What determines supply and demand for occupational pensions in Germany?

Abstract

Demographic change causes an undersupply of financial old age benefits within the statutory pay-as-you-go pension system in Germany. Therefore, the provision of occupational as well as private pensions has to be enhanced. However, there seems to be an undersupply of occupational pension provision particularly in small and medium sized enterprises (SMEs). Using survey data of the German Socio-Economic Panel (GSOEP) and the German SAVE survey, the present paper studies econometrically the determinants of occupational pension provision in Germany. It shows that occupational pensions depend not only on supply-side factors such as firm size and industry, but also on demand-side factors such as individual sociodemo-graphic attributes and people's savings motives.

Occupational pensions, tenure, and taxes

“…Horiba and Yoshida (2002) followed 488 Japanese firms listed on stock exchanges between 1980 and 1990. Dummann (2008) finds longer tenure among employees covered by an occupational pension in Germany, and also a higher probability of being covered in large firms, as well as differences between industries. Support for the role of economic incentives can also be found in the case of New Zealand, where tax concessions to occupational superannuation were largely abolished in the late 1980s, and occupational pension coverage fell from 22.6 % in 1990to 14.9 % in 2000(New Zealand Government, 2001.…”

Savings in Times of Demographic Change: Lessons From the German Experience

“…Information on occupational pension wealth requires respondents to know if they are involved in an occupational pension plan and, if yes, to know the details of their plan. Individuals however often ignore if they are covered by such pensions (e.g., Dummann, ; Lamla and Coppola, ) and are not familiar with the type of pension coverage they have (Gustman and Steinmeier, ). The data situation for analyzing households’ financial behavior has been for a long time particularly limited in Germany, as the existing databases did not record detailed data on the variables needed to properly capture the behavioral responses to pension reforms.…”

The efficiency wage effect of employer provided occupational pensions

“…For Germany, these studies find that profitability and turnover rates (Schnabel and Wagner 2001), as well as firm size (Dummann 2008) are associated with offering an occupational pension. Furthermore, Dummann (2008) shows that firms in Western Germany, as well as firms in manufacturing and the financial sector, are more likely to provide pensions. I try to replicate those findings in descriptive regressions of pension claims on employer characteristics.…”