13
1 EP (July 2000)
but now in addition to own earnings
(maximum up to 2002 about 1.8 EP = contribution ceiling)
(2) 1992
Fictitious years of insurance in case of child care to compensate existing gaps in
insurance career as a precondition to fulfil waiting periods for taking up e.g. early
retirement pension for women at age 60.
(3) 2001
Fictitious increase of low earnings in case of child care (age 4-10) if earnings is
below average earnings by 50 %, maximum 1 EP. Precondition: waiting period of 25
years. 10 years of fictitious years of insurance in case of child care (see 2) are counted
for this waiting period.
(4) 2001
Supplementing contribution payment of long-term care insurance (to pension
insurance) by 50 % up to 1 EP (maximum) in case of care for a handicapped child (up
to age 18).
(5) 2001
Widow(er)’s pension will be reduced from 60 % to 55 % of the pension of the former
spouse and all own income will be taken into account for the calculation of the benefit.
But there will be an increase of the pension for the first child by 2 EP and 1 EP for
other children.
In case of caring for frail elderly by family members the long-term care funds pay a
contribution to pension insurance in favour of the caregiver to improve the pension claim
which is expected to become lower because of not taking up employment because of the
care given to (in most cases) a family member. The contribution payment (and therefore also
the pension claim linked to the contribution) differs according to the category of care
dependency. 9 In case of caring for an disabled child this contribution is upgraded.
Regarding financing of these elements of family policy used in social insurance schemes,
there exist important differences. For example, in health and long-term care insurance the
contribution-free coverage of children or the non-working spouse is financed by contribution
revenue of all other contributors. That means, the expenditure are financed by earnings-
related contributions (contributions based on gross earnings up to a ceiling) and paid on equal
part by employees and employers.
In contrast to this, it was a clear political decision that crediting years in case of child care in
the social pension insurance is a matter of family policy. Because the (federal) state is
responsible for family policy, all tax payers are obliged to finance these measures. It is
obvious that the effect on income distribution is different if financing is by proportional
earnings-related contributions (up to a ceiling) or by a (progressive) tax on income or a value
added tax.
9 There exist three degrees in the new German long-term care insurance scheme.