ISBN: 3790816752
TITLE: Pension Systems
AUTHOR: Mattil

1 Introduction 1
1.1 Central motivation for the study 3
1.2 Outline 4
2 Objectives of pension systems 7
2.1 Pension system - a definition 7
2.2 Individual risks faced in old age 9
2.3 Basic principles: equitable distribution and sustainability 10
2.3.1 Intragenerational justice 11
2.3.2 Intergenerational justice 14
2.3.3 Sustainability 16
2.3.4 Dependencies between principles 17
2.4 Stipulation of tangible objectives 18
2.4.1 Objectives set by the European Union 19
2.4.2 Key objectives 22
3 Determining factors for sustainability and distributional effects of pension systems 27
3.1 Exogenous risk factors 28
3.1.1 Macroeconomic risk factors 30
3.1.2 Social risk factors 32
3.1.3 Summary 34
3.2 System parameters to counterbalance the effects of exogenous risk factors 36
3.2.1 Method of finance: pay-as-you-go financing versus funding 37
3.2.2 Further system parameters 44
3.3 Sustainability and distributional effects of three prototypes of old-age insurance 53
3.3.1 Characteristics 53
3.3.2 Risks assumed by participants 55
3.3.3 Distributional effects 57
3.3.4 Financial sustainability 59
3.4 Reducing exogenous risks with a combined system of old-age insurance 60
4 The macroeconomic and social environment of Germany and the United Kingdom 67
4.1 Development of macroeconomic key indicators 67
4.2 Social and economic trends challenging pension systems 74
4.2.1 Demographic change 74
4.2.2 European integration and globalisation 80
4.2.3 Labour markets: changing employment pattems 82
4.2.4 Changing family pattems 83
5 Comparative description of the pension systems in Germany and the United Kingdom 87
5.1 Criteria of comparison 87
5.2 Short overview 89
5.2.1 Introductory remarks: Shortcomings of the pension pillar concept 89
5.2.2 Germany 91
5.2.3 United Kingdom 92
5.3 The mandatory pension systems 93
5.3.1 Covered part of the population 93
5.3.2 Insured risks 94
5.3.3 Financing 97
5.3.4 Calculation of benefits 98
5.3.5 Elements of social redistribution 102
5.3.6 Taxation of contributions and benefits 103
5.3.7 Minimum pension and subsidiary System 104
5.4 Supplementary pension provision 105
5.4.1 Germany 105
5.4.2 United Kingdom 108
5.5 Preliminary assessment of the pension systems 108
6 Empirical analysis of the income situation of the elderly in Germany and the United Kingdom 111
6.1 Preliminary remarks 111
6.1.1 Objectives of the empirical analysis 111
6.1.2 Income concepts 112
6.1.3 Measuring income distribution 115
6.1.4 The datasets 117
6.1.5 Outline of the empirical analysis 124
6.2 Developments in net incomes 124
6.2.1 Pre-government and net incomes 125
6.2.2 Net incomes in the national macroeconomic context 132
6.2.3 Relative income positions 134
6.3 The distribution of income 136
6.3.1 Lorenz Curve presentations 137
6.3.2 Indicators of income inequality 140
6.4 Income poverty 142
6.5 Income sources of the elderly 148
6.5.1 Overall income composition 149
6.5.2 Mean income among recipients 154
6.5.3 Recipients by sex 157
6.5.4 Labour market participation among the elderly 159
6.6 Panel analyses 163
6.6.1 Retirement age 163
6.6.2 Old-age income ratios 168
6.6.3 Income composition of new pensioners 175
6.6.4 Regression analysis on equivalent income 179
6.7 Conclusions from the empirical analysis 181
6.7.1 Impact of the institutional structures 182
6.7.2 Assessment of compliance wich the key objectives of pension systems 186
7 Sustainability and distributional perspectives of the German and the United Kingdom pension system 189
7.1 Status quo projections until 2050 189
7.2 Risks for sustainability and distributional equity of the pension systems 197
7.2.1 Germany 197
7.2.2 United Kingdom 202
7.3 Reform options and their effects on sustainability and income distribution 206
7.3.1 Germany 206
7.3.2 United Kingdom 213
8 Final remarks 219
Appendix 223
References 267
List of Figures 277
List of Tables 281
END
