MIDAS DE – A LIAM2 based dynamic microsimulation of German pension incomes using linked RV–SOEP data

We introduce MIDAS DE, a LIAM2 based microsimulation model for analysing German pension incomes under current law and counterfactual policy scenarios. The model reproduces the statutory formula for earnings point accrual, access and type factors, and the current pension value, and is designed to evaluate distributional, gender, and adequacy effects of reforms such as pension splitting and survivor benefit adjustments within a unified framework. MIDAS DE is implemented in LIAM2 using discrete time processes over entities (individuals, households), typed fields (e.g., insured status, pension points), and explicit links (spouse/partner, parent–child) necessary for survivor pensions and splitting eligibility. The model combines SOEP RV administrative insurance records with SOEP survey microdata. Linkage relies on rv_id (SOEP RV↔SOEP) and pid to reconstruct households and partnerships from ppath/ppathl, household matrices from pbrutto/pl, and family histories from biofam/biomars. This enables (i) identification of spouses; (ii) retrieval of pension relevant histories for groups under represented in DRV (e.g., civil servants, self employed) via biowork/biojob; and (iii) construction of household attributes needed for survivor benefit means tests. To harmonise labour income for accrual, we estimate gender and occupation specific Heckman selection models for three groups—salaried employees, self employed, and civil servants—ensuring segment specific participation mechanisms and wage processes. Predictions are selection corrected (inverse Mills ratio) and back transformed with lognormal adjustments; observed wages replace predictions when available. This captures institutional heterogeneity (e.g., civil service pay scales, self employment volatility) and mitigates bias from missing or misreported earnings, feeding consistent contributory bases into earnings point calculations. Robustness checks consider exclusion restrictions (household composition and partner status), outlier trimming, and alternative retransformation (smearing). Technically, MIDAS DE shows how LIAM2 can host a law consistent German pension engine calibrated on linked RV–SOEP microdata with explicit household links, enabling faithful simulation of survivor pensions, pension splitting, and income offsets. Substantively, the model structures policy scenarios along current law splitting, VersAusglG style variants (with and without 25 year conditions and cross pillar coverage), and a universal splitting regime, providing outcomes on the gender pension gap, poverty at retirement, and fiscal effects.