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whether caring for children within the family (at least for some years) without being
employed is supported and looked upon as useful for society.6
There can also be measures to improve the financial situation of parents when they are
retired. This can be done for example by crediting pension claims because of former periods
of child care. While this becomes effective in old age by a higher pension it can, however,
also be argued that this reduces the costs in pension insurance in the pre-retirement period
because, if the mother or father wanted to accumulate this additional pension claim, she or he
had to pay a higher contribution.
In the following, the German situation is outlined with regard to some basic information on
how families are treated within social insurance (4). Then the present debate on improving
the conditions of families within social insurance and social security in general - caused by a
decision of the Constitutional Court - as well as the basic instruments proposed in the
discussion will be analysed (5).
4. Transfers to families from public budgets and by social
insurance in Germany
There exists a great variety of transfers in favour of families in Germany, mainly from public
budgets. Overview 2 gives some macro-data. Beside transfers in cash and tax expenditures
for families with children by different programs (as direct instruments of family policy like
child benefits, tax allowances, maternity, parental and childcare leave, but also as transfers
linked for example to housing subsidies) there are price subsidies and transfers in kind like
public education without fees, public child care facilities. The global figures on public
expenditure for families with children given in Overview 2, however, are not comprehensive
regarding public instruments and neglect private expenditure, for example those provided by
firms (employers). Starting in the year 2002, there are now also additional subsidies (transfer
payments or tax expenditure) for families in case of saving in certified types of private
pensions.7
for taking up employment - or may make it necessary by financial reasons because of the
additional contribution burden.
6 For an overview of different approaches see Kaufmann et al. (2001).
7 These certified capital funded products are designed as a substitute for a reduction of PAYGO
financed social pensions. For a discussion on this as well as the regulations regarding private
pensions see Schmahl (2003).