More flexibility, less bureaucracy: Germany reforms parental allowance
Even without a global pandemic, juggling childcare and work can be tough for parents. The German government has therefore signed off on a series of reforms to make the parental allowance (Elterngeld) more flexible and less bureaucratic.
German government signs off reform of parental benefits
In future, parents in Germany will be able to combine part-time work and the parental allowance more easily, while the mothers and fathers of premature babies will be entitled to receive the allowance for longer. At the same time, top-earning couples will no longer qualify.
All of these changes were approved by the Bundestag last week and - pending the approval of the Federal Council - should come into force on September 1, 2021. According to Federal Families Minister Franziska Giffey, the reforms should adapt the family allowance “even more precisely to the needs of parents and make it easier for them to take care of the important things: time with their children and family.”
The reforms are designed to help families juggle their personal and working lives even better, by minimising bureaucracy and boosting flexibility. Here’s an overview of what’s changing.
More flexibility around part-time work & partnership bonus
The law contains a number of improvements for parents who want to work part-time while still receiving the benefit. As it currently stands under the ElterngeldPlus scheme, parents can combine their benefit payments with up to 30 hours of work per week. In the future, this will be increased to 32 hours.
In addition, the so-called “partnership bonus”, which is paid out to parents who simultaneously work 25 - 30 hours per week, will be adjusted to give couples greater flexibility in dividing caregiving responsibilities. In the future, each parent can work between 24 and 32 hours per week to qualify for the bonus.
The bureaucratic burden on parents is also being relieved. In the future, for instance, parents should only have to provide proof of their working hours in exceptional cases.
Extra benefits for parents with premature babies
The reform also provides relief for parents of premature children. If a child is born at least six weeks before their due date, its parents will receive an additional month of parental allowance. If the child is born eight weeks early, two additional months of the benefit will be granted; three extra months will be given for babies born 12 weeks early; and four additional months for babies that are 16 weeks premature.
“We want to give parents special support during this difficult and emotionally demanding time, so that they can give their children the attention they need,” said Nadine Schön, the CDU / CSU deputy parliamentary leader.
Wage replacement benefits will not affect parental allowance
Up until now, if one or both of the parents was in receipt of income replacement benefits such as Kurzarbeit or sickness benefits, this would have reduced the amount of parental allowance they were entitled to. The new law will ensure that wage replacement benefits do not affect the amount of Elterngeld parents receive.
In addition, if parents have previously received the partnership bonus but then were not able to work as planned due to the coronavirus pandemic, they will not be asked to repay the bonus. This special regulation, which was introduced on March 1, 2020, will be extended until December 31, 2021.
Income limits adjusted for couples
The final change is that, to finance these reforms, the government has decided to adjust the income limit for the benefit. Top-earning couples with a combined income of more than 300.000 euros per year will not be entitled to receive the parental allowance. Previously, the limit was 500.000 euros. For single parents, the limit will remain 250.000 euros.
The new regulation is expected to affect around 0,4 percent of those who currently receive the parental allowance - around 7.000 parents. “With such a high income, it can be assumed that the parental allowance is irrelevant to the decision on the extent to which gainful employment should be foregone in favour of caring for the child,” says the reform memorandum.