Edited by Giuliano Bonoli and Toshimitsu Shinkawa
Chapter 3: New Century – New Paradigm: Pension Reforms in Germany
3. New century – new paradigm: Pension reforms in Germany 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...
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