Bert Rürup, economics professor and head of
the German government commission for "sustainability in financing the
social security systems", spoke at the IZA Tower Talk on January
21, 2004, and engaged in a lively discussion with Hilmar
Schneider, IZA Director of Labor Policy.
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Bert Rürup
Bert Rürup, Hilmar Schneider
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Rürup warned against misguided plans to reform the
German social security system. Neither the recently proposed "citizen’s
insurance", which would force public servants and the self-employed
into the mandatory pension scheme, nor tax-financed base pensions
are viable concepts to deal with the pension financing problems, said
Rürup. Instead of radical changes in the system, he called for a
sustainable reform of the current pay-as-you-go scheme to curb the
contribution hike while gradually raising the retirement age to 67.
Rürup criticized the lack of courage on the part of German
policymakers, whose recently passed reform package left the retirement
age unaffected, thus limiting the potential effects of the pension
reform. "There is no such thing as a secure pension", said
Rürup. People should be made aware that their public pensions will
no longer allow them to maintain their standard of living, and that they
will need a supplementary privately funded pension plan.
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Rürup also criticized the recent efforts to
reform the German health system. Although he found no empirical evidence
of a "cost explosion" in the health sector, health costs should no
longer be tied to labor costs as this would slow down growth. He
therefore strongly favored the introduction of "health premiums"
to be paid by each individual independent of income. Additional reforms,
which according to Rürup will become inevitable in a few years,
should allow the health sector to grow and thus to stimulate employment. |
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