Headnotes

to the Order of the First Senate of 7 April 2022

- 1 BvL 3/18 -

- 1 BvR 717/16 -

- 1 BvR 2257/16 -

- 1 BvR 2824/17 -

(Economic costs of child-raising in the social security system)

1. When imposing liability for public social insurance schemes, the legislator must observe the principle of equal burdening, which derives from the general guarantee of the right to equality in Article 3(1) of the Basic Law and applies to all state-mandated charges and contributions. Where the design of a social security contribution scheme has a disadvantaging effect for certain types of families as compared with other families, the state must ensure that the special protection afforded families under Article 6(1) of the Basic Law is upheld.

2. The general guarantee of the right to equality (Article 3(1) of the Basic Law) requires that the legislator accord equal treatment to matters that are essentially alike (prohibition of unequal treatment), and unequal treatment to such matters that are inherently different (prohibition of same treatment/requirement of differentiation).

1. Where constitutional review concerns a law that formally accords equal treatment but results in unequal burdens, the prohibition of unequal treatment is the applicable constitutional standard set by the right to equality when the burdening effect is inherent in the law itself. By contrast, the requirement of differentiation (prohibition of same treatment) is the applicable standard when the burdening effect stems from existing factual inequalities arising from the subject matter addressed in the law.

2. The standards for justifying unequal treatment of matters that are essentially alike apply accordingly when reviewing whether equal treatment of matters that are inherently different can be justified under constitutional law.

3. In line with the principle of proportionality, this requires an assessment of whether a law that fails to differentiate serves a legitimate purpose and whether it is suitable, necessary and appropriate (proportionate in the strict sense) to that purpose.

4. Equal treatment of matters that are inherently different only fails the necessity test if a more differentiating approach that would benefit currently disadvantaged parties could be taken, while also ensuring the same level of effectiveness in achieving or promoting the legislative aim without imposing additional burdens on third parties or the general public.

1. However, in cases where constitutional law requires that further privileged treatment be granted to individual contributors within the social security system, the state is not obliged to provide tax-based funding. For purposes of establishing the element of necessity under the principle of proportionality, alternative measures that merely shift the cost burden do not constitute less intrusive means.

5. Equal treatment of matters that are inherently different must satisfy the requirement of proportionality in the strict sense. In balancing the conflicting interests, the significance of the aim pursued by the lack of differentiation must therefore be appropriate to both the existing factual inequalities arising from the subject matter addressed in the law and the disadvantaging effect resulting therefrom.

3. Applying the same contribution rate to all parents enrolled in public social care insurance, regardless of how many children they have, amounts to equal treatment of matters that are inherently different in a manner that is not justified under constitutional law.

2. By contrast, the fact that the same rates are imposed on contributors with children and those without children under the public health insurance and public pension schemes does not amount to an unconstitutional disadvantaging of parents. The potential disadvantages incurred by parents are adequately compensated by the recognition of child-raising periods as relevant statutory periods of contribution under public pension schemes and by the availability of non-contributory family insurance under public health insurance schemes.

FEDERAL CONSTITUTIONAL COURT

- 1 BvL 3/18 -

- 1 BvR 717/16 -

- 1 BvR 2257/16 -

- 1 BvR 2824/17 -

IN THE NAME OF THE PEOPLE

- 1 BVL 3/18 -,

- 1 BvR 717/16 -,

- 1 BvR 2257/16 -,

- 1 BvR 2824/17 -

the Federal Constitutional Court – First Senate –

with the participation of Justices

President Harbarth,

Paulus,

Baer,

Britz,

Ott,

Christ,

Radtke,

Härtel

held on 7 April 2022:

1. § 55(1) first sentence of the Eleventh Book of the Code of Social Law as adopted 26 May 1994 (Federal Law Gazette I page 1014) and last amended by [Act] of 17 December 2018 (Federal Law Gazette I page 2587), § 55(3) first and second sentence of the Eleventh Book of the Code of Social Law as adopted 15 December 2004 (Federal Law Gazette I page 3448) and last amended by [Act] of 11 July 2021 (Federal Law Gazette I page 2754), and § 57(1) first sentence of the Eleventh Book of the Code of Social Law as adopted 23 December 2002 (Federal Law Gazette I page 4607) and last amended by [Act of 11 July 2021] are incompatible with Article 3(1) of the Basic Law to the extent that the same rate is imposed on all parents liable for contributions regardless of how many children they raise and care for.

