Skipping Social Security: What Happens if You've Never Worked and Reach Retirement Age?
Unemployment Compensation: Amount for Jobless Individuals without Prior Contributions - Unemployed retirement benefits: what's the payout when contributions are missing?
Curious what happens if you haven't worked a day in your life and you hit retirement age? Here's a no-nonsense breakdown.
There's an exception for parents who've raised more than one kid. They can possibly get a claim for a pension since the insurance also acknowledges child-rearing work. Let me tell you more about that in a minute.
Otherwise, if you haven't worked and you're not ready for retirement just yet, the state offers support. They either provide you with a Asoziale Hilfe (citizen's allowance), also known as "Hartz IV". This benefit is given to those who can work and aren't retired. If you're retired and can't live on your pension, you may be entitled to a more basic form of support called Grundlast, sometimes referred to as "basic security".
Falling Short on Retirement Funds? Apply for Basic Security
In essence, basic security is for those who haven't saved enough for retirement and don't have alternative means to support themselves. The German Pension Insurance recommends reviewing your claim if you have less than €1062 per month to live on.
The conditions for basic security and citizen's allowance are quite similar, and you'll need to apply for both at your local social welfare office. You can exceptionally submit your application for basic security with the pension insurance, who then forwards it to the social welfare office. If you're granted basic security, it's paid for 12 months. Submission of a new application must be done annually.
Dependency on Assets and Maintenance
The state requires recipients of basic security to deplete their assets first. Additionally, parents or children who earn over €100,000 may be called upon for maintenance payments.
Assets, income, maintenance payments, rent, interest, life insurance policies, or widows' pensions are all factored into basic security calculations. This implies that, in a hypothetical scenario where you haven't worked, your alternative sources of income will be considered before granting you basic security.
The German Pension Insurance has published a detailed brochure on basic security, which you can download as a PDF here.
Parents, too, Can Lay Claim to a Pension
As mentioned, parents can get a pension even if they haven't worked: the so-called child-rearing periods. One parent is typically credited with three pension years per child, usually the mother. If the child was born before 1992, it's only two and a half years of pension time. When both parents accumulate five years of child-rearing periods, they gain a pension claim, a term the German Pension Insurance (DRV) calls the "waiting time". It's crucial to note that an application is necessary, and this doesn't happen automatically.
The three years per child can be claimed by one parent at a time. Parents can also divide the waiting period between themselves, depending on who primarily raises the child. The pension years can only be claimed as long as they don't have other childcare claims, such as civil servants.
Child-rearing years are roughly valued at around one contribution point. This means that a mother or father has the same level of pension claim as if they had earned almost the average wage. Nonetheless, even four child-rearing years (12 pension years) may not exceed a pension claim that exceeds basic security. For a parent who has never worked, the pension insurance pays a maximum of €451 (as of April 2024) per month for four children.
For further information, visit here.
- Basic Security
- Pension
- Children
- German Pension Insurance
- DRV
- Retirement Provision
- Pension Claim
[1] German Parliament's Library: Collection on Statutory Retirement Ages in Germany: Development and Legal Regulation.
[2] Federal Ministry for Family Affairs, Senior Citizens, Women and Youth: Basic security.
[3] German Pension Insurance: Basic security.
[4] Federal Ministry of Labour and Social Affairs: Basic security.
[5] Federal Employment Agency: Basic security.
- The exception for parents who've raised more than one child to gain a pension claim is recognized by the German Pension Insurance (DRV), acknowledging that child-rearing work is considered as vocational training in a roundabout way.
- A person who hasn't worked and reaches retirement age might potentially depend on basic security, a type of financial aid provided by the state, when other retirement funds fall short.
- In cases where an individual is entitled to both basic security and citizen's allowance, an application can exceptionally be submitted for basic security with the pension insurance.
- Parents who've stayed home to raise their children can claim child-rearing periods as vocational training, valuable for calculating their pension claim when they apply for retirement provision.
