Deutsche Rentenversicherung

Hinweis zur Verwendung von Cookies

Wir möchten gerne unsere Webseite verbessern und dafür anonyme Nutzungsstatistiken erheben. Dürfen wir dazu vorübergehend ein Statistik-Cookie setzen? Hierbei wird zu keiner Zeit Ihre Nutzung unserer Webseite mit persönlichen Daten in Verbindung gebracht.
Weitere Informationen finden Sie in der Datenschutzerklärung. Auf dieser Seite ist auch jederzeit der Widerruf Ihrer Einwilligung möglich.


The impact of discontinuity – How unemployment shapes pension outcomes in all three pension pillars

After the reunification in 1990, a high rate of unemployment has defined Germany’s labour market for a considerable time. Since 2006, the unemployment rate has decreased, but there is still a large proportion of people who are affected by long-term unemployment. For individual life courses, unemployment can have a substantial scarring effect and make it difficult to get into stable, adequate, and well paid positions again. In this sense, early episodes of unemployment are a serious issue, as they set the path for the rest of the employment trajectory. The German pension system is centred on employment based contributions, and pensions depend on continuous insurance histories to be sufficient. Thus, long or recurring phases of unemployment will have a negative influence on the income in old age. The paper will use data of the study on life courses and old age provisions (LeA) to examine the effects of unemployment on the life courses of future pensioners. The paper will focus on two main issues. The prevalence and location of unemployment in the life course will be discussed, since it is expected that the effects are larger for younger cohorts who entered the labour market in times of structural unemployment and were affected at an earlier age, compared to older cohorts who were more established in their careers at the time of the German reunification. Then, the paper will look at the effects of unemployment on pension outcomes in all three pension pillars. Frequent or long-term unemployment has been shown to have negative effects on mandatory state pensions. However, occupational and private pension schemes in Germany are mostly voluntary, so that pension accrual in these schemes follows different rules, and underlies different influencing factors. It can be operationalized as a two-step process: A decision to participate, and, if the decision is positive, a second decision on the amount to be saved. A two-part model will be applied to adequately model the accrual of these voluntary pension entitlements  It becomes clear, that unemployment has a profound negative effect on both parts of the process, the decision to save and the amount to be saved, or in terms of outcome, the resulting entitlement. People with long cumulative times of unemployment are faced with several disadvantages in terms of pension accrual. The results of the analysis point to a serious challenge for social policy to ensure adequate future old age incomes for people with discontinuous employment histories.


Dina Frommert