ABSTRACT
In Germany, the book reserve system is the common method of nancing occupational pension plans. Hence, the pension liabilities are unfunded by nature, but mutually and compulsory insured by the Pensions-Sicherungs-Verein VVaG (PSVaG) against bankruptcy. In 2002, the PSVaG introduced reduced premiums for pension fund-based plans, which are commonly used by large German rms. is reform could lead to adverse selection problems in the future. e use of risk-adjusted premiums could be a means to avoid or mitigate this.
