“Our negotiations have led to the most comprehensive social policy reform in many years,” said Federal Minister for Family Affairs Lisa Paus in Berlin on Monday. She added that the Federal Government’s discussions concerning the basic child allowance marked the beginning of effective and fundamental action to combat structural child poverty in Germany.

“Central reform project”

Federal Finance Minister Christian Lindner described the basic child allowance as a “central social policy reform project in this legislative period”. He explained that it was a task that was set down in the coalition agreement – a shared concern to combine benefits and improve the take-up of available benefits.

“Children will benefit”

Federal Minister of Labour Hubertus Heil stressed that children in Germany would benefit from the agreement, adding that the current coalition had made available more financial resources for families and children than any previous Federal Government.

Deputy Government Spokesperson Wolfang Büchner said Federal Chancellor Olaf Scholz had expressed his support for the agreement on the basic child allowance.    

The goal is to introduce the basic child allowance from 2025 onwards. It is designed to ensure that up to 5.6 million families that are at risk of poverty and their children will receive benefits more quickly, simply and directly. Minister of Family Affairs Paus said that the basic child allowance would benefit 1.9 million children, who will no longer be dependent on the citizens’ basic income.

Guaranteed allowance and supplement

Planning provides for the following specific measures:

• All relevant existing benefits are to be combined in a single allowance. In future there will be a guaranteed child allowance that is independent of income – formerly the child benefit – and a supplementary child allowance. The latter is differentiated based on the child’s age and the parents’ income. To this end, the current child supplement will be developed further, and children whose parents receive citizens’ basic income or social benefits (Social Security Code II/XII) will also be eligible to receive this new allowance
• Applying for the basic child allowance is to involve a straightforward online process. Furthermore, there will be a single point of contact for all child benefits in the future: the Family Service of the Federal Employment Agency. As a result, all children will be treated equally, regardless of their parents’ employment status. Planning also provides for a so-called basic child allowance check to be developed so as to allow for an automatic review of a family’s eligibility to receive the additional child allowance.
• The Federal Government is providing 2.4 billion euros for the introduction of the basic child allowance in 2025.
• The sociocultural subsistence level will also be re-assessed in order to establish children's current real-life necessities. In addition, it will be ensured that combining benefits will not worsen the financial situation of any children.
• Single parents are more frequently affected by poverty, which is why only 45 percent of any alimony payments will be taken into account as income when calculating the additional allowance in future. Children who have been receiving citizens’ basic income will benefit from this, as 100 percent of such payments have been included in the calculation to date.
• The process for applying for benefits from the education and participation package and the so-called start of school package is to be simplified, too. Over the next few years, an “opportunities portal for children” is to be established as the central communication and organisation channel for this issue.

Essential paradigm shift

Federal Minister for Family Affairs Paus thinks of the basic child allowance as a true service. The fact that the onus would be on the state to provide benefits rather than on families to collect them marked a “paradigm shift”, she said.

Federal Finance Minister Lindner emphasised that it was important to him that “people claim what they're entitled to” and that this had to be “a goal of modern social policy”, to which the basic child allowance was making a decisive contribution.

Following input from the federal states and associations, the Federal Cabinet is expected to take the decision to get the basic child allowance off the ground within the next few weeks.