A new study from the Ifo Dresden branch suggests that the German government’s planned Elterngeld (parental allowance) reform slated for 2027 may yield significantly less budgetary relief than initially hoped. According to the research, the state’s goal of saving money conflicts with the simultaneous aim of increasing father participation in the current parental allowance scheme. Kyra Puteanus, an Ifo researcher, noted that “the more fathers engage with the reform, the less money the state saves.”
The reason for this discrepancy is that, on average, fathers receive higher parental allowance payments than mothers. The study projects that depending on the number of fathers taking the benefit, the reform could generate savings of up to 880 million euros between November 2027 and the end of 2030. In contrast, the Federal Family Ministry aims to save approximately 1.6 billion euros during the same period. The crucial factor determining the savings amount is the proportion of fathers who will draw the parental allowance in the future. Currently, this figure hovers around one in every two fathers.
If the proportion of participating fathers increases by just one percentage point each year, the projected savings drop to about 597 million euros. If the increase is two percentage points, the savings amount falls further to 311 million euros. The state saves nothing at all if the participation rate rises annually by approximately 3.1 percentage points or more. Most recently, this rate has only increased by 0.2 percentage points per year. However, according to Ifo researcher Franziska Nuernbergk, the proportion of fathers receiving parental allowance nearly doubled since 2010, meaning a rapid increase is not impossible, especially if other months are lost.
The reform is scheduled to come into effect on November 1, 2027. Under the new rules, parents will receive a maximum of twelve months of parental allowance, down from the current fourteen. Of these twelve months, three must be dedicated exclusively to either the mother or the father, while the remaining six months can be split freely between the parents. Simultaneously, the minimum payment increases from 300 to 330 euros, and the maximum payment rises from 1,800 to 1,900 euros. While the state saves money through the shorter duration for mothers, the change results in higher costs for fathers. Fathers receive an average of 1,345 euros per month, compared to only 845 euros for mothers. Almost 39 percent of fathers qualify for the maximum payment, while this figure is close to 17 percent for mothers.
The study calculated these costs by comparing the financial requirements of the parental allowance both with and without the reform for the period extending from November 2027 to the end of 2030. The analysis is separated by mother and father. It is based on data from the Federal Statistical Office regarding births in 2023, along with the office’s birth rate projections. The parental allowance amounts were extrapolated using growth rates observed from 2021 to 2025.
