Germany’s decision to boost the mother’s pension, a policy enhancing retirement benefits for older parents, has ignited a heated discussion about its economic and social implications, according to a recent Reuters report. The reform, expanding on a 2014 initiative, grants mothers of children born before 1992 an additional pension point, increasing their pension wealth by €3,380 per child, equivalent to 4.4% of their average pension wealth, per a CEPR study. While aimed at recognizing caregiving contributions, the policy has drawn criticism for placing financial strain on younger generations and failing to tackle Germany’s persistent gender pay gap or broader inequalities.
The mother’s pension, part of Germany’s pay-as-you-go system, relies on current workers’ contributions to fund retirees’ benefits. With the elderly-to-working-age population ratio projected to rise from 37.3% in 2022 to 49.8% by 2050, according to Bruegel, the reform increases contribution rates for younger workers. “This places more burden on labor and younger generations,” said economist David Pinkus, noting that a new €12 billion investment fund, set to grow to €200 billion by the mid-2030s, only partially offsets the cost. Critics argue this approach prioritizes older parents over sustainable pension financing, especially as contributions are expected to rise to maintain a 48% pension level until 2039.
The policy also falls short in addressing Germany’s gender pay gap, which stands at 16% in unadjusted terms, with women earning €1,080 monthly pensions without children, dropping to €800 for those with three or more, per a DIW report. “Pension-related childcare credits are meant to reduce the gender pension gap, but they don’t address underlying wage disparities,” said DIW researcher Clara Schäper. Women’s frequent career interruptions for childcare, higher part-time work rates (47% of working women versus 11% of men), and employment in lower-paid sectors contribute to a 29.9% gender pension gap, according to Destatis.
Key concerns include:
- Younger Generations’ Burden: Higher contributions strain workers as the aging population grows.
- Persistent Gender Pay Gap: The policy does not address wage disparities driving pension gaps.
- Regional Disparities: The pension gap is 37% in western Germany but only 10% in eastern Germany, reflecting differing labor histories.
Advocates argue the mother’s pension acknowledges caregiving’s value, but critics, including Schäper, note, “It doesn’t tackle structural inequalities like part-time work or low-wage jobs dominated by women.” The policy’s focus on older parents leaves younger workers and women in lower-paid roles without direct benefits, fueling calls for broader reforms, such as mandatory pension inclusion for self-employed workers, to ensure equitable support across generations and genders.
