A History of the German Public Pension System by Mierzejewski Alfred C.;

Author:Mierzejewski, Alfred C.;
Language: eng
Format: epub
Tags: undefined
Publisher: Lexington Books
Published: 2012-08-15T00:00:00+00:00

Moving Toward a Pure PAYGO System

Anyone who thought that the debate over pensions would end or even subside after the passage of the landmark pension reform laws of 1957 was mistaken. Disputes immediately erupted as implementation of the laws proved difficult and the finances of the blue collar plan did not develop as expected. Four interrelated problems appeared: First, difficulties arose organizing the Social Advisory Council; Second, questions arose about the size of the reserve; Third, the financial position of the blue collar plan deteriorated; Fourth, the federal government began to run deficits. The struggle over how to solve these interrelated problems led to a major modification of how the pension system was financed.

Creating a functioning Social Advisory Council proved to be more difficult than anticipated. At its very first meeting on 26 March 1958, the SBR proved unable to agree on a rationale for raising running pensions. Subsequent meetings did not lead to a compromise. Consequently, eight members of the council including its chair resigned on 27 October 1958. After much difficulty, Labor Minister Theodor Blank reconstituted the council with new members. At its first meeting in June 1959, the revived council elected Helmut Meinhold of the University of Frankfurt/Main as its chair. Meinhold would exert a great deal of influence over West German pension policy over the next quarter century as chair of the SBR and special committees charged with evaluating various aspects of West German social insurance policy. Remarkably, Meinhold was able to reconcile economic ideas shaped by Mackenroth and Keynes with his past as a functionary in the Nazi occupation apparatus in the General Gouvernement.[144] He quickly established order on the Social Advisory Council, built a smooth working relationship with the Labor Ministry, and delivered thoughtful reports in a timely fashion. Under Meinhold’s leadership, a pattern developed in which the SBR warned the government that the pension system would not meet its reserve requirements while the government ignored those warnings and raised pensions, causing no harm to the GRV or the economy.[145] Beginning in 1960 and continuing right up to the end of the first covering period in 1966, the council regularly advised the cabinet to raise the contribution rate and questioned whether the reserve requirement was appropriate. It saw no reason why the contribution rate should be increased just to fill the reserve accounts, especially since they would be of little use in an emergency anyway.[146] From the middle of the decade, the council recommended that the GRV only allow interest to accumulate in its reserves, permitting them to shrink in relation to expenditures.[147] It gained support in this endeavor from Blank, the labor ministry’s chief mathematician, Georg Tietz, and the Bundesbank.[148]

The first change in the provisions of the 1957 pension reform laws was made because the reserves of the blue collar plan had become much larger than those of the white collar plan. Therefore, on 23 December 1964 the Financial Balancing Law was passed to direct more of the federal subsidy to the white collar plan until its reserves were roughly the same as those of the blue collar plan.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.