Parental allowance in the crisis: purchasing power has been shrinking drastically since 2007!

Parental allowance in the crisis: purchasing power has been shrinking drastically since 2007!

In Germany, parental allowance is faced with fundamental changes that will bring about financial cuts as well as clarifications in the rules of claim. According to a current study by the Institute of German Economy (IW), that of the Rheinischen Post has been cited, parental allowance has lost around 38 percent of purchasing power in the past 16 years due to inflation. This loss does not only affect low earners who receive the minimum amount of 300 euros per month, but also families with higher incomes, the maximum rate of 1,800 euros was not adapted to inflationary conditions. Experts urgently call for inflation compensation to maintain the security level.

changed income limits from April 2024

The planned reforms of parental allowance from April 1, 2024 will significantly reduce the income limits for the purchase of this state service. As explained in the Federal Ministry of Family Affairs, the new income limit for 200,000 euros in taxable income for births from this date and is to be reduced to 175,000 euros in 2025. This means that fewer and fewer parents will be entitled to parental allowance, which could endanger financial security during a child's first months of life, especially for families with medium and higher income.

In addition to reducing income limits, the parallel purchase of parental allowance is also regulated. In the future, this will only be possible for a month within the child's first twelve months of life, which significantly limits flexibility for many families. The need to save on the expenditure of the Federal Ministry of Family Affairs is a central reason for these tightening, such as "https://www.bmfsfj.de/bmfsfj/themen/familien-leben-beim-elterngeld-fuer-burten-2024-228588"> Officials Information can be found from the Ministry. This will become the subject of strict controllers from 2024 and could hit millions of families.