Benefits provided by the German Pension Insurance Scheme – Transitional allowance

Determining the basis for calculation and the eligibility criteria for transitional allowance

Transitional allowance is a benefit in lieu of earnings and is provided to ensure a livelihood whilst undergoing rehabilitation.

Insured persons who, under the statutory pension insurance scheme:

• a benefit to facilitate participation in working life, known as vocational rehabilitation,
• a medical rehabilitation benefit,
• a benefit for prevention, or
• any other benefit to facilitate
• a phased reintegration

and are not receiving continued pay from your employer, you may be entitled to a transitional allowance. This is the case if you were in paid employment immediately prior to the start of the measure and had paid pension insurance contributions. The transitional allowance is then calculated on this basis.

If you are self-employed, you must have earned income from work immediately prior to the start of the measure. Furthermore, pension insurance contributions must have been paid in the calendar year prior to the start of the measure. The transitional allowance is calculated on the basis of these contributions.

If you were receiving Unemployment Benefit I, sickness benefit or injury benefit immediately before the start of the programme, you may be entitled to the transitional allowance if pension insurance contributions were paid on the remuneration or income on which the benefit was based. The transitional allowance is then calculated on the basis of the social security benefits received.

Special conditions apply if you are receiving basic income support. Seek advice from the German Pension Insurance.

Amount of the transitional allowance

The transitional allowance is calculated on the basis of:

• 68 per cent or
• 75 per cent, if there is a child or stepchild who triggers an entitlement to child benefit, or if the insured person is being cared for by a spouse or civil partner and is therefore unable to pursue gainful employment,

.

If Unemployment Benefit I (Alg I) is being received, transitional allowance may be granted up to the amount of that benefit.

Social security contributions on transitional allowance payments are paid in full by the pension insurance scheme; only if no proof of parenthood is provided is the additional contribution to social care insurance deducted from the transitional allowance.

If proof of parenthood is provided within three months of the transitional allowance decision being issued, the transitional allowance is recalculated retrospectively; otherwise, the recalculation can only take place after the month in which proof of parenthood is provided.

Gradual reintegration

If a medical rehabilitation benefit has been provided by the statutory pension insurance scheme, a phased reintegration into the previous job is possible thereafter, subject to certain conditions. Working hours are gradually increased until full working capacity is regained.

If there was a previous entitlement to transitional allowance, there is generally also an entitlement during the phased reintegration.

Duration of transitional allowance payments

Transitional allowance is paid whilst the individual is participating in the programme. Under certain conditions, it may also be granted between two programmes – known as interim transitional allowance – or following a programme to facilitate participation in working life, known as follow-up transitional allowance, at reduced rates for a maximum of three months.

In the case of benefits to support participation in working life, the transitional allowance may continue to be paid for a maximum of 42 days in the event of an interruption due to illness, provided that the benefit is expected to continue.

Special provision for a benefit to facilitate participation in working life

In special cases, the basis for calculating the transitional allowance for benefits to facilitate participation in working life is determined on the basis of a notional wage if basing the calculation on the insured person’s actual income prior to the start of the benefit would result in an inappropriate amount of transitional allowance. An information sheet on this subject is enclosed with the application documents.