The pension plans of the grand coalition in 2018 referring to the demographic change (PDF)

Seminar paper from the year 2018 in the subject Business economics - Investment and Finance, grade: 1,0, University of Applied Sciences Bielefeld, language: English, abstract: A rising life expectancy, the obsolescence of society and low birth rates - the current demographic change is a tremendous challenge for the German pension system. In its history, the German pension system has undergone several fundamental changes. Founded in 1899 as the first pension system worldwide, it continuously adapted to changing circumstances.

In 2018, the commission "Verlässlicher Generationenvertrag" is founded by the Great Coalition. Secretary of Labor, Hubertus Heil, chairs this commission. In cooperation with the Federation of Trade Unions, employers' associations and the Max Planck Institute, the commission works out a plan to ensure the continuation of the current pension system and thus the continuance of the inter-generation compact.

This research paper focusses on how the decisions of the great coalition regarding the pension system suit the demographic change and its impact on the inter-generation compact. After a short resume of the development of the German pension system and a differentiation between capital-covered and shared-financed pension schemes, the pension plans of the great coalition are analysed and evaluated from the aspect of the demographic change and their financing, before the answer to the starting question is given in the conclusion.

At this point, it has to be mentioned, that this research paper is to be understood as a general overview of the subject of demographic change, political decisions and the inter-generation compact. It explicitly focusses on the regular retirement pension and only briefly touches other pension forms like the mothers' pension or the limited incapacity benefit whilst still using the costs of these for calculations. Therefore, the consulting of specialized literature is advised. Besides this, a basic knowledge of the German pension system is required.