Heavy losses for families: Study: Parental allowance has been worth significantly less since its introduction

According to a study, parental allowance is worth significantly less today than it was when it was introduced in 2007. The state benefit lost around 38 percent of its purchasing power in the 16 years up to 2023, according to an as yet unpublished study by the German Economic Institute (IW). the “Rheinische Post” reported in advance.

“This development will continue without inflation adjustment,” says the analysis by study author Wido Geis-Thöne, which is also available to the dpa and is based on data from the Federal Statistical Office and our own calculations. The effects of inflation have therefore never been offset since 2007. The loss of purchasing power is affecting “more and more parts of the middle class”.

Losses affect all income levels

Parents who do not earn their own income receive the minimum amount of 300 euros per month. This amount has not been adjusted since the service was introduced. “It would have had to rise by 37.8 percent to 413 euros by 2023 in order to compensate for the inflation-related loss of purchasing power since 2007,” it says.

Even higher-earning parents would have to accept heavy losses. “Parental allowance has also lost a significant amount of purchasing power for people who receive the maximum rate, which would have had to rise from 1,800 euros to 2,480 euros if inflation had been adjusted,” writes the IW.

The maximum rate of parental allowance has not been adjusted upwards for years. This means that more and more families are reaching the maximum rate of 1,800 euros per month due to rising incomes. “If parental allowance is to work as before, the level of security for families with higher incomes should be maintained in real terms and not just in nominal terms, for which inflation compensation is essential,” demands the institute.

Traffic light balance: cuts instead of improvements in parental allowance

The failed traffic light government made up of the SPD, the Greens and the SPD had promised significant improvements to parental allowance when it took office. Among other things, the coalition agreement states: “We will make the base and maximum amounts of parental allowance more dynamic.” This was not redeemed. Instead, there were cuts in the benefit limit for higher incomes and in the parallel benefit for both parents.

From April 2025, mothers and fathers should only receive parental allowance as a wage replacement benefit if their joint annual taxable income does not exceed 175,000 euros. The limit had already been reduced to 250,000 euros in April of this year. Before that it was still at 300,000 euros.