Pension Reform in Germany: The Impact on Retirement Decisions

29 Pages Posted: 25 Aug 2003 Last revised: 4 Aug 2022

See all articles by Axel H. Börsch-Supan

Axel H. Börsch-Supan

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Barbara Berkel

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA)

Date Written: August 2003

Abstract

The financing problems beleaguering the public pension system have again shifted the spotlight onto the retirement age. This paper examines the impact of various reform options on the actual retirement choices of older workers. The paper focuses in particular on the long-term implications of the changes implemented in pension legislation since 1992 and the reform options discussed by the German Social Security Reform Commission installed in 2002, the so called R?rup Commission'. Our simulations show that the early-retirement pension adjustment factors introduced by the 1992 pension reform will, in the long term, raise the average effective age of retirement for men by somewhat less than two years. The across-the-board two-year increase in all the relevant age limits proposed by the R?rup Commission' would raise the effective average age of retirement of men by about eight months. If the actuarial adjustment factor is increased from 3.6% to 6% per year, the effective average retirement age rises by almost two years. The effects are considerably weaker for women.

Suggested Citation

Börsch-Supan, Axel H. and Berkel, Barbara, Pension Reform in Germany: The Impact on Retirement Decisions (August 2003). NBER Working Paper No. w9913, Available at SSRN: https://ssrn.com/abstract=437482

Axel H. Börsch-Supan (Contact Author)

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

HOME PAGE: http://www.mea.mpisoc.mpg.de

Barbara Berkel

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA) ( email )

Building L13, 17
D-68131 Mannheim
Germany
(0621) 181-3505 (Phone)

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