MEA research news - old-age poverty

Age poverty - wrong calculation

Munich, April 2016. The WDR (West German Broadcasting Corporation) published on 12 April 2016 a projection of old-age poverty in Germany which received great attention in the public but was based on several serious errors. For this reason, Axel Börsch-Supan, Tabea Bucher-Koenen and Johannes Rausch published the following MEA statement: "The problem of poverty in old age requires increased attention especially in times of falling pension levels. The proportion of basic security recipients who are over 65 years old has increased both proportionally and in absolute terms significantly in recent years. In addition, the risk of poverty in old age will rise in the future due to demographic reduction in replacement levels. However, the debate on old age poverty in Germany is very emotional. Hence it is not surprising that a forecast that predicts that 50% of all workers will be in poverty at old age finds a corresponding echo. Unfortunately, however, the calculations presented by WDR contain at several critical points gross errors. The most important error is that the calculations are based on current incomes rather than lifetime incomes." >> Read more (in German)

Old-age poverty

Munich, 2015. Globalization and demographic change are major challenges for Germany. As can be seen in the wake of financial and Euro debt crisis, Germany is fairly well positioned compared with our European neighbors, mainly because of structural reforms since the mid-90s. However, these structural reforms also have their downsides. The German labor market has become more flexible and the number of employees is as high as never before, but the problems (long-term unemployment, precarious employment) have become more stubborn. All in all pension policy reforms have led to a sustainably financed pension system. Hence, it can be reassured that reasonable pension benefits can  also be paid in the long term (see Boersch-Supan 2015a). The dampening of the increase of the contribution rate, however, will inevitably mean a reduction in the pension level relative to wages unless this is compensated by later retirement. Additionally, private pensions will help although this is particularly difficult for low-skilled workers. The "Mütterrente", which was adopted in 2014, has improved the situation for a very limited population while the situation for poorer workers has deteriorated. Also the "Retirement at 63" unfolds its beneficial effect only for a small group of recipients who earn more, on average, are better educated and have better health. Moreover, the new early retirement scheme worsens the net income situation of those workers who earn relatively little. >> Read more in DP No.11-2015: Armut im Alter (German, PDF)

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