Old-Age Poverty in Germany | Munich Center for the Economics of Aging - MEA


01.01.2010 - 31.12.2014 / Social Policy and Old Age Provision

Old-Age Poverty in Germany

There is an increasing perception in the popular press that old-age poverty is high and increasing in Germany. This project sheds light on the current situation and projects future old-age poverty. The project is an initiative by the Council of Advisors to the German Federal Ministry for Economic Affairs. Current old-age poverty is low in Germany: less than 3% of individuals aged 65 and older receive an income below the German poverty line and thus social assistance (Grundsicherung im Alter). This is much lower than in opinion polls (between 30 and 40%), lower than in the German population at large (about 7.5%) and also low compared to other EU countries. Future poverty is expected to rise for three reasons: (1) the current reform process will lower public pension benefits in reaction to population aging; only few households in the lowest income quintile have supplemental private or occupational pensions. (2) the share of workers with jobs not covered by the public pension system has been increasing. While most of these individuals will end up with a covered job, they will accumulate fewer earnings points in the public system and are therefore expecting lower public pensions. (3) As opposed to current pensioners in East Germany, young workers in East Germany have already now much lower pension claims, partially due to higher unemployment, partially due to lower wages. The project has used a simulation approach to project that current old-age poverty will increase to about 2.5times the current share. While this is substantial, the share will still be lower than the expected poverty in the German population as a whole. Most poverty is shown to be concentrated at young families, especially in single-parent families and families with migration background. This project has led to several publications and a very large media echo.

Prof. Dr. h.c. Axel Börsch-Supan, Ph. D.