NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Crisis of Germany's Pension Insurance System and How It Can Be Resolved

Hans-Werner Sinn

NBER Working Paper No. 7304
Issued in August 1999
NBER Program(s):   PE

The paper discusses the options for a reform of the German pension system using a model developed at CES for the German Council of economic advisors to the Federal Ministry of Economics and Research. It is argued that the German pay-as-you-go-system is efficient in a present value sense but will nevertheless need the support of a funded system to avoid a financial crisis. The paper investigates the possibility of introducing obligatory private savings at a variable rate where the time path of the savings rate is chosen so as to stabilize the sum of this rate and the pay-as-you-go contribution rate, given the time path of pensions as defined in the present system.

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Document Object Identifier (DOI): 10.3386/w7304

Published: Cnossen, Sijbren and Hans-Werner Sinn (eds.) Public finance and public policy in the new century, CESifo Seminar Series. Cambridge and London: MIT Press, 2003.

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