Elterngeld: How Germany plans to change parental allowance
Germany is planning to cut entitlement to Elterngeld for higher earners - but after an uproar, fewer people will be affected. Here's a look at the latest planned changes.
What is parental allowance?
Germany has a parental leave system known in German as Elternzeit with the option to apply for up to 14 months of Elterngeld or parental allowance.
Unlike Mutterschutz (maternity leave), which is only for mothers in the run-up to and after the birth of their child, Elterngeld is an allowance of paid time off that both parents can split however they choose.
Elterngeld usually makes up 65 percent of the parent's previous net income, up to €1,800 per month and a minimum of €300.
But the German government decided in summer to cut entitlement to this allowance in order to make savings.
How is the allowance going to change?
At the moment, couples in Germany can receive parental allowance up to a combined annual taxable income of €300,000.
Under initial government plans, this limit was set to fall to €150,000 for couples, meaning those earning a combined income over that limit would not receive parental allowance.
However, the plans received a barrage of criticism from higher earners.
READ ALSO: 'A horrible idea': How cuts to Elterngeld will affect families
Under pressure to rethink the plans, the coalition then agreed in November that it would be lowered gradually - and not as much as originally planned. The limit will first drop from €300,000 to €200,000 and then to €175,000.
The limit for single parents - currently at €250,000 - will be lowered to €150,000.
Tens of thousands of families are likely to lose their entitlement to parental allowance under the plans.
Last year, according to Germany’s Statistical Office, 1.8 million in Germany received Elterngeld, the majority of them women (just under 1.4 million).
What is the timescale for this?
Nothing will change for parents whose babies are born by March 31st 2024. From April 1st, 2024, however, the new €200,000 limit will apply for couples, and the €150,000 limit for single parents.
The new limit of €175,000 will apply to couples whose baby is born from April 1st, 2025. The limit of €150,000 for single parents will remain at that level.
"By delaying the reduction, we give families more time to adjust to the changes,” said Felix Döring, a Social Democrat who is part of the government team working on the changes.
Are there changes to the so-called 'partner months' ?
Yes. Up to now, couples have been able to receive standard parental allowance for a maximum of 14 months and can freely combine this.
They can take turns, so that one stays at home for nine months and the other for the rest of the time, for example.
So far, it has also been possible for both parents to take a career break for seven months to care for the child and receive parental allowance at the same time.
However, this will no longer be allowed for parents of children born from April 1st 2024. on the plans.
READ ALSO: What families in Germany need to know about Kindergeld's replacement from 2025
Elterngeld will remain at 14 months in total, “but staying at home together and receiving parental allowance at the same time should only be possible for one month within the first 12 months of the child's life", reported German media wire DPA.
However, this change will not apply to couples who give birth to more than one baby at the same time, and premature babies.
What else should I keep in mind?
As things stand, these are the current plans but there is a budget crisis ongoing in Germany.
That means that the budget for next year is still up in the air so it's not impossible for there to be some changes as the government tries to save money.
READ ALSO: What happens if Germany can't decide on a budget for 2024?
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What is parental allowance?
Germany has a parental leave system known in German as Elternzeit with the option to apply for up to 14 months of Elterngeld or parental allowance.
Unlike Mutterschutz (maternity leave), which is only for mothers in the run-up to and after the birth of their child, Elterngeld is an allowance of paid time off that both parents can split however they choose.
Elterngeld usually makes up 65 percent of the parent's previous net income, up to €1,800 per month and a minimum of €300.
But the German government decided in summer to cut entitlement to this allowance in order to make savings.
How is the allowance going to change?
At the moment, couples in Germany can receive parental allowance up to a combined annual taxable income of €300,000.
Under initial government plans, this limit was set to fall to €150,000 for couples, meaning those earning a combined income over that limit would not receive parental allowance.
However, the plans received a barrage of criticism from higher earners.
READ ALSO: 'A horrible idea': How cuts to Elterngeld will affect families
Under pressure to rethink the plans, the coalition then agreed in November that it would be lowered gradually - and not as much as originally planned. The limit will first drop from €300,000 to €200,000 and then to €175,000.
The limit for single parents - currently at €250,000 - will be lowered to €150,000.
Tens of thousands of families are likely to lose their entitlement to parental allowance under the plans.
Last year, according to Germany’s Statistical Office, 1.8 million in Germany received Elterngeld, the majority of them women (just under 1.4 million).
What is the timescale for this?
Nothing will change for parents whose babies are born by March 31st 2024. From April 1st, 2024, however, the new €200,000 limit will apply for couples, and the €150,000 limit for single parents.
The new limit of €175,000 will apply to couples whose baby is born from April 1st, 2025. The limit of €150,000 for single parents will remain at that level.
"By delaying the reduction, we give families more time to adjust to the changes,” said Felix Döring, a Social Democrat who is part of the government team working on the changes.
Are there changes to the so-called 'partner months' ?
Yes. Up to now, couples have been able to receive standard parental allowance for a maximum of 14 months and can freely combine this.
They can take turns, so that one stays at home for nine months and the other for the rest of the time, for example.
So far, it has also been possible for both parents to take a career break for seven months to care for the child and receive parental allowance at the same time.
However, this will no longer be allowed for parents of children born from April 1st 2024. on the plans.
READ ALSO: What families in Germany need to know about Kindergeld's replacement from 2025
Elterngeld will remain at 14 months in total, “but staying at home together and receiving parental allowance at the same time should only be possible for one month within the first 12 months of the child's life", reported German media wire DPA.
However, this change will not apply to couples who give birth to more than one baby at the same time, and premature babies.
What else should I keep in mind?
As things stand, these are the current plans but there is a budget crisis ongoing in Germany.
That means that the budget for next year is still up in the air so it's not impossible for there to be some changes as the government tries to save money.
READ ALSO: What happens if Germany can't decide on a budget for 2024?
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