Money has a habit of always being scarce, and the Family Ministry in Germany also has to save.
What are the plans for the parental allowance?
In particular, expenditure on parental benefits, which appears to have increased in recent years, is to be reduced by €500 million. 8.3 billion will be spent on parental benefits in 2023.
According to the Federal Statistical Office, a good 1.8 million people received parental allowance in 2022, quite predominantly women, namely just under 1.4 million.
To save the 500 million, two solutions are obvious: either everyone gets less parental allowance, or some people no longer get parental allowance and for the rest the amount remains the same. Federal Family Minister Lisa Paus (Greens) is flirting with the second solution and is lowering the earnings limit for couples from the current 300,000 euros to 150,000 euros. She is not happy about this, she lets it be known. Couples who earned more than 150,000 euros in the year before the birth of their child will no longer receive parental allowance.
Lisa Paus explains that there are about 60,000 families who would then no longer be entitled to parental allowance. The Institute of the German Economy in Cologne (IW) assumes 435,000 couples - anyway, there is still political discussion.
How does parental allowance work in Germany?
Parental allowance is intended to replace the previous income paid to parents who stay at home for the time being after the birth of their child. It is supposed to replace between 65 and 67 percent of the professional income, depending on the parents' taxable gross annual income in the year before the birth. The amount of parental allowance is between 300 and 1,800 euros per month.
Previously, it was paid if one parent had less than 250,000 euros or both parents had a joint taxable income of 300,000 euros.
Depending on whether only one parent or both parents stay at home, the parental allowance is paid for 12 or 14 months. Within the framework of "Elterngeld Plus", the period of entitlement can be doubled; in this case, the amount is halved.
Isabella Seidl, Director of Global Consultant Relations at BlackRock, explains the current debate: "Parental allowance is not intended as a social support, but should, among other things, serve as a motivation to promote equality, to also offer fathers the opportunity to get involved in the early years with the child and thus promote equality between men and women".
Marital splitting and free co-insurance should also be put to the test!
As an alternative solution, Lars Klingbeil, the chairman of the SPD, suggests that instead of saving on parental allowance, the Ehegattensplitting should be abolished. This consideration is long overdue, because spousal splitting makes work less worthwhile for the low-income earner (usually the woman). As a result, women often return to work later after the maternity leave or stick to mini-jobs. This in turn has long-term consequences for the woman, who forgoes pension points, among other things. This is one of the reasons why women are more affected by old-age poverty than men, and it promotes dependence on the partner. The bonbon of spousal splitting may be nicely thought of, but it is in fact a poison candy!
If we're already thinking about decluttering: What actually happened to the kostenlosen Mitversicherung in the health insurance for spouses? In cases where a couple does not have children who need to be looked after, this issue should also be examined, because it is then difficult to see any economic benefit. Why should society provide free health insurance for a spouse who stays at home, when there is currently a shortage of labour?
Another savings opportunity is offered by the widow's pension. If a spouse dies today, the surviving partner receives immediately Witwenrente, regardless of his age. The question arises whether it is not enough for widow's pensions to be paid from retirement age, at least if there are no children to look after. Since one's own earnings would be counted towards the widow's pension, this nicely-intentioned bonus again mainly discourages women from re-entering the workforce after their husband's death. Why is that? Where is the sense in times of a shortage of skilled workers?
Politically, there is still a struggle going on, at least over parental allowance. But the bottom line is this: Keep your eyes open when planning finances for your family and yourself! Things can always turn out differently than you think! One stroke of the law and everything will change!
What do you think? Feel free to take part in our Umfrage. You might also be interested in Anne's Interview mit der Soziologin Prof. Dr. Allmendinger. She has no problem with the reduction of parental allowance, but demands the abolition of spousal splitting and more day-care places.
Anke Dembowski is a financial journalist and author of various investment fund-related and other financial books. She is also a co-founder of the "Fondsfrauen" network.