Skipping the Workforce, Securing the Retirement: A Guide to Pension Funds for Stay-at-Home Parents
Non-Contributory Retirement Pension Amount: Inquiry Concerning Uncontributed Amounts - Unemployment and Pensions: Investigating Benefits for those who failed to contribute
By Matthias UrbachEstimated Reading Time: +- 3 Min**
No job under your belt? Fret not! You're still eligible for a pension fund, but there's a catch—you must be a parent who's raised multiple children.
In the exceptional case of parents who have dedicated their life to raising more than one offspring, the pension insurance recognizes their hard work by crediting them with a pension claim. More on this later!
However, the state doesn't leave you hanging if you're unable to support yourself through work. They provide assistance in the form of citizen's allowance, previously known as "unemployment benefit II", (abbreviated as "ALG II" or, colloquially as "Hartz IV"). This benefit is granted to individuals who are capable of working but are yet to reach retirement age. For those who don't fit this criteria, there's the so-called basic security.
Basic Security: The Lifeline for the Underfunded
This pension provision is designed for those who haven't saved enough for their golden years through the pension insurance or any other means of retirement planning. The German Pension Insurance proposed a rule of thumb: If your monthly income falls short of 1062 euros, it's wise to get in touch with the social welfare office to discuss your basic security claim.
The criteria for basic security and citizen's allowance are strikingly similar, and applications for both benefits should be filed at the local social welfare office. Remarkably, it's also possible to submit a basic security application directly to the pension insurance, who will subsequently forward it to the social welfare office. In case your application is approved, you'll receive the grant for 12 months at a time, necessitating an annual renewal of your claim.
Parental Maintenance Obligations and Exemptions
The state imposes several conditions on social benefits, including asking parents or their children to contribute financially when their income exceeds 100,000 euros. However, there are some assets and incomes that are not subject to consumption when claiming basic security. For instance, cash worth up to 10,000 euros, reasonable household assets, personal heirlooms, a residence that's proportionate to the state's maintenance contribution, and more are not counted towards your assets when determining your eligibility for basic security.
Keep in mind that your possible income—including maintenance payments, rental income, interest, life insurance, and widow's pensions—is taken into account while calculating your basic security amount.
The German Pension Insurance has published an informative brochure on basic security, which you can conveniently download as a PDF using this link.
Parents on Pension: A Look at Child-Rearing Periods
As mentioned earlier, parents who have never worked professionally may still qualify for a pension. This is thanks to the child-rearing periods. For children born before 1992, parents typically received two pension points per child; for children born after 1992, the standard is three pension points per child.
However, these pension points can only be claimed by one parent at a time. Parents can also share these points depending on who primarily cares for the child. The child-rearing years are valued at around one contribution point, providing a pension claim comparable to someone who has earned close to the national average wage.
Even with four children, these child-rearing years might not be enough to secure a pension claim surpassing the basic security limit. The pension insurance pays a maximum of 451 euros per month (as of April 2024) to parents who have not worked, for four children. To learn more, head over to the DRV website.
- Basic Security
- Pension
- Children
- German Pension Insurance
- DRV
- Familial Contribution
- Retirement Provision
- Pension Claim
- Despite not having a formal job, stay-at-home parents are eligible for a pension fund, a benefit acknowledged by the pension insurance for parents who have raised more than one child.
- For individuals who haven't saved adequate funds for retirement and do not qualify for the unemployed benefit, the German Pension Insurance offers the basic security, a provision for those with a monthly income less than 1062 euros.
- The basic security is similar in criteria to the citizen's allowance, with both benefits claiming application submission at the local social welfare office, and annual renewal required for continued grant.
- The assets exempted from consumption when claiming basic security include cash up to 10,000 euros, reasonable household assets, personal heirlooms, residence proportional to the state's maintenance contribution, and various other incomes such as widow's pensions and alimony.
