tag:blogger.com,1999:blog-1469531130099587588.post1720985621280260873..comments2023-06-05T16:26:27.079+02:00Comments on Miscellaneous economic ramblings: More on German PensionsThomashttp://www.blogger.com/profile/05980127611042973278noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1469531130099587588.post-63067245693135272912009-05-06T19:24:00.000+02:002009-05-06T19:24:00.000+02:00I agree: If there is sustained deflation going for...I agree: If there is sustained deflation going forward, the "no cuts in nominal pensions"-approach will be completely unaffordable. <br /><br />At a minimum, 1-2 % annual inflation will be necessary for pensions to stay constant in the longer run without rapidly ballooning additional taxpayer subsidies (or much higher contribution rates than the current 20 %).<br /><br />It's rather arbitrary to focus on nominal terms anyway: It has no meaning whatsoever that nominal pensions are constant. But most non-economists seem to see that differently...Thomashttps://www.blogger.com/profile/05980127611042973278noreply@blogger.comtag:blogger.com,1999:blog-1469531130099587588.post-36302594121972181732009-05-06T19:12:00.000+02:002009-05-06T19:12:00.000+02:00While the purchasing power of the pensioners is li...While the purchasing power of the pensioners is likely to fall in case of inflation, it is increasing in case of deflation due to the new rule. So lets hope for modest inflation.<br /><br />The problem of the new rule is that it also prevents pension cuts when (not if!) the ratio of pensioners per worker increases. This new rule is virtually unpayable.<br /><br />As I argued <A HREF="http://miscellaneous-economic-ramblings.blogspot.com/2009/04/german-pensions.html#comments" REL="nofollow">here</A> cutting pensions is the only way out of country default. That door is close for the time being...Anonymousnoreply@blogger.com