Ageing and Pension Reform Around the World

Evidence from Eleven Countries

Edited by Giuliano Bonoli and Toshimitsu Shinkawa

This book comprehensively documents developments in pension policy in eleven advanced industrial countries in Western Europe, East Asia and North America. In order to explore what population ageing means for the sustainability of pension systems, the authors present a detailed review of pension policy making over the past two decades and provide up-to-date analysis of current pension legislation. They examine the factors that can facilitate or impede the adaptation of pension systems and the features that shape and determine reforms. They also highlight the fact that although the path of reform taken by each country is somewhat different, the processes at work are often very similar.

Chapter 3: New Century – New Paradigm: Pension Reforms in Germany

Karl Hinrichs

Subjects: economics and finance, public finance, politics and public policy, public policy, social policy and sociology, ageing, comparative social policy, economics of social policy


Karl Hinrichs 1. INTRODUCTION After a series of changes enacted between 1989 and 2001, at the end of 2003, the Red-Green government in Germany got involved in another enterprise of reforming pensions. Apart from closing a short-term deficit of the public pension scheme, the main rationale for the latest reform initiative is again demographic aging. It results from both below-replacement fertility and ever greater life expectancy and concerns those welfare programs disproportionately utilized by the elderly. This includes health and long-term care services, but most heavily affected are old age pension schemes. The combination of an ever more elderly-biased age structure and a shrinking population of what presently is defined as employable age poses severe problems for a welfare state that, in its expenditure orientation, is elderly-biased anyway, not the least since public pensions regularly represent the largest single item of total social spending (Lynch, 2001; Esping-Andersen and Sarasa, 2002). Germany is among those Western countries where fertility has been very low since about the mid-1960s. This will – according to the median variant of the latest official projections – lead to a shrinking population size: from presently 82.4 million to 75.1 million in 2050. Due to increasing longevity, a smaller population size goes along with a rising share of elderly. The percentage of elders (60+) already exceeds that of the young generation (below age 20) since the 1990s, and more than one-third of the population will be 60 years of age and older in 2030 (34.4 percent) and thereafter (2050: 36.7...

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