The motherhood pension gap in Germany: which role do the pension-related childcare credits play?

Abstract The motherhood pension gap (MPG) measures the difference in pension entitlements between mothers and childless women and provides some indication of whether parenthood is a risk factor for women’s old-age security. In this research report, we focus on the role of pension policies in mitigating the MPG. We raise the question of whether pension-related childcare credits are effective in increasing mothers’ public pension entitlements in Germany and whether patterns differ by region (East and West Germany), age, and the number of children for women born between 1952 and 1959. The analysis is based on a subsample of the register data from the German Pension Fund (n = 78,222). 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 for the childbearing years, but widens again at later ages.