PENSIoN CoNCEPTS
1.1 OTTO vON BISMARCk’S PENSION CONCEPT .1 Biography.1 Biography
Otto Eduard Leopold von Bismarck-Schönhausen – born on 1 April 1815 in Schönhausen; Duke of Bismarck-Schönhausen, Duke of Lauenburg; a German politician, the Prime Minister of Prussia, the Chancellor of the Reich dubbed the Iron Chancellor (der Eiserne Kanzler);
under his rule Prussia became one of the most powerful countries in Europe; he contributed to the unification of Germany1. He was born in 1815 in the Junker Prussian family in Schönhausen. He studied law at the University of Göttingen, but got a degree in Berlin. In 1835 he started work in a court in Berlin, and then in Aachen. Three years later he came back to his family estate, which he started to manage. In the meantime he did the military service. He was a keen traveller, who visited England, Scotland, France, and Switzerland. In 1847 in Alt Kolziglow near Bütow he married Johanna von Puttkamer. In 1851 he became a Member of
Based on: Andrzejewski M. (00), and Wielka Encyklopedia PWN (00), v. , pp. -.
the Parliament (Bundestag) of the German Union (Deutscher Bund) in Frankfurt on the Main. Next he worked for the diplomatic service of the German Union, from 1859 as a deputy in Petersburg, and in 1862 as an ambassador in Paris. In 1862 he became a Prime Minister and the Minister of Foreign Affairs of Prussia. In 1864 he won a war with Denmark for Schleswig-Holstein, in which Prussia allied with Austria.
Two years later, in 1866, Bismarck led to the war against Austria, whose result was the dissolution of the German Union and creation of the North German Union (Norddeutscher Bund), of which he became a Chancellor (Bundeskanzler). In 1867 he received a land estate near Alt Kolziglow in Versin. In the same year he purchased a huge estate with a palace in nearby Varzin. In 1870 he forged a notorious telegram from Ems, which brought about the Prussian-French war and, in effect, led to the unification of Germany. On 18 January 1871, the Second Reich was proclaimed, referred to as the German Empire (Deutsches Kaiserreich). Bismarck became its Chancellor, along with the title of the duke and a nickname of the Iron Chancellor. Between 1871 and 1878 Bismarck waged the so-called war for culture (Kulturkampf), which in fact meant fight between the Prussian government and the Catholic church, and on the Polish territory under the Prussian rule it entailed intensive germanization of the Polish people.
In 1878 Bismarck led to passing of the anti-socialist act, pursuant to which the activity of socialist, social democratic, and communist organizations was banned. Between 1879 and 1887, Bismarck prompted signing a treaty of alliance with Austro-Hungary and Italy (the so-called Tripple Alliance) and with Russia. On 25 January 1890, the Reichstag rejected the proposal to extend the anti-socialist act, thanks to which social democracy became legal again. On 20 February 1890, the first election to the Reichstag took place, which was decisive for Bismarck’s failure. On 20 March 1890, Bismarck resigned from the office and the Emperor Wilhelm II dismissed him from the office of the Chancellor. For all the years of his service he was rewarded with the title of the Duke of Lauenburg and the rank of general-colonel. After his dismissal in 1890, the former Chancellor settled in Varzin and Fredrichsruh. In the following years, aided by Lothar Bucher, he wrote three volumes of his memoires titled Thoughts and Memories
(Gedanken und Erinnerungen), published in 1898-1921. Bismarck died on 30 July 1898 in Friedrichsruh near Hamburg.
1.1.2 Historic background
In Germany, the idea of paying benefits to those who cannot perform work any longer dates back to the middle of the 19th c. It was then that the Catholic bishop of Mainz2 Wilhelm Emmanuel von Ketteler advocated that employers be obliged to pay compensation to those labourers who lost the ability to work, either temporarily or permanently, through no fault of theirs and while working. In doing so he created the foundations of the Catholic social sciences3. The first self-help organizations which provided also pension benefits were established. The first unions in Germany were started in 1849. On 10 April 1854, the Prussian law on miners’ guilds (Preußische Knappschaftsgesetz)4 was passed. 1859 marked the beginning of the first self-help organization of railwaymen (Eisenbahnverwaltungen für ihre Arbeiter auf dem Gebiet der Sozialversicherung Versorgungskassen)5. In 1878 Bismarck took advantage of two attempts on the Emperor Wilhelm I, and forced through the act against aspirations of social democrats considered dangerous to the general public (Gesetz gegen die gemeingefährlichen Bestrebungen der Sozialdemokratie)6. In 1881 the German Emperor Wilhelm
After the Vienna Congress in 85-866, Mainz became a part of the German Duchy of Hessen-Darmstadt. In 866, on establishment of the North-German Union, it was included in Prussia. From 8, the King of Prussia was the hereditary German Emperor.
Strzeszewski Cz. (85), p. .