2. The aforementioned provisions may continue to apply until the legislator amends the law. The legislator must enact new provisions by 31 June 2023 at the latest.

3. The constitutional complaint lodged in proceedings 1 BvR 2257/16 is, for the rest, rejected as unfounded. The constitutional complaint lodged in proceedings 1 BvR 2824/17 is rejected as unfounded in its entirety.

4. […]

R e a s o n s:

A.

The present proceedings (comprising a social court referral for judicial review and three constitutional complaints) concern the question of whether and to what extent the current statutory framework governing contributions to public social care insurance, public pension schemes and public health insurance adequately factors in costs associated with childcare and with raising children.

The law governing public pension schemes and public health insurance does not currently differentiate between contributors with children and those without children, whereas the law governing public social care insurance provides that a lower contribution rate be applied to contributors that raise and care for children (including step parents, adoptive parents, and foster parents – hereinafter, ‘parents’). This lower rate is applicable to all parents regardless of how many children they have. The referral from the social court received in proceedings 1 BvL 3/18 and the constitutional complaints lodged in proceedings 1 BvR 717/16 and 1 BvR 2257/16 raise the issue of whether the law on public social care insurance ought to differentiate further by providing different reduced rates for parents depending on the number of children. The constitutional complaint lodged in proceedings 1 BvR 2257/16 additionally raises the issue whether the Basic Law requires that privileged rates benefitting parents be incorporated into the law governing contributions to public health insurance and public pension schemes as well, as the law currently makes no specific distinction between persons with or without children in this context. The constitutional complaint in proceedings 1 BvR 2824/17 also concerns (and is limited to) this last question.

I.

1. The three main branches of the German social security system concern public health insurance (see a) below), public pension schemes (see b) below) and public social care insurance (see c) below):

a) In terms of its general design (see aa) below), insurance and contribution structure (see bb) below), funding (see cc) below) as well as in terms of the specific benefits and privileges extended to families (see dd) below), the public health insurance system is organised as follows:

aa) Public health insurance is the oldest pillar of the German social security system established by law. It first became [effective] 1 December 1884. Today, public health insurance is governed by the Fifth Book of the Code of Social Law (Fünftes Buch Sozialgesetzbuch – SGB V). Pursuant to § 1 first sentence SGB V, public health insurance operates based on a ‘community of solidarity’, serving to maintain, restore and preserve the health and well-being of its members. In principle, all insured persons are guaranteed the right to equal benefits and healthcare (§ 27 SGB V). In case of illness, insured persons are entitled to sick pay (§§ 44 ff. SGB V) compensating the loss of income caused by time taken off from work.

bb) Insurance coverage under public health insurance is obtained on the basis of mandatory enrolment (§ 5 SGB V) or voluntary enrolment (§ 5 SGB V). In terms of mandatory enrolment [...], all employees and staff in gainful employment, including trainee staff and apprentices, are required to enroll in a public health insurance scheme. In addition, retired persons claiming public pension benefits and certain other categories of persons claiming benefits under public pension laws are subject to mandatory enrolment ([...]). Family insurance is governed by § 10 SGB V, which provides that spouses, civil partners and children of contributors are co-insured on a non-contributory basis ([...]) under the conditions set out in § 10 SGB V (see para. 14 below). If co-insured children have dependent children themselves, the latter are covered by family insurance as well.

As of 31 December 2020, about 88% of the general population were insured under public health insurance. [...] Of these, about 22% were enrolled as non-contributory members covered by family insurance ([…]).

cc) Since 1 January 2009, the public health system has been funded by the Public Healthcare Fund ([...]), a federal special-purpose fund that is financed from the contribution revenue collected by public insurance providers ([...)], tax-based federal subsidies ([...]) as well as other sources of revenue.

(1) [...]

(2) Contributions are collected from the individual members of public health insurance schemes (§ 223(1) SGB V). Based on the principle of solidarity (§ 1 first sentence SGB V), contributions are assessed at a fixed rate: the insured person’s contribution-liable income forms the assessment basis from which a fixed percentage is collected as insurance premium ([...]). The insured person’s individual health risks and conditions have no bearing on the contribution rate under public health insurance schemes – a major difference between public and private health insurance. As of 1 January 2015, the basic rate for public health insurance contributions is set at 14.6% ([...]). From 1 January 2021, the amount of contribution-liable income is capped at EUR 4,837.50 per month (Beitragsbemessungsgrenze , ‘maximum income limit for contribution assessments’).

