Family, social security and social insurance: General remarks and the present discussion in Germany as a case study

12

pension if children
were born

- In unemployment insurance unemployment benefits for insured people with children are
higher compared to benefits for persons without children.

- In health insurance and long-term care insurance children as well as the non-working
spouse (that means not being employed) are covered without paying own contributions or
without the husband paying contributions for them. In health insurance there are also
benefits in case of pregnancy and maternity.

- In pension insurance several instruments are used in favour of families. Overview 4
gives information on five instruments used in Germany.⁸ As already mentioned, a
contribution is paid from the federal budget in case of caring for children (for 3 years per
child based on average earnings). This affects the pension of the insured person. The
rules for crediting these years has changed over time. In the future there will also be a
bonus for widow’s/widower’s pensions in case the person had a child. Several other
instruments are used to improve the pension benefit in old age or in case of disability if
contributors had periods of child care during their working life.

Overview 4: Instruments in social pension insurance focused on families

(1) Crediting years of child care

- number of years

- Earnings Points (EP) per year

1986  1 year      0.75 EP

but own earnings replace the credit

1992  3 years     0.75 EP

1999            gradual increase to

8 For a better understanding of these instruments it is necessary to mention that the individual
pension claim in social pension insurance is based above all on the following two factors in case
of employment:

(1) the relative amount of gross earnings, i.e. individual gross earnings (in a specific year) divided
by the average gross earnings of all insurance persons in this year (Earnings Points) and (2) the
number of years of insurance. If individual earnings is just as high as average earnings, one
Earnings Point is credited in the individual account in social pension insurance. Pension
calculation takes into account the sum of all Earnings Points. In addition to Earnings Points from
periods of employment there are for example Earnings Points based on contributions from health
insurance, unemployment and long-term care insurance as well as by the state. But there can be
also a crediting of Earnings Points without a contribution payment (e.g. for some years of
schooling).

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