A new pension adjustment formula for Germany: distributional sensitivity results Online publication date: Sat, 21-Jun-2014
by Jürgen Faik
International Journal of Behavioural and Healthcare Research (IJBHR), Vol. 4, No. 1, 2013
Abstract: In Germany, amidst the backdrop of a fundamentally changed sociopolitical strategy within the German pension system and to strengthen the private pension schemes, the principles of pension adjustments have attracted a great deal of public attention. This paper presents a relatively simple adjustment formula to overcome the drawbacks of the existing German adjustment rules. This formula considers the implications of the population's ageing in Germany as well as distributional coherences. On the basis of the new formula, sensitivity studies on the well-being of the elderly in Germany are performed, and these results are compared to the well-being of other German age groups. The (micro-)data used are from the 1984-2010 German Socio-Economic Panel (SOEP). Based on extensive regression results, the sensitivity findings point to a betterment of the elderly with application of the proposed formula (compared to the existing rules).
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