Uncovering the Pension Mysteries for Parents Who Haven't Worked
Unemployed Retirement: Income Prospects for Those Without a Work History Contribution - Unemployment and Pensions: Unpaid Contributions and Pension Amounts Explored
Let's get real: If you've never set foot in the workforce, you're out of luck when it comes to a pension. However, there's an exception for parents who have raised more than one kid. They can lay claim to a pension entitlement because the German pension insurance also acknowledges child-rearing work as valid contribution years. Here's the lowdown.
When Kid-Rearing Counts as Work
If you've gone all-in parenting, there's a glimmer of hope. The German pension insurance considers child-rearing as legitimate work, allowing parents to claim up to three pension years for each child. Keep in mind, though, that only one parent can claim this per child, and the other parent needs to have contributed to the German pension system in some way before.
The State's Financial Safety Net
For those who can't work or support themselves, the state offers two safety nets: Citizen's Allowance (formerly "unemployment benefit II" or "Hartz IV") and basic security. Citizen's Allowance is for folks who can work but haven't yet retired, while the basic security is for those who can't make ends meet on their pension or have no other means to support themselves.
Down to the Nitty-Gritty: Basic Security
Basically, basic security is a safety net for folks who haven't contributed enough to the pension system to live comfortably after retirement or for those who hadn't made other financial arrangements for their golden years. If you're living on less than 1062 euros a month, it's worth checking if you're eligible for basic security.
Maintenance Dances: Parents on the Hook
The state takes parents or children earning over 100,000 euros annually into account when calculating basic security payments. However, don't fret if you have assets under 10,000 euros, reasonable household goods, or treasured heirlooms worth more than their monetary value. You can also keep your house or apartment, as long as the state's contribution matches its worth.
Dollars and Cents: Income Matters
If you've never worked, just know that maintenance payments, rental income, interest, life insurance payouts, or widow's pensions will be deducted from the basic security amount, as will any other income you might have.
Dive Deep: More Resources for Parents
The German Pension Insurance has published a comprehensive guide on basic security. For a more in-depth understanding, check out the official PDF guide.
Raising Four Kids? Here's the Pension Deal
If you've got four kids, your child-rearing years will net you around 12 years of "waiting time" (the German Pension Insurance's term for contributions that don't automatically give you a pension right away). After five years, you'll have a pension entitlement, although it may not be enough to exceed the basic security. In fact, the maximum pension you can receive for raising four kids is 451 euros (as of April 2024) if you've never worked.
- Basic security
- Pension
- Children
- German pension insurance
- DRV
- Retirement provision
- Pension entitlement
_[1] For parents who have never worked in Germany but have raised their children there, eligibility for basic security and pension in Germany may still be complex. Here's a breakdown of the relevant information:
Basic Security (Basic Pension or Grundrente)
The Grundrente is a supplemental pension for individuals who have contributed to the German pension system for at least 33 years and have had average earnings below 80% of the average earnings. It is not applicable to those who have never worked in Germany. However, times spent caring for children can be considered in pension calculations if the individual has paid into the German pension system at some point.
Pension Claim for Parents
In Germany, parents who have cared for children may receive a pension supplement due to childcare periods being counted as contribution periods. However, to benefit from this, they would typically need to have some form of connection to the German pension system, such as having worked in Germany or having a spouse who has contributed to the system.
Eligibility for Parents Who Have Never Worked in Germany
For international parents who have never worked in Germany but have raised children there, they might not qualify for the basic pension or regular pension claims unless they have contributed to the German pension system through other means or have a social security agreement with their home country.
Amount of Pension
The amount of a pension in Germany depends on the number of years of contributions and the average earnings over the contribution period. For those who have never worked in Germany, the pension amount would be nonexistent unless they have a form of pension entitlement through international agreements or other special circumstances.
International Agreements
Germany has social security agreements with several countries, which can affect eligibility for pensions. However, childcare periods are generally not directly compensated unless there is a specific agreement or contribution to the German system. Additionally, the pension entitlement from Germany might not satisfy the minimum pension requirement to receive a pension from the parent or child's home country.]
- The German pension insurance acknowledges child-rearing as legitimate work, allowing parents to claim up to three pension years for each child.
- For those who haven't contributed enough to the pension system or made other financial arrangements for their golden years, the state offers a safety net called Basic Security, which is a supplemental pension for individuals who need it.
- International parents who have never worked in Germany but have raised children there might not qualify for the basic pension or regular pension claims unless they have contributed to the German pension system through other means or have a social security agreement with their home country.
