Alfred C. Mierzejewski. A History of the German Public Pension System: Continuity amid Change.

Abstract

The German public pension system created under Otto von Bismarck in 1889 was the first of its kind in the world. It also managed to survive the upheavals of two world wars, revolution, military occupation, and no fewer than five different forms of government in the twentieth century. In A History of the German Public Pension System: Continuity and Change, Alfred Mierzejewski seeks to account for the resiliency of this remarkable institution while also offering his readers a comprehensive new history of the German pension system from its inception to the major reforms implemented under the governments of Gerhard Schröder and Angela Merkel. Mierzejewski is well equipped to tell this story, drawing on extensive research in German archival and printed primary sources and demonstrating a complete mastery of this complex topic and its rich historiography throughout his narrative. The book begins by recounting a now-familiar story of the Bonapartist, anti-Socialist, and Pietist Lutheran origins of the idea of public pensions under Bismarck. It is to the author’s credit that he highlights how much the actual legislation passed in 1889 was altered from Bismarck’s original proposal during debate in the Reichstag and Federal Council. Unfortunately, little of the rich tenor of those debates over no fewer than forty-three Reichstag committee meetings and twenty-four plenary sessions was conveyed by the author’s brief summary of the legislative process (14–17). In any case, Bismarck, the “Iron Chancellor,” was highly dissatisfied with what was passed. Rather than a centralized and uniform system of generous worker pensions funded from taxation and the proceeds of a state tobacco monopoly, he got a compulsory insurance system financed primarily by worker and employer contributions, with very modest benefits scaled to employee contributions. The system’s administration was decentralized to some thirty-one self-governing regional state-insurance institutes, thirteen in the state of Prussia alone. Out of sheer expediency, it became a pay-as-you-go system with a modest reserve accumulated to protect against economic fluctuations. With minor modification, it would remain that way for most of the twentieth century.