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.
Bert Rürup Bert Rürup, Hilmar Schneider	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.
	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.