Responding to the challenges of demographic ageing, the German system of old-age provision has undergone substantial changes during the past two decades and is in fact still under reconstruction. Benefit levels deriving from the public pay-as-you-go scheme will decline until 2060, while contribution rates may still go up substantially. Additional cover from private or occupational pension schemes is urgently needed. Thus far, steps in this direction have been half-hearted. The continuing crisis in financial markets and a more profound distrust in financial institutions and market-based instruments of old-age provision currently create obstacles to progress with this overhaul. Nevertheless, despite the differing traditions, Germany could learn important lessons now from other developed countries that have longer experience of funded pensions.

This Presidential Address highlights the national problem of inadequate savings for retirement by the current working population. It examines what can be done to restore confidence in long-term savings and, in particular, looks at the contribution that individual actuaries and the Actuarial Profession can make. The Address also examines the origins in the current shortfalls in final salary pension schemes and the lessons to be learned from recent events, before going on to comment on the lessons from the report on Equitable Life by Lord Penrose.

The occurrence in firms of occupational pensions is investigated with a linked employer–employee dataset, supplemented with actuarial calculations of tax savings when labour compensation is in the form of pensions compared to wages. Tax gains, which can be shared between employers and employees, and expected increases in average tenure are both clearly associated with the occurrence of an occupational pension. Occupational pensions are typically found in large firms, with decentralized wage negotiations, a high degree of unionization, and the requirement of long training. The results and the approach provide a basis for analyzing also the trend towards DB pensions.

Corporate governance and the theory of the firm are discussed primarily from the shareholders' perspective. This point of view neglects the tremendous effects of private pensions and of co-determination as well as interdependencies between codetermination, pensions and corporate governance. Since in the private pension world the firm serves as an investment tool, the focus should be shifted from short-term interests to concepts maximising long-term shareholder value. In this context, also moderate forms of co-determination might serve as a tool for long-term oriented corporate governance. Given the rise of the European Company, co-determination is likely to spread in Europe. Both, private pension-based corporate governance systems and stakeholder-oriented corporate governance systems should be re-examined in the light of the financial and economic crisis and due to the rise of behavioural law and economics.

Why do German policymakers support some aspects of a single European pension market, but not others? This article argues that the German government’s preferences towards European Union (EU) pension directives are best explained by combining historical institutionalism (HI) and domestic discourse analysis (DA). Each approach by itself is insufficient to account for the observed variation between 1991 and 2007. Arguments based on party ideologies offer less explanatory power. HI explains why all governments – Kohl, Schröder, and Merkel – protected employer-sponsored book reserve pensions, a cornerstone of Germany’s coordinated market economy, from the scope of EU directives. DA allows us to grasp how interests were reframed. While the status quo stance of the Kohl government succeeded in delegitimizing supporters of alternative pension security concepts, the Schröder administration imposed an economically efficient pension reform without much public support. The grand coalition, in turn, abandoned Chancellor Merkel’s initial plan to expand second-tier pensions in the light of rising pressures that the Left Party posed for the Social Democratic coalition partner.

The 1993 Jubilee Lecture considered two fundamental questions addressed in the report of the Pension Law Review Committee: when an employee joins an occupational pension scheme, what should the law consider to be the fundamental pension promise; and how should that promise be protected? The factors affecting the employee's expectations are examined in the light of the pension promise, and the conclusion drawn that certain expectations relating to accrued rights should be protected by law, although the employer should be able to control its financial commitments as to future service. The status of surplus, in both an ongoing scheme and in the event of a wind-up, is also considered, and recommendations made as to the use of a surplus if not already dealt with by the scheme rules. The two principal forms of protection for the pension promise which were recommended by the Pension Law Review Committee are discussed; firstly, the introduction of a minimum solvency standard, backed up by tighter rules for the prompt payment of contributions and by enhanced monitoring and reporting requirements for scheme auditors and actuaries; and secondly, the setting up of a statutory compensation fund to cover a deficit in the event of fraud or theft, to be financed by a post-event levy on schemes.