Social Security and Retirement in Germany

This paper describes the German public old age social security program (`Gesetzliche Rentenversicherung) and its incentive effects on retirement decisions....It summarizes labor market behavior of older persons in Germany during the last 35 years and surveys the empirical literature on the effects of the social security system on retirement in Germany. The paper shows that even after the 1992 reform the German system is actuarially unfair. This generates a substantial redistribution from late to early retirees and creates incentives to early retirement. (EXCERPT)