The generation contract marks an accepted social consent, which is to secure the financing of the legal old age pension insurance. Those employed persons (or anyhow the majority of them, i.e. the employees) pay in each case the pensions of the generation (allocation procedure), separated from the business life, with their contributions and actually acquire thereby requirements on similar achievements of the following generations.

Also different instruments of the welfare state, e.g. the legal health insurance, are based to a large extent on the principle one "„generation contract "“, since the average expenditures for health are smaller in the age clearly more highly and the current incomes than in the acquisition years.

History

The term of the generation contract develops with the allocation procedure in the old age pension insurances and also with other rearrangement mechanisms in the welfare state is later used. The original system of the legal old age pension insurance built on a saving of the pension contributions, which were to be paid in equal numbers from employers and employees on pension accounts. This system of the Kapitaldeckung was converted 1957 under Konrad Adenauer to an allocation procedure. The underlying concept of Wilfrid writer - also admits as "“writer plan"” already used the term of the generation contract. It was however partly converted only. Writer had planned that the middle generation, apart from which support of the old persons provides, at the same time with worker and money for their own replacement. Accordingly also a child pension and double contributions for child lots were intended.

In Switzerland the term was likewise introduced in the context of the legal introduction of the age and leaving insurance (AHV) 1947 into the political discussion. Also the AHV is based on an allocation procedure. With the introduction of further socialnational rearrangement mechanisms - for example in the health insurance law of 1996 - the use of the term expanded also on these ranges and stands today for a broadly accepted principle of the Swiss welfare state.

Financing problems

The social systems working with generation contract stand before increasing financing problems. Missing contribution revenues led to the fact that the Federal subsidy had to be increased for example in Germany since 1990 nearly annually to today more than 80 billion "€. As main cause frequently high unemployment and sinking the wage ratio at the national income are called. Increasingly in addition, the population trend becomes apparent. Since beginning of the 1970er years (pill break) Germany expressed one low birth rate. 1000 adults witness in the course of their life of only about 700 children. With the occurring of these classes the business life since beginning of the 1990er years began itself the basis of the contribution payers to diminish. A dramatic change in the relationship of contribution payers and - receivers expect demographers however only starting from 2010 if birth-strong classes reach and from the business life separate the pensionable age. On the social systems will have which effects, depends - beside the pure - still on several factors, which are connected for their part among themselves and with the population trend, in particular with the activity rate and the productivity development.

Criticism

The term "„generation contract "“regarded by critics as political key word, which suggests, the requirement from pension claims is justified by an agreement of the generations. Those in the future employed persons are however at the time the requirement reason either not yet born or not yet legally responsible to agree thus unable one "„contract "“. Besides the generation of the today's pension-referring was entitled itself a development, which stands in no relation to their own contribution.

Other critics regard the generation contract than bare fiction, since writer plans were not completely converted. In reality act it thereby around one "„insurance against childlessness "“. Those, which remain childless and which thereby the available to use - thus also a higher income and higher rights to a pension obtain - should therefore invest time for their business life a part of their income into a private age precaution. It is criticized that it however, without closer inspection their childlessness, nevertheless a pension "„at expense of the children of other people and/or at expense of their parents "“to refer, whose portion of "„the pension pot "“precipitates accordingly lower.

See also

• Solidarity
• Social free-market economy
• Mackenroth thesis

Articles in category "Generation contract"

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