations of the pension rate time series in the model. Monte Carlo simulation is used to quantify future risk. The latter is an important feature of our model, as the future development of the population and, eventually, the pension claims and the financial burden resulting from those claims, are highly stochastic. The model predicts that, in the median trajectory, the number of old-age pensions will increase by almost 5 million between 2017 and 2036, alongside increases in the number of disability pensions by 2036. These numbers take account of the increase in legal retirement ages as part of the 2007 pension reform. After the mid-2030s, however, a moderate decrease can be expected. The results show a clear need for further reforms, especially in the medium term