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KMID : 1124020140300040030
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Korean Social Security Studies
2014 Volume.30 No. 4 p.30 ~ p.54
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German Public Pension Reform and its Implications: focusing on the pension for
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Kim Sang-Ho
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Abstract
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The world’s first introduced German public pension system contributed to achieving worker’s dream of retirement and was the benchmark for countries which have begun to initiate public pension scheme. However, the German pay-as-you go system faced a financial crisis due to slow economic growth and aging society. Eventually, it is on the agenda of reform since the late 1980s. While maintaining its previous framework, which secured economic life of elderlies by the public pension system, the reform was conducted in the form of reducing pension in a small amount and expanding its financial sources. However, after realizing that it is inevitable to suffer from short-term financial crisis with the existing framework, priority was given to the stabilization of contribution rate which led to the reduction of pension level. Afterwards, sustainability factor was introduced in order to modify the pension amount based on population structure and labor market situation. The purpose of this paper is to find out implications for the financial sustainability of National Pension Scheme by analyzing German pension reform since 1957, focusing on the pension formula.
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KEYWORD
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National Pension Scheme, German pension reform, pension formula, financial stability, sustainability
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