Budget-, Versorgungsund Verteilungswirkungen der beitragsfreien Entgeltumwandlung

Occupational pensions are promoted by the exception of deferred compensation of taxes and social security contributions in Germany, the latter being limited until 2008. However, we show that this incentive was effective, leading to a higher spread of occupational pensions. But it comes with costs for social security in terms of contribution payment losses. The size of this loss mainly depends on the reactions of employees upon the end of the exception. Furthermore, the prolongation of this subsidy would lead to a slightly lower contribution rate and public pension level. As total income provision in retirement is higher if employees are encouraged to enrol in deferred compensation, it seems to be sensible to prolong this incentive in order to install a multi-pillar pension system.