Stochastic PopulationForecast for Germany and itsConsequence for the GermanPension System

Population forecasts are crucial for many social, political and economic decisions. Officialpopulation projections rely in general on deterministic models which use different scenariosfor future vital rates to indicate uncertainty. However, this technique shows substantialweak points such as assuming absolute correlations between the demographic components.In this paper, we argue that a stochastic projection alternative, with no a priori assumptionsprovides point forecasts and probabilistic prediction intervals for demographic parameters inaddition. Age-sex specific population forecast for Germany is derived through a stochasticpopulation renewal process using forecasts of mortality, fertility and migration. Time seriesmodels with demographic restrictions are used to describe immigration, emigration and timevarying indices of mortality and fertility rates. These models are then used in the simulationof future vital rates to obtain age-specific population forecast using the cohort-componentmethod. The consequence for the German pension system is discussed. To maintain theactual average pension level the premium rate of the present system rises at least by 50% asthe old-age ratio nearly doubles by 2040.<br<