[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1997
Kiel Working Paper 840
There are only few estimates of the returns on contributions to the German public pension System (GPPS). Those that are published ränge between nominal rates of future returns between about 4,5 % and 48 %, indicating that GPPS treats different groups of people differently. The authors develop a methodology of calculating rates of return of GPPS contributions and apply it to a standardised retiree and to the average retiree, both male and female. The outcome is that the present System implies negative real rates of return for future retirees. It is argued that the returns on contributions have nothing to do with investment returns prevailing on the capital market and that the currently discussed plans for reforming the German social-security System will lead to a further deterioration of the whole system.