Ifo Institute suggests cuts to parental allowance and mothers' pensions

The Ifo Institute, a prominent German economic research organization, has put forward a series of proposals for federal budget cuts, targeting social benefits like parental allowance and mothers' pensions. These suggestions were made in a study commissioned by the Initiative Neue Soziale Marktwirtschaft (INSM), a lobby group.

Among the key recommendations is a drastic reduction in the income limit for receiving parental allowance (Elterngeld). The Ifo Institute suggests lowering the threshold to a taxable income of 50,000 euros per year, a significant drop from the current limit of 175,000 euros. This change would affect a large number of families currently eligible for the benefit.

For the pension system, the institute proposes decoupling pension increases from wage growth and instead linking them to inflation. Furthermore, it suggests a phased reduction of the mothers' pension (Mütterrente) over the next four years, bringing it down to 50 percent of its current level. The Ifo Institute also recommends a blanket 15 percent annual reduction in all unapproved federal subsidies over a four-year period.

Collectively, these proposed measures could lead to annual savings of up to 60 million euros, according to the institute's analysis. The proposals are likely to spark debate about social welfare spending and fiscal policy in Germany.