In statutory pension insurance, the contributions collected in a year are paid out to the current pensioners according to the pay-as-you-go system. The pensions of the parents’ generation are thus paid for by the generation of their children.
The current system can also be interpreted as insurance against childlessness. Every additional child increases the pensions of the parents’ generation at the existing rates of contribution. However, one’s own parents only benefit to a small extent from the contribution payments made by their children. The benefit to society of a child thus clearly exceeds the benefits that the parents receive. Measured in terms of social benefits, parents who only take their own benefits into consideration decide to have too small a number of children. To correct this flaw in the state pension system, Hans-Werner Sinn recommends topping up the state pension with a child allowance pension for parents, which would naturally be paid out in addition to their existing pension claims.
Can Germany Still be Saved? - Theses on the Future of the Republic, Information page
Articles in refereed journals
"Europe’s Demographic Deficit. A Plea for a Child Pension System", De Economist 153, 2005, pp. 1-45; (Download, 1 MB); Authorised Abstract (Download, 9 KB); Tinbergen Lectures, (Download Preliminary Version).
"The Pay-as-you-go Pension System as a Fertility Insurance and Enforcement Device“, Journal of Public Economics 88, 2004, pp. 1335- 1357; (Download, 214 KB); CESifo Working Paper No. 154, 1998; NBER Working Paper No. 6610, June 1998.
"Pensions and the Path to Gerontocracy in Germany“ (together with S. Übelmesser), European Journal of Political Economy 19, 2002, pp. 153-158; (Download, 114 KB); "When will the Germans Get Trapped in their Pension System?“ (together with Silke Uebelmesser), CESifo Working Paper No. 561, September 2001; NBER Working Paper No. 8503, October 2001.
"The Value of Children and Immigrants in a Pay-as- you-go Pension System: A Proposal for a Transition to a Funded System“, ifo Studien 47 (1), 2001, pp. 77-94; (Download, 3.9 MB); CESifo Working Paper No. 141, 1997; NBER Working Paper No. 6229, October 1997.
"Why a Funded Pension System is Useful and Why It is Not Useful“, International Tax and Public Finance 7, 2000, pp. 389-410; (Download, 174 KB); CESifo Working Paper No. 195, 1999; NBER Working Paper No. 7592, March 2000.
Academic papers in conference volumes
"The Crisis in Germany’s Pension Insurance System and How it Can be Resolved“, in: S. Cnossen and H.-W. Sinn, eds., Public Finance and Public Policy in the New Century, MIT Press: Cambridge, Mass. 2003, pp. 269-292 (Download, 2.8 MB); CESifo Working Paper No. 191, 1999; NBER Working Paper No. 7304, August 1999.
"A General Comment on the Old Age Pension Problem: A Funded System for those who Caused the Crisis“, in: H. Siebert, ed., Redesigning Social Security, J.C.B. Mohr (Paul Siebeck): Tübingen 1998, pp. 197-203 (Download PDF, 155 KB).
Ifo Viewpoint No. 70: Reward Childrearing in the Pension System!, Dec 7, 2005.
Ifo Viewpoint No. 42: Pensions and Children, Jan 15, 2003.
Ifo Viewpoint No. 23: The Socialisation of Human Capital, Apr 5, 2001.
Ifo Viewpoint No. 16: A step in the right direction, Oct 18, 2000.
Ifo Viewpoint No. 15: 20% is the Limit, Sep 26, 2000.
Ifo Viewpoint No. 4: Funded Pensions, Nov 3, 1999.
Ifo Viewpoint No. 1: State Pension at 60, Oct 26, 1999.