The government wants the childcare allowance to eventually disappear. In its place will be a new funding system for childcare. The new system will be simpler and offer parents more certainty about what they have to pay for childcare. Childcare costs will go down for most working parents. What are the plans?
Placement agreement and reimbursement to childcare organisation
The parent enters into a contract with the childcare organisation to purchase childcare, known as the placement agreement. After concluding the placement agreement, the parent must agree to the application for childcare compensation. The childcare organisation submits this application to the executor. By agreeing, the parent explicitly declares that at that time he or she meets the conditions, the most important of which is meeting the work requirement.
Income-independent, low parental contribution
The parent no longer receives a high reimbursement from the government to pay the childcare organisation's bill, but only pays a parental contribution to the childcare organisation. This parental contribution is equal to 4% of the hourly rate up to the maximum hourly rate, multiplied by the agreed number of hours of care per month. Income no longer plays a role in determining the amount of the parental contribution. If the actual childcare rate is higher than the maximum hourly rate (on which the childcare fee is based), the parent pays this difference directly to the childcare organisation. Costs for additional services offered by the childcare organisation, such as hot meals, are also paid by the parent directly to the childcare organisation.
Employment requirement remains
For the childcare allowance to be granted, it is important that the parent meets the conditions, including the work requirement. The work requirement corresponds to the work requirement in the current childcare allowance. This means that the parent must be in paid employment (employed or self-employed), is preparing for paid employment (pathway from work to work, a training or an integration course) or is excluded from participating in the labour process as a result of detention or long-term care.
No recovery
An important difference with the current system is that once a childcare allowance is granted, it is not reclaimed from the parent. For example, if a parent stops working, this only affects the entitlement to the childcare allowance into the future.
Basic income disappears
To simplify the system, the income basis will disappear. This means that the income of parents will soon play no role in determining the amount of the childcare allowance. This will also make it possible to simplify the partner concept for the work requirement test. In the current, income-dependent childcare allowance, the partner concept from the General Act on Income-dependent Schemes (AWIR) applies. That partner concept assumes financial responsibility for the child. In the new system, there will be a so-called 'parent concept'. For the test on the work requirement, the parent(s) of the relevant child according to the Basic Registration of Persons (BRP) will be assumed. If a child's parents live at the same address, the work requirement applies to both parents. Otherwise, the work requirement only applies to the parent with whom the child lives according to the BRP and for whom the childcare allowance is applied for.
Potential staff shortages and additional measures
As with any major overhaul, the transition to a new system is complex and not without consequences. Besides the obvious benefits, the government is also mindful of the risks. These may arise particularly during the transition period. The transition to the new system will almost certainly lead to an increase in demand for childcare. If supply cannot keep up with the extra demand, this could lead to price increases and waiting lists. If prices rise, this will particularly affect low-income households. They are often already entitled to the maximum childcare allowance rate. And therefore they do not benefit from the new high general reimbursement rate.
The government is aware of this. It is exploring possible additional measures to mitigate adverse effects in the coming period. Among other things, it is looking at the role of municipal childcare policies, preventing large price increases and countering staff shortages. The government will decide on possible additional measures next spring at the earliest.
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