The Organization for Economic Cooperation and Development (OECD) has analyzed the retirement systems of 34 industrial countries, and presented the findings of this international comparison in Berlin on Tuesday.

Germany, a role model in many social sectors, landed in the middle of the pack in this category. That means that other countries have found better solutions for taking care of their citizens as they age.

OECD retirement expert Monika Queisser knows where the problem lies with Germany's retirement system. "One hundred percent orientation on income means that there is hardly any redistribution for those who are socially vulnerable. Switzerland, New Zealand and the Netherlands have better regulated their systems for those with low paying jobs or physical disabilities."

Systematically disadvantaged in Germany

Pension levels in the federal retirement system in Germany correlate directly to the amount of income earned throughout one's career. The general rule is: Those who earned a lot while working automatically had larger amounts of money deducted from their paychecks, thus have paid more into national retirement funds over the years, and so receive higher retirement payments as seniors. Those who earned less, paid in less, and so must be able to finance their lives with much lower, state pension payments when they retire. Knowing that, low wage earners need to put money away toward retirement on their own. The catch is that most people in this situation do not have money to put away at the end of the month. Their only choice is the federal retirement system. For hard luck cases, such as the longterm unemployed, only nominal social welfare payments are available.

Advantageous rules

Switzerland, New Zealand, Denmark and the Netherlands have taken a different approach. They use a base pension. The idea is that a fixed amount of money is guaranteed to every citizen, no matter how much he or she earned throughout their career. The level of such base payments are generally lower than average monthly pensions in Germany, but a guaranteed fixed rate is more effective in protecting the socially vulnerable from poverty in old age.

In the OECD's opinion, one practice in particular seems to have proven its worth; namely, the calculation of pensions based on the best 35 years of a person's career. Periods in which a worker was unemployed, earned less, or was ill, are not figured into the equation. Countries that design their retirement systems toward social equality, or toward a taxpayer funded pension for all, offer their citizens much greater security against old age poverty than those that don't.

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