Dissertation_Paula Aleksandrowicz_12 ... - Jacobs University

the early retirement scheme, and firms alike, prefer the blocked model 13 , the governmental
objective has not been fulfilled. Another motive behind the introduction of (blocked) ATZ
was to enable a knowledge transfer between younger and older workers. 14 Furthermore, the
government had hoped to decrease unemployment by enabling firms to hire young workers
as a replacement for ATZ retirees. That objective accounts for the high popularity of the
blocked model in German firms.
Compared to other European countries (Hinrichs/Aleksandrowicz 2005), Germany
started relatively early to adjust the pension system to demographic developments and to
attempt a reversal of the trend to early retirement incurred by preceding legislation. Worries
that a shifting age structure would lead to a raising of the contribution rate to statutory
pension insurance resulted in the pension reform of 1989, which went into effect in 1992. In
an inter-party compromise, it was agreed that, with the exception of the severely
handicapped, in 2012 all provisions to retire before age 65 without benefit reduction shall
phase out. Beginning in 2001, retiring earlier should imply a permanent reduction of 3.6 per
cent for each year below the standard retirement age. With the same reform, an incentive to
defer the pension receipt was introduced by granting a permanent 0.5 per cent bonus per
month of deferral. Before, workers could postpone their retirement at a 7.2 per cent bonus,
which was however only granted for up to two years and therefore not very attractive
(Casey 1998: 18).
The political consensus on pension reform broke in the forefront of the next law, the
Growth and Employment Promotion Act passed in 1996 and effective from 1999. In the
context of active ageing, the most important change were shortened phasing-out periods of
options to retire before age 65 without permanent benefit reduction. This bill meant a
decisive departure from the previously held conception that sending older workers into
voluntary early retirement was an acceptable way to prevent rising unemployment figures of
young and middle-aged workers.
The Pension Reform Act of 1999 (legislated in 1997 by the CDU/CSU-FDP
government) also contained some controversial elements: In order to raise the actual age of
13 A survey of personnel and works councils of 1999/2000 showed that 47% of private companies and 20% of
public offices allowed only for the blocked model of part-time retirement (Klammer, 2003: 43); 90% of
workers utilise that model (Teipen/Kohli 2004: 102).
14 As Stück (2003) found out in his empirical studies on the take-up of part-time retirement in firms in Bremen,
new workers seldom occupy the same position as the person in part-time retirement, so there is no real
knowledge transfer taking place.
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