A Guide for the Unworked: Understanding Germany's Basic Security and Pension for Parents
- by Matthias Urbach
- 3 Min
Unemployed Retirement: Quantifying Benefits for Those Without Work-Related Contributions - Unemployment and Pensions: What's the Entitlement when Contributions Are Missed?
In layman's terms: If you've spent your life unwaged and without a pension, fret not! Germany's social safety net's got your back. Let's delve into the intricacies of basic security and childcare credits.
First off, if you ain't worked a day in your life, you can't claim a pension. However, there's a special exception for dedicated parents: those who've raised more than one kid can assert a pension claim. Mind you, this rule applies only when the state recognizes child-rearing work—information on child-rearing periods can be found below.
Now, if you can't work and haven't hit retirement age, you're entitled to citizen's allowance, formerly known as unemployment benefit II (ALG II) or colloquially as Hartz IV. But what if you're of retirement age and lack the necessary pension? Enter basic security, a sort of pension for the under-resourced.
Basic Security for the Underprivileged
Basic security caters to those with insufficient pension income. According to the German Pension Insurance, if your monthly income is below 1062 euros, it's prudent to check your eligibility for basic security. The conditions for basic security and citizen's allowance are strikingly similar, with applications submitted at your local Social Welfare Office. Exceptions to this rule include instances where you apply for basic security directly with the pension insurance, who then forwards the application to the Social Welfare Office. Keep in mind that the claim is valid for twelve months; a yearly reapplication is required.
The state expects you to exhaust your assets before receiving basic security. However, certain assets like cash up to 10,000 euros, household items, and personal heirlooms aren't considered in the calculation. The same goes for a house or apartment when it's deemed suitable for the state providing for maintenance.
In addition, any income like maintenance payments, rental income, interest, life insurance, or widow's pensions are offset against your claim.
The German Pension Insurance provides a comprehensive brochure on the details of basic security; simply follow this link to download the PDF.
Pension for Parents: Child-Rearing Credits
As previously mentioned, parents can earn a pension claim even without a work history, thanks to child-rearing periods. Parents are credited with three pension years for each child—usually the mother. Parents born before 1992 receive 2.5 years of pension time per kid. If five pension years are achieved, a pension claim is established; the German Pension Insurance speaks of the five-year "waiting period." Pension years are available only when neither parent holds other childcare claims, like those held by civil servants. Worth noting: an application is vital—the pension insurance refers to the so-called account clarification, which occurs only upon application.
Parents can divide the waiting period among themselves, depending on who mostly raises the child. Child-rearing periods are valued around one contribution point, providing a pension claim equivalent to working towards the average wage. Nevertheless, even four child-rearing periods wouldn't secure a pension claim surpassing basic security: the maximum pension amount for an unworked parent with four children is 451 euros (as of April 2024), as per the DRV's website.
- Basic security
- Pension
- Parents
- Children
- German Pension Insurance
- DRV
- Retirement provision
- Pension claim
- If you're a parent who hasn't worked much or at all, you can still earn a pension based on child-rearing credits, as each child credit equals three pension years. However, be aware that even four child-rearing periods might not provide a pension claim exceeding basic security, with the maximum pension amount being 451 euros (as of April 2024), according to DRV's website.
- To supplement your income during retirement, it's essential to understand the benefits of basic security, which caters to those with insufficient pension income. You may be eligible if your monthly income is below 1062 euros, as per the German Pension Insurance. Financing your personal-finance and wealth-management needs in retirement can be addressed through effective planning, including understanding your entitlements like basic security.
