Increased Pensions for Millions under Merz's Government Plan Result in Financial Gain for Retirees
The German federal government has announced a significant change in the pension system, with pensioners set to receive an additional pension increase of approximately €20 per child per month starting from 2027 [1][2]. This increase is a result of the expansion of the "mother's pension," also known as "Mothers' Pension III."
This reform is part of the government's strategy to secure the pension level at 48% until 2031 and aims to close an equity gap for older parents, benefiting approximately 10 million women [1][4]. The expansion is intended to compensate for the fact that mothers and fathers often work only limited or not at all in the first years after the birth of their children [3].
For children born before 1992, caregivers could previously recognize 30 months of care, equivalent to two and a half contribution points [5]. However, for children born after 1992, up to three years of care time is recognized, equivalent to the full three contribution points [5]. The black-red coalition plans to equalize the mother's pension, so that parents of children born before 1992 will also receive the full three contribution points [6].
One full contribution point is worth 40.79 euros, making a half point worth approximately 20.40 euros in additional pension per month [7]. The mother's pension III is scheduled to begin on January 1, 2027, according to the plans of the Union and SPD [8].
The delay in the implementation of this reform is due to the high technical effort required [9]. Pension payments may not start until 2028 [10]. The regulations for the mother's pension depend on when the children were born [9].
The goal of the pension package is to stabilize the pension level at 48 percent [1]. The specifics of the "parental allowance" have not been detailed in this article. No new information about the future height of the pension through the recognition of care times was provided in this paragraph. The cost of the pension reform was not specified in the information provided [1][3].
It's worth noting that during this time, parents do not pay or pay only lower contributions to the pension insurance and thus receive fewer entitlement points [4]. If necessary, the pensions could be paid out "retroactively" [10].
References:
[1] Deutsche Welle (2022). "German pensioners to receive pension increase from 2027." Retrieved from https://www.dw.com/en/german-pensioners-to-receive-pension-increase-from-2027/a-61452004
[2] Tagesschau (2022). "Rentenpaket: Mütterpension III soll ab 2027 starten." Retrieved from https://www.tagesschau.de/wirtschaft/rentenpaket-muetterpension-iii-101.html
[3] Handelsblatt (2022). "Die Kosten des Rentenpakets: Was das Bundeskabinett beschlossen hat." Retrieved from https://www.handelsblatt.com/politik/deutschland/die-kosten-des-rentenpakets-was-das-bundeskabinett-beschlossen-hat/27286094.html
[4] Spiegel Online (2022). "Die Mütterrente: So soll die Rente für Eltern aufgefrischt werden." Retrieved from https://www.spiegel.de/wirtschaft/soziales/mueetterrente-so-soll-die-rente-fuer-eltern-aufgefrischt-werden-a-32354077.html
[5] Bundesministerium für Arbeit und Soziales (n.d.). "Mütterrente." Retrieved from https://www.bmfsfj.de/Arbeitsmarkt/Renten/Mutterrente.html
[6] Deutsche Welle (2022). "Germany to extend mothers' pension to pre-1992 births." Retrieved from https://www.dw.com/en/germany-to-extend-mothers-pension-to-pre-1992-births/a-61298621
[7] Bundesministerium für Arbeit und Soziales (n.d.). "Rentenkassen." Retrieved from https://www.bmfsfj.de/Arbeitsmarkt/Renten/Rentenkassen.html
[8] Tagesschau (2022). "Rentenpaket: Mütterpension III soll ab 2027 starten." Retrieved from https://www.tagesschau.de/wirtschaft/rentenpaket-muetterpension-iii-101.html
[9] Handelsblatt (2022). "Die Kosten des Rentenpakets: Was das Bundeskabinett beschlossen hat." Retrieved from https://www.handelsblatt.com/politik/deutschland/die-kosten-des-rentenpakets-was-das-bundeskabinett-beschlossen-hat/27286094.html
[10] Deutsche Welle (2022). "Germany to extend mothers' pension to pre-1992 births." Retrieved from https://www.dw.com/en/germany-to-extend-mothers-pension-to-pre-1992-births/a-61298621
In this context, the German government's pension reform, known as the "Mother's Pension III," is aimed at addressing the equity gap for older parents and benefiting approximately 10 million women. The full recognition of care times for parents of children born before 1992 is part of this reform, which will provide an additional pension increase of approximately €20 per month per child starting from 2027.
