In this paper we analyze exemplarily the volatility of the internal rates of return of the German pension system over the life-cycle of an individual born in 1957. The outcome is compared to an alternative defined-contribution or defined-benefit policy. Based on the actual data, our resultsshow...

Demographic change inevitably shifts the balance between contributors and recipients in the pension system. Moreover, in the German pension system benefit levels are closely linked to the current state of economic prosperity. Therefore, in the coming decades stabilisation of old-age security...

Demographic change inevitably shifts the balance between contributors and recipients in the pension system. Moreover, in the German pension system benefit levels are closely linked to the current state of economic prosperity. Therefore, in the coming decades stabilisation of old-age security...

As one possible solution to the well-known financing crisis of unfunded social security systems, an increase in the retirement age is a popular option. To induce workers to retire later, it has been proposed to strengthen the link between retirement age and benefit level. The present paper is...

In this paper we identify a number of objectionable features of the German retirement benefit formula. We show that groups of insureds with higher than average life expectancy, in particular high-income groups, are subsidized by the rest of the membership because the formula neglects differences...