- by Bob Smith
- 3 Min
Unemployed Retirement: Amount for Individuals with No Contributions Made - Unemployed and seeking pension: what's the payout if contributions were neglected?
Let's lay it all out there: If you haven't worked a day in your life, you won't be collecting a traditional pension. But fear not, for those who've dedicated their lives to raising little ones, there's still hope for financial support.
There's a loophole for the parents who've brought up more than one child. They're entitled to claim a pension, thanks to the good old pension insurance recognizing child-rearing as valid work. Read on to find out more about this unconventional yet beneficial arrangement.
Even though the state provides a safety net for those unable to fend for themselves, it comes in the form of unemployment benefits or basic security, not pensions. These benefits are for individuals who are fit to work but have yet to reach retirement age. The alternative, known as basic security, is for those who haven't saved enough for their golden years or haven't made other arrangements.
When Little Income Gives Way to Basic Security
Basic security is essentially the pension for those who can't afford their own or didn't save enough. The German Pension Insurance recommends checking your entitlement if you have less than €1062 per month to live on.
The requirements for basic security and unemployment benefits are similar, and applications for both must be submitted at the local welfare office. In some cases, you can apply at the pension insurance directly, which will forward your application to the welfare office. If granted, basic security is paid out for a year, requiring annual reapplications.
Maintenance Obligations for Parents and Children
The state may enforce maintenance payments from parents or children earning over €100,000 a year. Assets and income are considered when evaluating basic security. Important to note that some assets, like cash up to €10,000, appropriate household goods, personal heirlooms, a house or apartment, and any income, such as maintenance payments, rental income, interest, life insurance, and widow's pensions, are offset against the claim.
You can find detailed information regarding basic security in this PDF download.
Raising Children – A Ticket to a Pension
Child-rearing can pave the way to a pension, even for those who've never formally worked. The way it works: for each child born after 1992, one parent receives 3 years of pension contributions credited to their account, amounting to one "pension point" per child annually. In total, parents can claim up to 12 pension points through child-rearing credits.
It's worth noting that these credits can only be claimed by one parent at a time, but they can share the "waiting period" between them—basically, whichever parent primarily takes care of the child.
Once parents have accumulated five pension points through child-rearing credits, they've reached a pension claim. The German Pension Insurance refers to this as a waiting period, which is essential to know. An application is necessary for it to happen—they call it account clarification.
If you've got four children, you could potentially receive up to €451 per parent monthly (as of April 2024) in pension benefits. Head here for more information.
- Basic security
- Pension
- Children
- German pension insurance
- DRV
- Retirement provision
- Pension claim
- Despite not receiving a traditional pension due to lack of work history, parents who have raised multiple children can still claim a pension, as the pension insurance acknowledges child-rearing as valid work.
- When income is insufficient to sustain a livelihood, individuals may qualify for basic security, which functions as a pension for those unable to afford their own or save enough for retirement.
- Vocational training and contributions to personal-finance might be beneficial avenues for those who wish to secure a larger pension beyond the child-rearing credits, as these can potentially contribute to additional pension points.
- The German Pension Insurance provides a loophole for parents, granting them 3 years of pension contributions for each child born after 1992, amounting to one "pension point" per child annually, up to a maximum of 12 points through child-rearing credits.