For most people, mandatory enrolment and liability for contributions to public health insurance arise from their employment status, with their [gross] salary ([...]) serving as the assessment basis for calculating the contribution amount. [...]

In these cases, half of the contribution cost is born by the employee, while their employer pays the other half (§ 249(1) first sentence SGB V). [...]

dd) The law governing public health insurance provides for several measures aimed at alleviating the burden on families, including specific benefits for mothers, fathers and children.

Non-contributory family insurance (§ 10 SGB V) is one of the key elements in this regard. Under the current framework, family insurance grants insurance coverage and benefits to the dependent family members of contributors. [...] Children are generally covered by family insurance until the age of 18 ([…]). Adult children that are not in gainful employment remain co-insured until the age of 23 ([…]). Under certain conditions set out in the law, children with disabilities are covered by family insurance indefinitely ([...]). [...]

[...]

Families also benefit from privileges set out in the rules governing co-payments for services covered by public health insurance ([...]). Many services covered by public health insurance require co-payment from insured persons. These co-payments are capped at an annual upper limit (normally, co-payments may not exceed 2% of the annual gross income covering the costs of living). Families also benefit from privileged treatment in that insured persons under the age of 18 [...] are generally exempt from co-payments ([...]). [...]

Other specific privileges and health insurance benefits are specifically tied to pregnancy and parenthood. [...]

[...]

[Moreover], children under the age 18 are entitled to various early detection screenings and other preventive healthcare check-ups like dental prophylaxis appointments. [...]

[...]

a) In terms of its general design (see aa) below), insurance and contribution structure (see bb) below), funding (see cc) below) as well as in terms of specific benefits and privileges extended to families (see dd) below), the basic features of the public pension system are as follows.

aa) In Germany, a public pension system was first established and became effective [...] 1 January 1891. In 1957, Germany switched from a ‘funded pension system’ (Kapitaldeckungsverfahren ), in which funds accrue in individual accounts, to a ‘pay-as-you-go system’ (Umlageverfahren ), in which current contributors finance the expenses for current recipients of benefits. This reform led to a significant increase in pension levels and also allowed the value of pension expectancies to be dynamically adjusted in relation to the average gross wage growth. The law on public pensions was later reorganised [...] in the Sixth Book of the Code of Social Law (Sechstes Buch Sozialgesetzbuch – SGB VI), with effect from 1 January 1992.

Benefits under public pension schemes cover old-age pension ([...]), occupational disability pension ([...]) and bereavement pension ([...]). The benefit amounts are primarily determined by the salary or income earned by the insured person during relevant statutory periods on which contributions were based (§ 63(1) SGB VI; for further details see §§ 64 ff. SGB VI); such contributions are then converted into pension points (§ 63(2) SGB VI). In certain cases, the law recognises ‘non-contributory periods’. For these periods, insured persons are credited pension points depending on the salary or income earned during contributory periods ([...]). [...]

bb) Similar to public health insurance, most persons insured under public pension schemes are subject to mandatory enrolment. In particular, public pension insurance is mandatory for employees (§ 1 first sentence no. 1 SGB VI) as well as certain categories of self-employed persons (§ 2 SGB VI). Most notably, mandatory enrolment also extends to persons claiming ‘child-raising periods’ (§ 3 first sentence no. 1, § 56, § 249(1) SGB VI; see below para. 36). […]

In the law on public pensions, so-called statutory periods are a key factor both for establishing whether the qualifying periods have been met and for determining the amount of pension benefits. Statutory periods include contributory periods, i.e. periods during which mandatory or voluntary pension contributions were paid (§ 54(1) no. 1, § 54(2) and (3) SGB VI), non-contributory periods (§ 54(1) no. 2, § 54(4) SGB VI) as well as other eligible periods (§ 54(1) no. 3 SGB VI). […]

Contributory periods that fall under § 55(1) first sentence SGB VI are those in which the insured person earned a salary or income. In keeping with the principle of equivalence that underpins insurance law, contributory periods are the central factor in determining individual benefits (cf. § 63(1) SGB VI). At the same time, the law recognises ‘alternative credit periods’ (Anrechnungszeiten ) (§ 58 SGB VI). These are either non-contributory (§ 54(4) SGB VI) or reduced-contribution periods (§ 54(3) SGB VI), which are nevertheless recognised as relevant statutory periods under public pensions schemes in the interest of social equity. This is applicable, for instance, if the insured person is unable to work in a contribution-generating capacity due to pregnancy or motherhood (§ 58(1) first sentence no. 2 SGB VI).

