The retirement benefit is comparable in magnitude to the stated amount - Unpaid Debts Accumulate Cost: The Price You Continually Forgo
In Germany, parents who have stayed at home to raise children can still receive pension claims, thanks to the "mothers’ pension" (Mütterrente) scheme. This system credits parents, especially mothers, for child-rearing periods, even if they do not have professional work contributions. These credited child-rearing periods count as pensionable time, increasing their pension entitlements[1].
The statutory pension insurance in Germany is based on contributions made during employment. However, recognised child-rearing periods are treated as contribution periods for pension calculation purposes. Therefore, parents who stayed at home to raise children receive credit towards their pension claims proportionate to their child-rearing time. This recognition helps ensure they do not lose pension rights due to non-participation in professional work[1][3].
The German pension system is part of the "pay-as-you-go" model, where contributions by the working generation fund current retirees. Credited child-rearing times are acknowledged as valid contribution periods in the pension formula[3]. As a result, even without professional paid employment, parents can accumulate pension rights through recognised child-rearing periods that increase their eventual pension claim.
However, there are certain conditions to be met. For instance, the pension years are only available if the parent does not have other claims for childcare, like civil servants. Each parent can claim three pension years for each child, usually the mother. If a child was born before 1992, parents can claim only 2.5 pension years per child[1].
Parents who have never worked can still claim a pension due to child-rearing periods, but the pension claim from these child-rearing years may not exceed the basic security. The so-called basic security is a retirement provision for those who have not paid enough into the pension insurance[1]. If basic security is granted, it is paid for twelve months, and the application must be submitted every year[1].
The German Pension Insurance suggests that those with less than 1062 euros per month for living should have their entitlement to basic security checked. The maximum pension for one parent who has not worked is 451 euros (as of April 2024) for four children[1].
For those who cannot support themselves, the state provides citizen's allowance. Basic security and citizen's allowance have similar conditions and must be applied for at the social welfare office. An application is necessary to receive the pension claim, known as the account clarification. The application is forwarded by the pension insurance to the social welfare office[1].
The German Pension Insurance has a brochure on the details of basic security available for download[1]. It's important to note that if a parent or child earns more than 100,000 euros gross, they can be called upon for maintenance payments[2].
In conclusion, the German pension system recognises and values child-rearing periods as contribution periods, ensuring that parents who have stayed at home to raise children do not lose out on their pension rights. However, it's essential to understand the conditions and requirements to fully benefit from this system.
[1] German Pension Insurance (2023). Retrieved from https://www.deutsche-rente.de/ [2] German Federal Ministry of Labour and Social Affairs (2023). Retrieved from https://www.arbeitsagentur.de/ [3] European Commission (2023). Retrieved from https://ec.europa.eu/
- To accumulate a decent pension without professional employment in Germany, one can utilize recognized child-rearing periods, as these are treated as contribution periods for the pension calculation purposes, similar to vocational training.
- As personal-finance planning is crucial for retirement, it's essential to understand that the basic security provided by the German Pension Insurance, for those who have not contributed enough to the pension system, might not exceed the financing necessary for a basic standard of living in business matters.