It was the basis for the miners’ guilds providing insurance for miners. In the second half of the thc. they comprised the Federal Guild (Bundesknappschaft). Cf.: http://www.
deutsche-rentenversicherung-knappschaft-bahn-see.de/nn_08/DRVKBS/de/
Inhalt/UeberUns/6__geschichte/__knappschaft/knappschaft __gen.html, accessed December 00.
5 It was the basis for the Federal Railway Insurance Institution in the nd half of the 0thc.
(Bahnversicherungsanstalt). Cf.: http://www.deutsche-rentenversicherung-knappschaft-bahn-see.de/nn_08/ DRVKBS/de/Inhalt/__UeberUns/6__geschichte/__bahn/
bahngen.html, accessed December 00.
6 Until the act was abolished in 80, organizations were dissolved, whose alleged aim, stemming from their social-democratic, socialist, or communist ideas, was to
I Friedrich Ludwig von Hohenzollern delivered an address (Kaiserlichen Botschaft) to the Parliament, written by Bismarck, in which he ordered the state to provide care for those suffering disability resulting from old age7. In 1883 the first state legislation on sickness insurance was introduced, and in 1884 – on accident insurance8. Bismarck considered introducing the public pension insurance system in the political perspective, and with a view to weakening the political influence of socialists, he was aiming at integration of blue-collar workers with the young German state9. This legislation was supposed to give blue-collar workers a sense of security in the old age and help them realize that it is the state that cares about their future, not trade unions10.
1.1.3 Main elements of pension concept
Soon, in 1889, Germany enjoyed the first in the world state legislation on the benefit and pension (Invaliditäts- und Alterversicherungsgesetz)11, commonly attributed to the Chancellor of the German Empire, Otto von Bismarck12. The worldwide novelty of this solution concerned mainly the obligatory nature of pension insurance; a statutory obligation was introduced, and employers were held responsible for complying with it.
The scheme covered blue- and white-collar workers on law incomes. It
overthrow the current system. Among them were numerous trade unions, which often supported social democracy. Cf.: http://www.dgb.de/dgb/ geschichte/ bewegtez/
DiefrJahre/index_html, accessed February 008.
Liedtke P. M. (006).
8 Ratajczak J. (00), p. .
The person who has [the perspective of – J.P.] an old-age pension is more satisfied and easier to rule than the one devoid of it. Cf.: http://www.dgb.de/dgb/geschichte/
bewegtez/DiefrJahre/index_html, accessed February 008.
0 Formally, the beginning of the organized trade unions was on March 8 in Halberstadt, where the foundation conference of the first trade headquarters, i.e.
German Trade Unions General Commission (der Generalkommission der Gewerkschaften Deutschlands), established by representatives of 5 trade associations. Cf.: http://www.
dgb.de/dgb/geschichte/bewegtez/DiefrJahre/i , accessed February 008.
Schulze I., Jochem S. (00), p. 6. Rürup B. (00), p. .
excluded miners, who stood by their own occupational pension scheme13. The original solution provided for paying pension contributions, investing the accumulated resources, and paying pension benefits. Contributions were paid in 50% by employees and in 50% by employers, subsidized by the central budget. The average contribution, different for different income groups, amounted to 1.7% of remuneration14. Employers transferred collected contributions to an insurance institution, which was under obligation to invest them in profitable ways and pay pensions.
Thus, it was an obviously capital solution, devoid of individual records of contributions. The retirement age was defined as 7015. The minimal qualifying period of eligibility to payment was also a 30-year participation in the scheme16. The main idea of this insurance was the legal assumption that the elderly would become disabled before the age of 70, and as such they would obtain benefits for those unable to work. Law was coming to their rescue since as a result of the natural loss of power they became infirm, which justified the assumption on their becoming disabled17.
1.1.4 Implementation and development
In 1890 the first national insurance funds for blue-collar workers were established, and in 1891 Invaliditäts- und Alterversicherungsgesetz came into force. In 1911 the compulsory pension insurance covered all white-collar workers18. In 1912 a separate legislation on pensions for miners was introduced. In 1913 the retirement age was defined as 6519, and a minimum contribution period was established at 10 years for men and 6 for women and the disabled20. The act of 1923 on miners’ guilds
Czajka Z. (00), pp. 6-.
Schulze I., Jochem S. (00), p. 6.
5 Żukowski M. (006), p. 120.
6 Schulze I., Jochem S. (00), p. 6.
Jędrasik-Jankowska I. (00), p. 0.
8 Schulze I., Jochem S. (00), p. 6.
Pension Reform and the Development of Pension Systems. An Evaluation of World Bank Assistance (006), p. 6.
0 Schulze I., Jochem S. (00), p. 6.
introduced the uniform miners’ insurance in the whole Reich, including health, disability and old age insurance21, and the retirement age for blue-collar workers was lowered to 6522. In 1925, the first pension insurance companies were set up for craftsmen, the self-employed and authors23. In 1929 the retirement age of 60 for unemployed clerks was introduced24. From 1933, the resources of the pension system started being used for implementing the government armament programme25. In 1938 the pension insurance for craftsmen was introduced.