[...]

cc) The public pension system operates as a pay-as-you-go system financed by contributions and supplemented by federal subsidies or other federal funds ([...]).

(1) [...]

(2) Subject to a maximum upper limit, contributions are calculated as a specific percentage (contribution rate) of the assessment basis (§ 157 SGB VI). The assessment basis for mandatory contributions is the insurance-liable income of the insured person ([...]), usually the gross salary in the case of employees [...]. Contribution rates, as well as the maximum limit, are determined in a federal ordinance issued by the Federal Government, which requires the consent of the Bundesrat ([...]). As of 2018, the basic rate for public pension contributions is 18.6%. [...]

Employees are liable for half of the cost (§ 168(1) no.1 SGB VI; the employer is liable for the other half) […]. In some cases, insured persons are completely exempt from contribution liability: for instance, if they claim child-raising periods. In these cases, their contributions are covered in full by federal funds (§ 170(1) no. 1 SGB VI).

dd) The law on public pensions sets out several measures promoting family welfare.

Most notably, the law honours time spent in raising a child by crediting child-raising periods ([…]) as contribution periods. The 1992 Pensions Reform Act ([…] extended eligible child-raising periods […] from the first twelve months to the first 36 months of a child’s life, and raised the value of the credit to reflect (nearly) 100% of the average income (prior to the reform, the amount credited was 75%) ([…]). These child-raising periods constitute contribution periods, with contributions being fully covered by federal funds as of 1 June 1999 […]

[...]

In addition to child-raising periods, which constitute contribution periods, parents can claim up to a maximum of ten years, regardless of the child’s age, as additional ‘child-related periods’ (Kinderberücksichtigungszeiten ) (cf. § 57 SGB VI). […] As of 1 January 2002, these additional periods may translate into higher pension benefits, provided that the conditions set forth in § 70(3a) SGB VI are met (for further information see para. 343 ff. below). […]

[...]

c) In terms of its general design (see aa below), insurance and contribution structure (see bb below), funding (see cc below) as well as in terms of specific benefits and privileges extended to families (see dd below), the basic features of the public social care insurance system are as follows:

aa) Established on 1 January 1995, public social care insurance is the most recent branch of Germany’s social security system. This type of insurance protects against the risks of needing long-term care and is governed by the Eleventh Book of the Code of Social Law (Elftes Buch Sozialgesetzbuch – SGB XI).

In § 14(1) first and third sentence SGB XI, the law defines a ‘person needing long-term care’ as someone whose independence or abilities are impaired due to illness and who is therefore in need of assistance. […]

bb) Members of public health insurance schemes are automatically enrolled in public social care insurance ([...]). Persons with a private health insurance plan have a statutory obligation to take out private care insurance ([...]). The vast majority of insured persons are enrolled in the social care insurance system established under public law.

As of 31 December 2020, about 88% of the general population were covered by social public care insurance ([...]). If the current system remains in place, the enrolment quota can be expected to stay roughly the same in the future, according to the Federal Government. About 78% of insured persons (or about 69% of the general population) are active contributing members, meaning that they pay contributions funding social care insurance ([...]).

In 2020, approximately 4.32 million persons claimed social care insurance benefits. […] Recent trends show a steady increase in the number of benefit recipients ([...]). The spike observed in 2017 can in part be attributed to the new statutory definition of ‘needing long-term care’, which expanded the group of eligible recipients from 1 January 2017 ([...]).

In addition, an increasing number of elderly persons ([...]) also means that more people claim care insurance benefits, as the risk of needing long-term care increases with old age. [...]

cc) Public social care insurance is primarily funded by contributions, which are supplemented by other types of revenue ([...]). Until 2020, the public social care insurance system did not rely on tax-based funding. However, due to the pandemic, a subsidy in the amount of EUR 1.8 billion from federal taxes was allocated to social care insurance in 2020 ([...]). Pursuant to § 61a SGB XI, as amended by Act of 11 July 2021 (Federal Law Gazette, Bundesgesetzblatt – BGBl I p. 2754), a federal lump-sum grant of 1 billion euros is allocated annually to contribute to the expenses of the social care insurance system.

(1) [...]

