Thinking of starting a family in Germany? Looming reforms to ‘Elterngeld’ could mean less financial support, stricter eligibility and new rules for sharing parental leave. Here’s what you need to know.
The German government is ramping up its efforts to save money in the federal budget, and Elterngeld – one of the country’s most important family benefits – is now firmly in the spotlight.
While no final decisions have been made, the current CDU/CSU-SPD coalition is actively debating reforms, and Family Minister Karin Prien (CDU) has been tasked with presenting concrete proposals.
The changes under discussion could affect how much financial support families receive, how long they get it for, and even how married couples divide the work of childcare.
If a serious reform proposal goes forward, those currently planning to start a family in Germany may find that the country’s generous parental benefit system has been reduced.
What is ‘Elterngeld’?
Elterngeld, also known as Germany’s “parental allowance”, is designed to replace part of a new parent’s income when they stop or reduce work to care for a newborn.
Introduced in 2007, the benefit aims to help parents take time off work and maintain financial stability after having a child.
Payments are linked to pre-birth earnings and range from €300 to €1,800 per month for up to 14 months (assuming that each parent takes at least two months off work).
These minimum and maximum amounts have not been increased in nearly two decades, meaning the benefit has lost significant value. One estimate suggests Elterngeld is now worth 38 percent less than when it was introduced.
But despite a coalition promise to raise these limits, ministers are now looking at making cuts instead.
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How would new parents be affected by the proposed reforms?
Policymakers are considering a range of reforms – most of them involving cuts or restrictions. These include:
Lowering the income threshold: Couples who earn more than €175,000 are already ineligible for the benefit. Until recently, that threshold had been €300,000 and could soon be lowered once more.
Reducing the replacement rate: Currently, Elterngeld replaces about 65 percent of a working parent’s net income. A lower rate would mean less money each month for all recipients, but especially for those with higher pre-birth earnings.
Shortening the payment period: At present, parents can receive Elterngeld for up to 14 months combined (if both take at least two months off). A shorter period would force families to return to work sooner or bridge the gap with savings or other benefits.
Stricter rules for sharing leave: Ideas reportedly under discussion also include requiring fathers to take four or six months off work – or an equal amount with the mother – in order for the family to receive the full 14 months of paid leave.
Supporters say this would encourage a fairer division of childcare and help reduce traditional gender roles.
It could also save money, if some families chose to forfeit benefits rather than change their working arrangements.
Cutting extras and simultaneous claims: Further savings could come from reducing bonuses for both parents working part-time or restricting how long both parents can claim benefits at the same time.
READ ALSO: What German health insurance benefits can you get during pregnancy?
Germany is thinking of making cuts to the parental allowance system known as Elterngeld. File photo: Ida Marie Odgaard/Ritzau Scanpix
The case for reform
The main driver behind reform is the need to save money. The coalition government – a partnership between the centre-right CDU and centre-left SPD – is under pressure to balance the books, and family policy is one of the few areas with large, flexible budgets.
Finance Minister Lars Klingbeil (SPD) has tasked Family Minister Karin Prien with finding around €540 million in savings by 2027.
Arguably, some of these savings will be found even if Prien does nothing – simply as a result of Germany’s plummeting birth rate. Last year saw the lowest number of births since 1946, adding to doubts about how far Elterngeld has helped to raise birth rates
There’s also the question of fairness. Because payments are currently tied to previous income, higher earners receive up to six times as much as low-income parents.
According to commentary in TAZ, the focus on incentivising high-earners, professionals and academics to have children was intentional. But the result is that most support is currently given to those who arguably need it least.
In addition, while both parents can share leave, mothers still take the majority of time off while fathers often take only the minimum required two months.
READ ALSO: How much does it cost to raise children in Germany?
Reaction
Unsurprisingly, debate on the topic is heated. Social organisations warn that families need reliability and financial security instead of new debates about cuts.
Some politicians within the governing coalition also oppose reductions, suggesting savings should be found elsewhere. Jasmina Hostert, family policy spokesperson for the SPD parliamentary group, suggested that instead of cutting family benefits, the government should consider reforming the debt brake or raising taxes.
Meanwhile Anne König, family policy spokesperson for the Union faction (CDU/CSU) suggested that avoidable bureaucracy should be examined for potential savings before placing additional burdens on families.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: thelocal.de
