It has been successful in providing a high and reliable level of retirement income and has served as a model for numerous social security systems globally.
Funds paid in by contributors (employees and employers) are not saved (or invested) but are used to pay current pension obligations.
Civil servants in Germany do not pay any contributions themselves but their salaries are correspondingly lower than those in the private sector.
The German pension insurance agency publishes the value of each year’s contribution (remuneration point).
This is then multiplied by the number of years contributed and the percentage of the average salary earned during the person's lifetime.
[10] According to the Deutsches Institut für Zeitwertkonten und Pension Lösungen, a consultancy, "in almost all firms, 30 to 50% of the capital required to meet the commitments made in days when the interest rates were higher is missing".