Determinants of retirement in Germany Dr. Erika Schulz.

Determinants of retirement in Germany

Dr. Erika Schulz

Erika Schulz12.06.2003

Tasks of WP 3– To show how health factors affect labour

supply and early retirement – Calculation of net replacement rates

• valuation of household work• separate calculations for unhealthy with

altered labour supply and household work


Requested data

– Wage of a reference worker in households– pension level and earnings for a average

production worker– average retirement age


Hourly rates for household workers

Part-time employees (not more than 15 hous per week)Total not more than 325 EURO per month 2001

Wage costs for employer 9,76 social security contributions paid by employer (22%) 1,76Gross wage 8 social security contributions paid by employee 0 labour income tax (tax group I) 0net wage 8


Hourly rates for household workersHalf time worker ( not more than 19,25 hours per month)Total more than 325 EURO per month 2001

Wage costs for employer 9,63 social security contributions paid by employer (20,4%) 1,63Gross wage 8 social security contributions paid by employer (20,4%) 1,63 labour income tax (tax group I)* 0net wage 6,37


Hourly rates for household workers

Full time worker ( 38,5 hours per month)Total more than 325 EURO per month 2001

Wage costs for employer 9,63 social security contributions paid by employer (20,4%) 1,63Gross wage 8 social security contributions paid by employer (20,4%) 1,63 labour income tax (tax group I)* 1,24net wage 5,13


Net pension level of a standard pensioneer in %

55,0

65,0

75,0

net


Average Retirement Age in the Statutory Pension System 1960 bis 2000West-Germany

58,0

58,5

59,0

59,5

60,0

60,5

61,0

61,5

62,0

62,5

63,0

year

avera

ge r

eti

rem

en

t ag

e

Men Women

old-age pension


Average Retirement Age in the Statutory Pension System 1993 to 2000East-Germany

57,0

58,0

59,0

60,0

61,0

62,0

1993 1994 1995 1996 1997 1998 1999 2000

year

avera

ge r

eti

rem

en

t ag

e

Men Women

old-age pension


Kind of pensions in Germany– Old-age pensions (Since 1889)

• Regular old age pensions (65 years)

• Old-age pensions for long-standing insured (since 1972; since 2000 63->65)

• Old-age pensions for severly disabled persons, with vocational invalidity or general invalidity (since 1972; new 60->63 years)

• Old-age pensions on account of unemployment or following old-age part-time work (since 1929; new 60->65 years, limited to persons born before 1952)

• Old-age pensions for women (since 1957; new 60->65, limited to persons born before 1952)

– Pensions on account of decreased earning capacity• Vocational/general invalidity (since 1889)

• New system (since 2000)

– Pensions on account of death


Kind of Pensions 1960 to 2000Statutory Pension System - both sexes

West-Germany

0%

20%

40%

60%

80%

100%

year

shar

e o

f

pension on account of decreased earning capacity

regular old-age pension

old-age pension for long-standing insured

old-age pension for severely disabled persons

old-age pension on account of unemployment

old-age pension for women


Kind of Pensions 1993 to 2000Statutory Pension System - both sexes

East-Germany

0%

20%

40%

60%

80%

100%

1993 1994 1995 1996 1997 1998 1999 2000

year

shar

e o

f


regular old-age pension old-age pension for long-standing insured

old-age pension on account or unemployment

old-age pension for severely disabled persons

old-age pension for women


Average Retirement Age in the Statutory Pension System 1960 to 2000West-Germany

50,0

52,0

54,0

56,0

58,0

60,0

62,0

year

aver

age

reti

rem

ent

age

Men Women



Average Retirement Age in the Statutory Pension Fund 1993 to 2000East-Germany

49,0

49,2

49,4

49,6

49,8

50,0

50,2

50,4

1993 1994 1995 1996 1997 1998 1999 2000

year

aver

age

reti

rem

ent

age

Men Women


Determinants of retirement in Germany Dr. Erika Schulz.

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