Demographic transformation is taking to absurd lengths the risk equalisation between young and old incorporated into Germany’s statutory health insurance system. Despite increasing average expenditure on benefits, the solidarity principle is being upheld for a cross-section of the insured in any given period. In the long term, however, each succeeding cohort is having to bear a heavier burden. A similar situation applies to the risk equalisation between the productive and the less productive insured. To ensure that inter- and intragenerational solidarity is maintained as well, it is essential that the pay-as-you-go system is combined with an appropriate form of capital funding.
Calls for the reduction in state pension benefits for early retirees to reflect real insurance risks imply that early retirement need not involve any additional costs.
The pay-as-you-go statutory pension insurance is intended to protect workers in Germany from having to rely on tax-financed assistance in old age. However, due to the ageing of society the security level of the statutory pension insurance must decrease.