Since the 1957 pension reform, German pensions have been financed on a pay-as-you-go basis. This means that contributions by active employees are used to pay benefits to current retirees. The aging of society, however, has made the pay-as-you-go system increasingly problematic, since a smaller number of employees must support a growing base of benefit recipients. To avoid raising pension contributions, which would have further compromised Germany's international competitiveness, the Schröder administration decided to gradually lower pension-benefit levels. In return, grants and tax breaks were introduced to encourage citizens to supplement their state benefits with voluntary private contributions. This program was called the “Riester pension” [Riester-Rente] after then minister of labor Walter Riester. Around 1.4 million policies were sold in 2003 alone, and by 2008 sales had reached 12.1 million. The Riester pension represented a paradigm shift toward greater personal responsibility – and thus marked a turning point in German national social policy. This photograph shows Chancellor Schröder (right) and Federal Labor Minister Walter Riester (left) presenting the “Riester pension” after the Bundesrat approved pension reform.