How Much is Transfer and How Much is Insurance in a Pay‐as‐you‐go System? The German Case

Abstract

Pay-as-you-go pension systems provide insurance against longevity-related old-age poverty and related risks. They are commonly also used as instruments for redistribution. This paper provides several estimates of the insurance and transfer share of the German public pension system. Estimating these shares is important because they are indicative of taxation-related deadweight losses and in¯uence public acceptance of the pension system. We also disentangle intragenerational from intergenerational transfers. Although our estimate of intragenerational transfers is smaller than recent semi-of®cial estimations, such transfers create substantial deadweight losses. Intergenerational transfers are much larger, thereby contributing to strong negative participation incentives for the younger generation.

Effectiveness of early retirement disincentives: Individual welfare, distributional and fiscal implications

“…Börsch-Supan, 2000;Blundell, 2002). The effects are vast as statutory pensions account for about 85% of the average household disposable income for the elderly population (Börsch-Supan and Reil-Held, 2001). While many of these reforms have been undertaken in other countries in a similar fashion, some reforms are not yet fully investigated and deserve further attention.…”

Is There a Social Security Tax Wedge?

“…More recently, Murphy and Welch (1998) and Orszag and Stiglitz (2000) have come round to the idea. This theoretical insight has sparked-o¤ a number of empirical studies aimed at measuring the tax component of pension contributions; see, for example, Börsch-Supan and Reil-Held (2001), and Fenge and Werding (2004). Disney (2004) takes the empirical analysis further by attempting to separate the e¤ect of the tax from that of the mandatory saving component.…”

Can inheritances Alleviate the Fiscal Burden of An Aging Population?

“…Social security expenditures in 1993 came to DM 309 billion (see IW, 1999 , Table 93). However, according to Börsch-Supan and Reil-Held (2001), only 80 percent of these expenditures constitute intergenerational transfers, while the rest is mere intragenerational redistribution. For lack of adequate data, it is further assumed that health and old-age insurance contain pay as you go elements of negligible magnitude.…”