How sensitive are subjective retirement expectations to increases in the statutory retirement age? The German Case
Demographic change poses an evident threat to the financial sustainability of pension systems based on a "pay-as-you-go" (PAYG) scheme. To cope with this threat, pension systems have undergone numerous reforms in many countries in order to keep people longer at work. One crucial element of these reforms typically is an increase in the statutory retirement age at which workers are legally allowed to retire. But will people really work longer?
Who Lost the Most? Financial Literacy, Cognitive Abilities and the Financial Crisis
The recent ?nancial downturn and economic crisis provided a major challenge for ?nancial institutions, politicians, and companies around the world. In this context, it is of major importance to analyse how private households were affected by the crisis, how they reacted to such a shock and what the long-term consequences will be. One central question is whether households with higher financial literacy were better at protecting themselves from the effects of the financial and economic crisis.
Nursing home residents make a difference – The overestimation of saving rates at older ages
While life-cycle theory makes the clear prediction that people dissave at old-age, this prediction is not at all borne out by the data from many countries. Various suggestions have been made to explain this discrepancy. In his paper, MEA researcher Michael Ziegelmeyer sheds more light on the effect of the exclusion of institutionalized individuals in estimating saving rates over old-age.
Ten Misconceptions related to Retirement at the Age of 67
The increase of the statutory retirement age to 67 years is one of several reforms which aim at stabilizing the public pension insurance. Despite a continuous rise in life expectancy, which strongly suggests the extension of the employment period, this increase in the retirement age is highly unpopular. Mostly, it seems to be due to various misconceptions attached to it.
Comment: Retirement at the Age of 67
- A Story of Misconceptions -
Impact of the Financial Crisis on Private Old-Age Provision
The big losses of some investments during the financial crisis have roused a lively debate over risks related to privately funded old-age provisions and estimations con-cerning the losses of returns. Axel Börsch-Supan, Martin Gasche and Michael Ziegelmeyer investigate the effects of the financial crisis on private old-age provision and who is strongly affected. Their conclusion: Privately funded old-age provision is much less affected by the financial crisis in Germany than generally argued.
Financial literacy and private old-age provision
Private old-age provision is growing increasingly important in times of demographic change and mounting strains on the public pension system. For many individuals in Germany the “need” to save for old-age in addition to the state pension is new and households seem to face difficulties saving for old age due to the high complexity and the large variety of old-age savings contracts. Therefore, it is important to evaluate who saves and who does not and whether this decision is related to financial knowledge of individuals.
Germany Learns to Save for Old Age
The governmental subsidized old-age provision, the Riester-pension scheme, is gaining an enormous increase in popularity. Although not having found much approval by savers in the first few years when introduced, it has now emerged as saver’s absolute favourite amongst private old-age provision models. But despite the growing importance of the Riester pension very few detailed studies have examined these developments so far.
Rates of Return of the German Pay-as-you-go System
Population ageing exerts great pressures on the German public pay-as-you-go (PAYG) pension system. On the one hand, expenditures rise as pensions have to be financed for longer periods due to continuous increases in life expectancy. On the other hand, revenues stay behind as working cohorts become smaller due to low fertility rates. The current situation will deteriorate further once the baby boom generation will begin to retire around 2015. As a consequence, if retirement ages cannot be raised sufficiently, either contribution rates must rise or pension levels must decrease in the long-run.
How Germans Earn Their Fortune - Trends in Household Portfolio Behavior
German household portfolio behavior still differs a lot from that of other countries. The share of assets in banks and savings banks is comparably high, while stocks and investment fonts play a minor role. Nevertheless they can look back on a history of amazing growth in the last years, although they are still not able to approach internationally common household portfolio shares.
How Utility Functions Bend in Reality
Psychologists can divide human beings into two groups, according to how they make decisions: intuitive and deliberative deciders. While the intuitive deciders tend to “listen to their stomache”, i.e. they rely a lot on their feelings, deliberative decision-makers reflect more on the decision-making process and possible consequences. Up to today, many economists have neglected these psychological details in their studies of human decision-making. Therefore, the economist Daniel Schunk and the psychologist Cornelia Betsch have started an investigation about systematic relationships between economic modelling of risk attitude and psychological decicison modi.
The Impact on Retirement Decisions
The option of early retirement is a highly prized, but at the same time highly costly, social achievement in Germany. With an increasing aging population and the precarious financial state of the public pension system, these costs are once again the focus of discussion about pension reform. Since the 2004 reform has kept the retirement age largely untouched, the reform discussion is shifting once again to the pivotal retirement age of currently 65.
Births, Economic Growth and Population Aging
The gradually accelerating demographic change is one of the key factors shaping the future development of our society. In an aging population a shrinking working age population is accompanied by a rising number of pensioners. In the future this means that the financial burden of supporting ever more pensioners will fall on ever fewer shoulders and will exercise increasing pressure on social security systems and on the economy as a whole. To date discussion has focused primarily on the consequences of aging, and on the financing and design of the public pension system. However, it would also make sense to investigate the causes of the aging phenomenon, focusing in particular on the continuing decrease of the fertility rate. The obvious question to ask is whether the aging problem can be solved by raising the fertility rate?
How strategic response behaviour influences pension reforms
Proposals for pension reform typically meet fierce resistance with the public. But what are the reasons for this opposition? Mostly, we obtain information on voters' preferences from public opinion polls. But the highly political nature of such polls makes them a good instrument for voters to express their discontent not only about pension reform proposals but with politics in general. Scheubel, Schunk und Winter analyze data from an experiment in SAVE to show that the opposition to a reform proposal - in our case to an increased retirement age - can indeed trigger strategic survey responses on another issue
- How sensitive are subjective retirement expectations to increases in the statutory retirement age? The German Case
- Who Lost the Most? Financial Literacy, Cognitive Abilities and the Financial Crisis
- Heimbewohner machen einen Unterschied – Die Überschätzung von Sparquoten im Alter
- Ten Misconceptions related to Retirement at the Age of 67
- Retirement at the age of 67 – A Story of Misconceptions
- How strategic response behaviour influences pension reforms
- Impact of the Financial Crisis on Private Old-Age Provision
- Births, Economic Growth and Population Aging
- The Impact on Retirement Decisions
- How Utility Functions Bend in Reality
- Rates of Return of the German Pay-as-you-go System
- Financial literacy and private old-age provision
- How Germans Earn Their Fortune - Trends in Household Portfolio Behavior
- Impact of the Financial Crisis on Private Old-Age Provision
- Germany Learns to Save for Old Age
MEA – Seminar
29 May 2013: Tabea Bucher-Koenen "Gender, Confidence and Financial Literacy"
"Ökonomische Analyse des Rentenreformpakets der Bundesregierung" [Economic Analysis of the Pension...
Call for Papers
PHF-SAVE Conference on "Household Finances, Saving and Inequality: An International Perspective",...
SHARE Wave 4 Book Launch celebrated June 27, 2013 in Brussels
„Solidargemeinschaft oder Eigenverantwortung - Wie viel Staat muss sein?“ findet am 27. November...