Demands on the German social pension system against the background of demographic change

This paper deals with the German public pension system which is affected by changing demographics. It examines whether the problems can be solved more efficiently by either a fundamental change towards a tax-financed basic allowance augmented by a private capital accumulation sheme, or by adjustments within the present system of wage-determined contributions. The analysis shows that basic allowance and capital accumulation systems are inadequate, essentially for macroeconomic reasons and adverse effects on redistribution, to the demographically induced problems of the public pension system.