Germany’s retirement income system comprises an earnings related pay-as-you-go system based on the number of pension points earned during an individual’s career; a means-tested safety net for low-income pensioners; and supplementary pension plans which are common amongst major employers. These plans typically either adopt a book reserving approach, with or without segregated assets, or an insured pensions approach.
The overall index value for the German system could be increased by:
- increasing the minimum pension for low-income pensioners
- increasing coverage of employees in occupational pension plans
- increasing the labour force participation rate at older ages
- improving the level of communication from pension arrangements to members
The German index value fell slightly from 62.2 in 2014 to 62.0 in 2015 due to a number of small changes.