(2) Contributions are collected from the individual members enrolled in public social care insurance (§ 54(2) SGB XI). Family members of contributors that are co-insured under family insurance pursuant to § 25 SGB XI are exempt from contribution liability (§ 56(1) SGB XI). As is the case with public health insurance, contributions to public social care insurance are not assessed based on the individual risk of the insured person and, in particular, do not take into account that person’s health, age or gender. Instead, contributions are calculated as a percentage (rate) of income earned by the insured person subject to a maximum limit (§ 54(2) first sentence, §§ 55, 57 SGB XI). For employees, contributions are assessed on the basis of [...] their gross salary, just like contributions to public health insurance and public pension schemes.

When public social care insurance was first established by federal law effective 1 January 1995, the basic rate was initially set at 1% of the insured person’s contribution-liable income. [...] As of 1 January 2019, the basic rate is 3.05% (§ 55(1) first sentence SGB XI).

Starting at the age of 23, insured persons that do not have children must also contribute a premium supplement for ‘childless contributors’ (§ 55(3) first and second sentence SGB XI). This supplement [...] was first introduced by legislation that took effect on 1 January 2005, in response to the Federal Constitutional Court’s judgment on social care insurance rendered on 3 April 2001 (Decisions of the Federal Constitutional Court, Entscheidungen des Bundesverfassungsgerichts – BVerfGE 103, 242; for further details see para. 67ff. below), and subsequently amended several times. [...] As of 1 January 2022, the supplement is set at 0.35 percentage points.

[...]

Pursuant to § 20(1) second sentence no. 1 SGB XI, persons falling under the mandatory insurance mandate – workers, employees and trainee staff (all of whom are similarly subject to mandatory enrolment in public health insurance) – and their respective employers generally split the costs of contributions, which are calculated on the basis of the insured person’s gross salary ([...]). The supplement for contributors without children, however, is solely borne by the employee ([...]).

(3) By Act of 17 December 2014 (BGBl I p. 2222), effective 1 January 2015, the legislator established the Social Care Insurance Sustainability Fund to secure the long-term stability of the contribution-financed system (§ 131, § 132 first sentence SGB XI). Accounting for demographic developments, this Fund acts as a reserve to ensure a more equitable distribution of the rising benefit expenditures across generations and to partially alleviate the expected rising contribution burden on future generations (cf. Bundestag document, Bundestagsdrucksache – BTDrucks 18/1798, pp. 2, 16f., 18). To this end, a certain amount of savings from insurance revenue will be placed in the Fund as reserves during the period of 2015-2033. From 2015, these savings are to be gradually re-infused into the social care insurance system to finance additional benefit expenditures caused by factors other than improved benefits (§ 135(2), § 136 SGB XI). No individual capital reserves accrue in this regard.

[…] Together with establishing the Social Care Insurance Sustainability Fund, the legislator raised the basic rate for insurance contributions by 0.3 percentage points from 2.05% to 2.35%, effective 1 January 2015. [...] From the increased contribution rate, an annual amount that equals 0.1 percentage points is to be transferred into the Fund ([...]). [...]

dd) In the system of public social care insurance, measures designed to alleviate the burden on families include the non-contributory family insurance (§ 25 SGB XI) and the supplement collected from contributors without children (§ 55(3) SGB XI; see above para. 53).

The conditions under which family members of contributors are co-insured under public social care insurance are essentially the same as for the non-contributory family insurance under public health insurance (see above para. 14). [...]

Moreover, public social care insurance offers numerous benefits specifically designed to allow family members to take over long-term care responsibilities. In this respect, the law aims to promote long-term care provided at home as the primary option, and to encourage family members and neighbours to take on caregiver roles, seeking to ensure that persons in need of care can continue to live in their familiar environment for as long as possible ([...]). [...]

[...]

2. The supplement payable by contributors without children was first introduced in response to a judgment on social care insurance rendered by the Federal Constitutional Court on 3 April 2001 (BVerfGE 103, 242ff.). In that judgment, the Court held that it is incompatible with Art. 3(1) GG (Grundgesetz – GG) in conjunction with Art. 6(1) GG – the general equality clause and the fundamental right to protection of the family – if persons enrolled in public social care insurance that care for and raise children are liable for contributions at the same rate as those without children. This was based on the reasoning that parents already provide an additional (‘generational’) contribution towards a social security system in which current contributors finance the expenses for current benefit recipients (pay-as-you-go system, umlagefinanziertes System ), since the current younger generation will likely be future contributors. The Court also stated that in designing a social care insurance framework that satisfies the constitutional requirements arising from Art. 3(1) in conjunction with Art. 6(1) GG, the legislator is afforded broad latitude. In the 2001 judgment, the legislator was given a deadline until 31 December 2004 to bring the law in conformity with the Basic Law. In deciding on how much time was needed to pass new legislation, the Court took into account that “the legislator is tasked with appraising the significance of the present judgment not just in relation to the law on social care insurance but in relation to the other branches of the social security system as well” (BVerfGE 103, 242 <270>).

