1. Gender in the private pension systems in Germany - the case of Riester-Rente Joanna Ratajczak-Tuchołka Department for Labour and Social Policy

2. Agenda 1.Some introductory remarks 2.Pension system and gender 3.Riester-Rente from the gender perspective 4.Conclusions

3. 1. Some remarks 1.Why use gender perspective (women’s perspective) 2.Why focus on supplementary pension system? 3.Why choose Riester-Rente?

4. 1. 1. Why gender perspective (women’s perspective)? Since 70-ties gender perspective has been used to analyse state policies in Germany Female beneficiaries were subject to analysis only within obligatory pension system Such a perspective is rarely used with regard to supplementary pension systems

5. 1.2. Why supplementary pension system and the focus on Riester-Rente? Reforms of the first tier of pension system: towards expense oriented pension policy and reduction of the standard replacement rate Introduction of voluntary Riester-Rente, which is aimed at compensation of lower pension’s level, especially for low- earners

6. 2. Gender perspective in the pension system biographies pension regulationsoutcomes += - employment biographies - family biographies - other non-paid-work biographies dependend on each other compensatory rules

7. 2. Gender perspective in the pension system biographies pension regulationsoutcomes += micro level focus on an individual macro level focus on society mezo level focus on different groups of women individual replacement rate/pension gap level of individual pension provision pension gap among female sub-groups an average replacement rate/ pension gap an average pension provision gender pension gap an average replacement rate in a sub-group/pg an average pension provision in a sub-group indicators of distributional effects between m and w the total value of savings and their structure for m and w coverage rate

8. 2. Gender perspective in the pension system biographies pension regulationsoutcomes += state intervention, which creates the circumstances state intervention, especially: regula- tion and transfers asessment and justification (normative approach): different aspects, values, values structure and interpretation of values

9. 2. Compensatory rules What is the compensatory rule? A mechanism used in pension systems aimed at financial compensation of the limitations resulting from individual pay differentials or lack of employment, with the exclusion of premium equivalence What are its „construction aspects”? coverage (compensation) scope of time level of compensation nature of compensation time (stage) of financing source of financing

10. 3. Riester-Rente Introduced in 2001 State intervention: regulation of quantity and quality of supply and quantity of demand income transfers

11. 3. Riester-Rente – income transfers target group: directly and indirectly entitled level of compensation : government subsidy (annually): basing subsidy of 154€ + child subsidy of 185/300€ tax adventages: Riester savings can be claimed as a special expense deduction in the worker’s annual income tax return one-time bonus of 200 € if he/she signs up for a Riester pension plan before the age of 26

12. 4. Pension regulations of Riester-Rente from the gender perspective Compensation rules: –indirectly entitled beneficiaries –child subsidy relativelly high, profitable especially for low- earners, for every child, –unequal situation of carers and mothers of younger and older children –child subsidy paid to the mother automatically –inheritance possibility (only spouses without deductions) –uni-sex tariffs

13. 4. Outcomes of Riester-Rente from the gender perspective Macro level Fragmentary and incoherent data

14. 4. Female and male Riester-Rente’ holders Source: Altersvorsorge Atlas 2013

15. 4. The replacement rate of obligatory pension and Riester-Rente by gender

16. 4. The level of obligatory pension and Riester-Rente by gender (in €)

17. 5. Conclusions and more remarks Construction of Riester Rente is female friendly Wide access to the RR, low minimum contribution requirements for non- working women (5€ per month) but Relatively low contributions lead to a low RR For some groups of women access depends on having a legal partner Female perspective is limited to the discussion about poverty Weak incentives for low-earners The results of RR and its distributional effects depend on the actual individual behaviour

18. 5. Conclusions and more remarks Is there substitution among non-subsidised and subsidised pension savings? Is such extensive state intervention consistent with the logic of private pension schemes? How does the introduction of RR influence the effectivness of the pension system?

19. Thank you for your attention

20. 1.2. Why supplementary pension system and the focus on Riester- Rente?