Old Age Pension Systems and Income Distribution Among the Elderly: Germany and the United States Compared

Across most industrialized countries, the process of aging populations has led to an intensive discussion about the old age social security systems. The discussion focuses on the question of whether the old age pension system should be organized on a pay-as-you-go basis in the future, and if so, to what extent. Economic theory states that capital funded and privately organized systems provide a more efficient way of organizing old age security (see, e.g., Kotlikoff 1996). Efficiency, however, is not the objective of our paper. Our question rather is: How do different old age security systems affect the income distribution and the risk of poverty among the elderly?