National accounts, domestic product 8.9 trillion euro pension entitlements of private households from employment-related pension schemes

In light of demographic change and ageing societies, especially in industrialized countries, statistical information on old-age provisions are of increasing importance. To improve statistical coverage of old-age provisions and its comparability between countries, a new table has been introduced with the European System of Accounts (ESA) 2010 which shows for the first time entitlements from employment-related pension schemes in National Accounts based on actuarial model calculations. Employment-related pension schemes cover collective social insurance schemes born by employers and social security pension schemes. In Germany, those are pension schemes for civil servants and occupational pension schemes, as well as the statutory pension insurance which is part of social security. Not included are however, individual life insurance contracts and other types of wealth that can serve as retirement income, such as capital assets and residential property.

European Union member states transmitted results on pension entitlements in social insurance for the first time at the end of 2017 to the Statistical Office of the European Union (Eurostat) for the reporting year 2015.

At the end of 2015, employment-related pension entitlements in Germany account for about 8.9 trillion euro. Thereof, some 6.8 trillion euro (or 77 per cent respectively) fall upon social security pension schemes (the statutory pension insurance and the farmers’ pension insurance). The pension entitlements of civil servants amount to approximately 1.2 trillion euro, corresponding to 14 per cent of all employment-related pension entitlements. Occupational pension schemes have accrued pension entitlements of about 0.7 trillion euro (equal to 9 per cent of all pension entitlements represented here).

In relation to the German gross domestic product (GDP), which was slightly over 3.0 trillion euro in the year 2015, pension entitlements amount to 291% of GDP. This shows the high quantitative importance of old-age provisions, however is also due to the fact that the stock of pension entitlements, which is the sum of discounted future payment flows over a long time horizon is set in proportion to the GDP of one current year.

On a national level, the results allow for a more complete assessment of the pension entitlements of private households towards pension systems, which have not been available before, except for the entitlements from occupational pension schemes. On an international or European level, they allow for a better comparability of pension entitlements between countries which differ in terms of the structure of pension schemes. It has to be considered however that solely privately arranged pension plans without relation to the employer are not included in the results on pension entitlements in social insurance.

The calculation of pension entitlements shown here is not to be considered as a measure to judge the sustainability of pension systems. Pension entitlements of private households are also not to be interpreted as a form of government debt. On the one hand, this is due to the fact that the table shows gross entitlements without regard for future social contributions, e.g. for the social security pension scheme. On the other hand, though the entitlements show important claims of private households, they are nevertheless not fully legally guaranteed in their full amount, as the legislative authority can change both the benefits of the social security pension scheme as well as those of civil servants via pension reforms. In this respect, the results on pension entitlements in social insurance reflect the system parameters and legal framework that are valid at reporting date.