Pension Schemes FRG vs. USA

The change in demography brings about the fact that the population of the industrial nations is made up of a growing part of elderly people. That is the reason why, especially in Europe, but also in the US, pension schemes reach the end of their capacity.

The countries that are the most affected by this are those that not only have more and more retired people to support, but that also, at the same time, observe fewer and fewer births. In this case, the basis for being able to put into practice the pay-as-you-go system is missing to a considerable extent. In that system, the people currently working pay the pension of the people who have gone into retirement. However, if more and more people are retired, and stay in retirement longer due to a higher life expectancy and medical progress, this is not financially viable for the decreasing number of working people. Not to mention the fact that these people cannot expect financial help during old age themselves.

Germany and the USA are faced with different challenges; however, there are financial shortages in both countries that need to be overcome so that forthcoming generations will be able to lead a dignified life even in old age as well. Despite the difference in challenges, there is a tendency to adopt a funded pension insurance system in both cases.