The Motherhood Pension Gap in Germany: Which role do the pension-related childcare credits play?

The Motherhood Pension Gap (MPG) measures the difference in pension entitlements between mothers and childless women. It indicates whether parenthood is a risk factor for women’s old-age security and whether social policies can cushion some of the adverse effects of having children. In this paper, we raise the question of whether pension-related childcare credits are effective in increasing women’s public pension entitlement in Germany and whether patterns differ by region (East and West Germany), birth cohorts, age, and the number of children. The analysis is based on the Versichertenkontenstichprobe 2020 (VSKT2020), a subsample of the register data from the German Pension Fund (n=231,738). The variable of interest is a woman’s accumulated public pension entitlement, calculated with and without pension-related childcare credits. The results show a strong and pronounced public pension penalty for mothers in West Germany, but not in East Germany. Once pension-related childcare credits are considered, the motherhood pension gap is greatly reduced during the childbearing years. For example, for a West German mother of the cohorts 1952-59, the motherhood pension gap at age 45 drops from 44% to 21% when pension-related childcare credits are accounted for. However, the gap widens again at later ages.