Bavarian Prime Minister Edmund Stoiber's recent proposal to include children as a factor in calculating pensions have placed l this issue on the political agenda. Professor Hermann Adrian, a physicist at the University of Mainz with a sideline in demography presented an overview of demographic developments and a plea for comprehensive reform of the state social insurance system at the Munich Seminars sponsored by CESifo and the Süddeutsche Zeitung.
Adrian sees the cause for the decline in birth rates in the negative stimuli of the German socia insurance system. "The costs for the upbringing of children are borne by the families alone, the advantages - particularly for the pay-as-you-go pension system - go to the whole society. In this situation it is no wonder that more and more young people decide against children", Prof. Adrian observed. Factoring in children in calculating pensions is not only a question of justice but is also necessary for higher birth rates.
Children as a pension factor is not penalising people without children, as Adrian exemplified with a normal human biography. In the course of our lives we receive a two-fold support: as a child from our parents and in old age from working children. In the employment phase, two-fold contributions have be made, for one's own children and for one's parents. This is the only way that a pay-as-you-go system can function. If somebody withdraws from this generation contract when he does not raise any children, it achieves only a contribution for the parents. In the age it is dependent onto the pension contributions of the children of other people: "That is at the time existing pension system unfair since the contemporary children are forced to that to give a pension to the child lots.
The problem is intensified by child lots receiving a higher pension than many parents since they would have some higher acquisition earnings due to missing upbringing times onto which the pensions are linked: "A scandal is, that child lots, because they have a continuous employment, today a higher pension. Upbringing and care times of parents must be recognised much more strongly." Also a capital-opaque pension system is not for Adrian a satisfactory solution, because with a sinking population number the Nachfrager were missing in the age for the saved bonds.
Adrian referred also to the judgement of the Federal Constitutional Court for the care assurance. The court found in 2001 an unconstitutional placing at a disadvantage of parents on the contribution page of the social care assurance which is to be tested also for the other branches of the National Insurance. The apportionment system leads to a priority of the child plays that gained by parents through the upbringing service without having achieved an own contribution to the existence preservation of the system.
Adrian required a rigorous release of parents in case of pension, health and care. "One can and must demand from the child lots and the parents only with a child, that besides they save for the own occupational pension scheme. Since they achieved only a contribution instead of the one necessary for the preservation of the system of two contributions, also the necessary averages would be available to them. The existing promotion of families does not suffice in order to compensate the placing at a disadvantage. This would lead also to young people getting more children again. At the present time one can agree only with the former condition judge Paul Kirchhof: "The greatest benefit of children comes from not having any."
This article was published in: Süddeutsche Zeitung, November 2003
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