The German statutory pension insurance is funded according to the pay-as-you-go method. Revenues are generated through mandatory and voluntary contributions to cover earned entitlements and through transfers from the federal budget to cover the redistributive part of the social insurance pension scheme. Based on demographic and economic projections the rate of contribution is set on an annual base in a way that ensures the liquidity of the pension insurance throughout the entire year. Pension funding ought to follow a comprehensive concept of sustainability. That means to strike a balance between broad and affordable coverage, adequate benefits and retaining sufficient financial reserves.