What you need to know: German budget changes to Elterngeld in 2024
The German government has just approved FDP Finance Minister Christian Lindner’s budget for 2024. According to the books, it is likely that 60.000 families in Germany will no longer be eligible to receive Elterngeld support payments. Here's what we know so far about the imminent changes.
What is Elterngeld?
Elterngeld is a social security benefit that new parents can claim while they are on parental leave (Elternzeit). Currently, all new parents who are EU citizens, German citizens or residents in Germany, who care for their child and work no more than 32 hours per week, qualify for the social security benefit so long as their combined annual income does not exceed 300.000 euros before tax.
2024 federal budget to change eligibility for Elterngeld
Germany’s coalition government has now published and approved its draft federal budget for 2024. Funds are 30 billion euros tighter than last year, and cuts to Elterngeld (parental allowance) mean that fewer parents will be eligible to claim the benefit come the new year - although the amount of money that eligible parents will receive from Elterngeld will not change.
How will Elterngeld in Germany change next year?
According to the new budget, the combined annual income threshold for eligibility will be halved to 150.000 euros before tax.
At the moment, single parents who earn no more than 250.000 euros annually before tax are also eligible to receive the benefit. So far, the government has only announced policy changes for parents who share caring responsibilities and it is not yet known if the rules will also change for single parents.
No other changes to how the benefit is distributed, such as the amount and duration of eligibility, have been announced so far. Currently, parents in Germany are entitled to receive basic parental allowance of between 300 and 1.800 euros per month for 12 months after childbirth, and 14 months for single parents. The amount they receive is means tested based on how much they earned before their child was born.
How have politicians and experts responded to the news?
Overall, the Federal Ministry of Family Affairs, Senior Citizens, Women and Youth, which is responsible for distributing Elterngeld, is expected to see a budget cut of 218 million euros. Cuts in the department have been harshly criticised in opposition to Lindner setting aside a record-high budget for Germany’s military defence in 2024. Popular Wednesday night talk show, Maischberger, ran with the question, “Does the government have money for tanks but not for children?”
To justify the Elterngeld cuts the ministry has argued that top earners do not need financial support during parental leave. Elterngeld was initially designed to encourage high-income earners, such as academics, to have more children and also intended to reduce the ways that people who have recently given birth may become financially dependent on their partners.
Critics have said that the new policy will mean that equally dividing parental leave time will be harder if income is significantly unequal between two parents, and that the cut may come as a nasty surprise for parents expecting children in the near future.
Others have said that these consequences contradict the initial intentions of Elterngeld; to reduce gender inequality in heterosexual parenting couples by encouraging mothers’ financial independence and return to work as well as motivating fathers’ to be more involved in raising their children.
Lindner has defended FDP's planned Elterngeld cuts
Lindner argues that his increasingly controversial Elterngeld cuts will “bring the budget into the safe zone without increasing taxes”. The politician is eager to reduce Germany’s debts after three years of high spending to tackle the coronavirus and energy crises.
Defending his cuts as a guest on Maischberger, Lindner compared his new budget to Michaelangelo’s David. “It was only possible for Michelangelo to create this figure from a block of marble by removing the excess stone," Lindner said in a reference to an earlier explanation of his 2024 budget. "One can imagine the Finance Ministry as an artist who removes the excess from the outstanding debts so that the essentials can be maintained."
Thumb image credit: Ground Picture / Shutterstock.com