The '1992 Reform' of Public Pensions in Germany: Main Elements and Some Effects

Abstract

This article gives an overview of central aspects (aims and measures) of the German Pension Reform Act decided upon in 1989 and implemented m 1992. One main element is the redefinition of the pension adjustment procedure (introducing net pension adjustment) aiming at a constant net pension level. It is integrated in a self-regulating mechanism making financing (for contribution payments as well as from federal grant) a dependent variable. Other important measures are aimed at increasing the (average) retirement age and introducing a partial pension (phased retirement) into social insurance. The article discusses possible economic effects of these measures as well as consequences of their introduction in East Germany after the German unification, taking into account the quite different situations m East and West Germany.

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