Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323824 
Year of Publication: 
2025
Citation: 
[Journal:] DIW Weekly Report [ISSN:] 2568-7697 [Volume:] 15 [Issue:] 29 [Year:] 2025 [Pages:] 167-176
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
As the baby boomer generation enters retirement, the payas-you-go pension system in Germany is under an increasing amount of pressure. Relevant changes, in particular higher contribution rates or lower pension levels, are causing tension between generations: Either the financial burden on the younger generations is increased or the risk of insufficient pensions and old-age poverty for the elderly rises. This Weekly Report analyzes two different reform approaches that would result in redistribution within the older generations: A progressive devaluation of pension entitlements as proposed by the German Council of Economic Experts and the "boomer solidarity surcharge" suggested here, a special surcharge on all retirement income above a defined tax allowance. While redistribution within the pension insurance system would be a long-term process, the special surcharge could be implemented immediately. Both measures would improve the financial situation of low-income pensioner households without directly burdening the younger generations. If the special surcharge applies to all retirement and property income, a broad redistribution with only a moderate burden on higher income groups would be possible.
Subjects: 
pension system
demographic change
redistribution
taxation
microsimulation
JEL: 
H55
I38
J26
J18
Persistent Identifier of the first edition: 
Document Type: 
Article

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