For 16 years, families have complained through all instances in order to achieve relief from social security contributions. The Federal Constitutional Court has now decided that their claim is partly justified: the legislature must take the number of children into account when contributing to long-term care insurance in the future.
The previous general distinction between parents and childless puts parents with several children at an inadmissible disadvantage. The highest German court has given the federal government just one year to implement the required new regulation.
In addition to this legal success for the plaintiffs and the family associations supporting them, the judge’s decision also includes a much more serious defeat: the highest German court sees no reason to change the parents’ contribution burden in the statutory health insurance or in the pension system. And these two social security funds together account for the lion’s share of social security contributions.
In long-term care insurance, childless people already pay a surcharge that raises the regular contribution rate from 3.05 percent to 3.4 percent of gross wages. However, the Federal Constitutional Court complains that this regulation does not take into account the number of children, but rather treats all parents equally.
“In social long-term care insurance, the same contribution burden on parents, regardless of the number of children, leads to equal treatment of significantly unequal things, which is unjustified under constitutional law,” says the reasoning for the judgment. This is unconstitutional.
Firstly, parents of larger families have higher costs and secondly fewer opportunities in professional life, the judges argue. Despite numerous measures to compensate for this, it is mainly mothers with several children who work less often and therefore earn less money over the course of their lives.
Federal Minister of Health Karl Lauterbach (SPD) is now required to get the requested new regulation off the ground as quickly as possible. The ministry announced that the reasons for the decision would be analyzed in detail and the necessary proposals for adjustments would be drawn up quickly.
However, the legislature has plenty of leeway when it comes to the design. So it would be possible that parents with only one child would have to pay half a supplement in the future, while a corresponding contribution discount would be granted from the third child onwards. According to the judgement, it would also be expressly permissible to finance such a compensation, which is graduated according to the number of children, via a tax-financed federal subsidy.
The social long-term care insurance has received tax funds since the corona crisis, and the traffic light parties have already committed themselves in their coalition agreement to support the long-term care insurance funds permanently with a federal subsidy of one billion euros.
Three families from Baden-Württemberg, each with three or four children, had sued. You see a systematic disadvantage for parents both in the long-term care insurance and in the pension system and health insurance. The complainants and the family associations supporting them point out that all three social insurance schemes are organized on a pay-as-you-go basis: the young people’s contributions are predominantly used to finance services for the older ones.
Young people are therefore just as relevant to the functioning of the social systems as the payment of contributions. As early as the 1990s, the Federal Constitutional Court had therefore demanded changes to pensions with the “rubble women judgment” and then in 2001 with the “nursing judgment” also to social long-term care insurance.
The legislature responded to the judges’ rulings. Since 1995, child-rearing periods have been taken into account when calculating the pension. In 2005, the childless allowance was introduced in long-term care insurance, which was initially 0.25 percentage points and since 2021 has now been 0.35 percentage points.
However, from the point of view of the families who had complained to Karlsruhe, these regulations are far from sufficient. In order to give appropriate consideration to child-rearing, they wanted to achieve lower social security contributions in long-term care, pension and health insurance that were graded according to the number of children.
The family associations also criticize the structural discrimination of families and in particular of parents with many children in the social system. The family association of Catholics points out that the risk of poverty increases with the number of children.
The point of criticism: While in tax law the state spares the subsistence level of the children – via child allowances or child benefit – this does not apply to social insurance. The contribution amount depends solely on income.
The number of children does not play a role in statutory pension and health insurance, although children also affect financial ability. Even the subsistence level of the children is therefore subject to contributions, which is why parents with lower incomes – and in the case of large families even those with an average income – slip below the risk of poverty. In order to prevent this, family associations are calling for the introduction of child allowances in social security.
However, the Federal Constitutional Court did not follow this argument. The judges of the First Senate point out that family benefits have been expanded in recent years. With the parental allowance, the child allowance surcharge for low-income families or the daycare expansion, new benefits for parents have been introduced since the 2005 care ruling, which also make it easier to combine work and family.
In the statutory health insurance, children and non-working spouses are insured free of charge. Medical services would also – unlike care – “used to a considerable extent in childhood and adolescence”, the court justified the rejection of a contribution reduction for parents in health insurance.
The contribution regulations in the pension insurance system are also constitutional. The judges found that by taking child-rearing periods into account when calculating the pension, the legislature had already compensated for the additional economic burden on parents.
The family associations involved in the lawsuits do not want to give up in their fight for relief for parents in pension and health insurance. The dismissal of the constitutional complaints brings clarity “that family-friendly social security contributions can only be achieved through political means,” said the President of the German Family Association, Klaus Zeh.
Ulrich Hoffmann from the Catholic Family Association announced that he intends to continue working towards the goal of child allowances in all branches of social security. After all, the future of the solidarity contract between generations depends on the care and upbringing of the children.
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