Challenges of the Demographic Change in Germany (PDF)

The demographic change in Germany is a current and always present subject. The media, politicians and experts permanently discuss the topic. There are many different opinions and views, but all have a statistical commonality; humans are invariably growing older and at the same time Germany is struck by an alarming decline in the birth
rate. This dilemma leads to a fast aging population with big problems for the whole German society and especially for the efficiency of the German Pension Insurance.
Since many years, the legal pension fund is stuck in a crisis. Declining birth rates and an increasing expectancy of life yield to less and less premium payers and a steadily increasing group of pension recipients, which, due to the PAYG system, confronts the
Pension Fund with a financial problem. Hence, the benefit level will further decline in the long term and the legal pension will not be sufficient as the exclusive old-age insurance.
This assignment considers the key aspects of the demographic development, esp. the future perspective of the pension system. Furthermore, this assignment will discuss possible solutions in order to find out a possible strategy to solve this problem. The aspects are only related to Germany, even though Germany doesn't stand alone with the phenomenon of demographic aging. Similar developments can be found in almost every European and western industrial nation.