Reforming the Pension System in Germany – An Empirical Study of Reform Aversions

In a factorial survey experiment conducted as part of a population survey by the German Economic Institute (IW) 2023, contribution rate, pension level and retirement age are examined in relation to each other, and potential reform adjustments are simulated. Even the explicit presentation of reform scenarios is unable to overcome the existing aversion to reform. The status quo receives major support, but in theory it would only be financially sustainable by increasing tax subsidies, which would place a considerable burden on the state budget. In a direct comparison of reform options, an increase in contribution rates is opposed the least. Pension cuts are seen as the most painful. Delaying retirement by one year is viewed as negatively as an increase in the contribution rate of around three percentage points or a reduction in pension levels of around 4 per cent.

The lowest acceptance of reforms was to be found among those whom they would least affect: the over-50-year-olds. Among those under the age of 50, who are most concerned about their pensions, the rejection of all reform options is considerably weaker. The fact that the visible pressure on the pension system is pushing younger people in particular to be more flexible should serve as an argument to target the over-50s and highlight the consequences of inaction for society as a whole. Failure to act would either require a greater commitment to occupational and private pension provision or, while guaranteeing a constant level of pensions, lead to an immense burden on the state budget. Delaying the reform further risks reinforcing the public’s expectation of a constant level of pensions without their having to contribute, reducing the scope for manoeuvre and intensifying the debate on pensions