Can't Work? Can't Retire? Here's What You Need to Know About Pension
- by My Friend Matty
- 3 Min
No Work, No Pay? Learn About Zero-Contribution Pension Eligibility - Penalties Occur when Work Absence Persists or Pension Obligations Remain Unfulfilled
In plain English: No work, no pension.
However, there's a loophole for parents who've raised more than one kid - they can make a pension claim. More on that below.
But don't worry, the government doesn't leave its citizens high and dry. For those who can't support themselves, there's the Citizen's Allowance (formerly known as "unemployment benefit II" or ALG II). This one's for those who can work but haven't found a job yet and aren't retirement age. There's also something called the Basic Security, designed for those who haven't earned enough through the pension system, or haven't planned for retirement.
Struggling to Survive on Your Pension? Basic Security's Got Your Back
Basic Security, in essence, is a pension for folks who've worked too little to live off their pension, or haven't made proper retirement provisions. The German Pension Insurance suggests that if you have less than €1062 to live on monthly, it's worth checking your claim to Basic Security.
Application procedures for Basic Security and Citizen's Allowance are quite similar, and both require you to approach your local social welfare office where you reside. Depending on the situation, you can even apply for Basic Security directly at the pension insurance, who will simply forward the application. If granted, Basic Security is paid for 12 months at a time, so you'll have to submit a new application annually.
Child-Rearing Definitely Counts as Work (Kinda)
The state expects you to deplete personal assets before granting these benefits, and parents or children might be required to contribute maintenance if they earn over €100,000 gross annually.
Now, let's not forget, we're assuming this individual hasn't worked at all. In that case, any income sources, such as maintenance payments, rental income, interest, life insurance, or widow's pensions, will be taken into account when assessing the claim.
The German Pension Insurance mentions a handy guide on the specifics of Basic Security. You can download the guide here as a PDF.
Taking Care of the Kids... and Yourself
As mentioned, parents who've raised more than one child can assert a pension claim. This is called the 'child-rearing periods' - usually moms are given credit for three years per kid. If the child was born before 1992, it's only 2.5 years of pension time. Parents who've racked up five years are entitled to a pension claim; the German Pension Insurance calls this the 'waiting time.' It's essential to note that an application must be submitted for this.
The three years per child can only be claimed by one parent at a time. However, parents can also divide the 'waiting period' among themselves. Mom took the first year with baby number one, dad got the next year, and so on. But remember, parents can't claim this benefit if they have alternative childcare claims, like civil servants. Each child-rearing year is worth approximately one contribution point, making the parent's pension claim comparable to earning nearly the average wage. Even four child-rearing years (12 years) won't yield a pension claim that exceeds the basic security. The pension insurance offers a maximum of €451 (as of April 2024) a month for a parent with no job history and four kids. For more information, check out the DRV website.
- Pension
- Basic Security
- Retirement Provision
- Pension Claim
- Community policies often include provisions for pension should one become unable to work, providing a safety net for citizens.
- Pension and retirement provision are crucial considerations, especially in light of the inconclusive nature of work-life and health.
- The loophole for parents who've raised more than one child allows them to make a pension claim, known as the 'child-rearing periods.'
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