Biting the funding bullet

As it tries to rein in its state pension, Germany is now facing up to rocketing occupational pension liabilities to its civil servants. Carola von Schenk reports

Germany has one of the oldest social security systems, dating back to the late 19th century. In the face of increasing longevity and a declining birth rate, the generous first pillar provision has recently been cut back. Now, the large civil service is facing similar reductions.

German civil servant retirement promises constitute a largely unfunded, defined-benefit liability, financed from current tax income. A negligible element of funding was introduced in the late 1990s. The annual financial