Exploring the Impact of Adjusting the Basic Pension on Lower-Income Groups in the German Pension System

Abstract

This article explores the impact of adjustments to the basic pension (Grundrente) on lower income groups in the German pension system. This is done by hypothesizing that the basic pension reform is weakening status maintenance in the German welfare state for lower-income groups. We analyse monetary gains from the basic pension across different groups. We then adjust the eligibility criteria for the basic pension regarding the length of contribution periods and earning points threshold. From these findings, the paper develops a systematization for what needs to be considered in future pension reforms if the equivalence principle for lower-income groups is to be weakened.