The Equity Pension – How It Can Mitigate the Demographic Problem of German Pension Insurance

Demographic change poses major challenges for German pension insurance: if fewer and fewer contributors face more and more pensioners, contribution rates will have to rise or pension benefits will have to fall. If the aim is to avoid both these outcomes, the pension fund will have to be supported from outside. Up to now, this has been done primarily through subsidies from the federal budget – a method that is increasingly reaching its limits. The German government now wants to help stabilize pension finances with what is known as the equity pension.