3. In response to the 2001 judgment, in particular the Court’s finding on the legislator’s obligation to bring the law on social care insurance in line with the Basic Law and appraise possible implications for other branches of the social security system, the legislator took the following action:

a) To implement the judgment, the legislator adopted the Social Care Insurance and Child-Raising Act (Kinder-Berücksichtigungsgesetz ), which took effect on 1 January 2005 and introduced the aforementioned supplement payable by contributors without children in § 55(3) SGB XI (see above para. 53f.). In the legislative proceedings, one controversial issue was whether constitutional law required that contribution rates differentiate further depending on the number of children (cf. BTDrucks 15/3837, p. 7f.; Minutes of the 72nd Session of the Committee on Health and Social Security, committee records 15/72, pp. 8, 10ff.). […]

b) Following up on the finding that the implications of the 2001 judgment for other branches of the social security system must be appraised, the Federal Government compiled a report that was submitted to the Bundestag (Report of the Federal Government on the Federal Constitutional Court’s Judgment on Social Care Insurance of 3 April 2001 <1 BvR 1629/94> and its Implications for Other Branches of the Social Security System, 4 November 2004, BTDrucks 15/4375). In accordance with the Federal Government’s assessment, the legislator refrained from introducing privileged rates for parents in the law governing public pensions and public health insurance.

4. Since the Court rendered its 2001 judgment, the legislator has also taken action to improve family welfare outside the social security system by introducing new measures and strengthening existing policies to alleviate the burden on families ([...]). [...]

a) aa) The rules on the so-called child benefit (Kindergeld ) and income tax law effectively provide tax relief for parents ([...]). For each eligible child, each parent may claim in principle two types of allowances that are exempt from income tax pursuant to § 32(6) of the Income Tax Act (Einkommenssteuergesetz – EStG): a ‘child allowance’ (Kinderfreibetrag ), for expenses that secure the child’s material existential minimum; and a ‘child-raising and childcare allowance’ (Freibetrag für Betreuung, Erziehung oder Ausbildung ). [...]

In 2022, parents could claim a child benefit in the amount of EUR 219 each for their first and second child, EUR 225 for their third child, and EUR 250 for each additional child (§ 66 EStG and § 6 of the Child Benefit Act, Bundeskindergeldgesetz – BKGG). Taxpayers with children may claim for the year 2022 a ‘child allowance’ in the amount of EU 2,730 and a ‘child-raising and childcare allowance’ in the amount of EUR 1,464 (§ 32(6) first sentence EStG) for each eligible child. […]

bb) [...]

Under the Federal Parental Allowance and Parental Leave Act (Bundeselterngeld- und Elternzeitgesetz – BEEG), parents that stop working or take time off work following the birth of their child are entitled to a parental allowance for a duration of twelve months (14 months if both parents file for parental leave – so-called ‘partner months’, § 4(3) first and second sentence BEEG). This allowance compensates parents in the amount of (at least) 67% of the average monthly net income they earned during the twelve months leading up to the child’s birth [...]. The allowance is capped at a maximum limit of EUR 1,800 per month ([...]); the minimum allowance guaranteed, regardless of the parents’ previous income, is EUR 300 per month ([...]). Eligible parents whose average monthly net income prior to the birth of their child was less than EUR 1,000 may claim an increased allowance of up to 100% of their previous income ([...]).

[...]

cc) [...]

dd) […]

ee) Pursuant to [...] § 24(2) first sentence of the Eight Book of the Code of Social Law (Achtes Buch Sozialgesetzbuch – SGB VIII), children from the age of twelve months until the age of three years are entitled to an early childcare and education placement in a day care facility or with a registered independent childcare provider. [...]

b) […]

II.

1. The referral for judicial review in proceedings 1 BvL 3/18 concerns the law on contributions to public social care insurance from 1 January 2015.

a) The plaintiffs in the initial proceedings before the social courts are parents to four children born in 2007, 2009, 2011 and 2013. As employees, they are subject to mandatory enrolment in public health insurance and public social care insurance. Their health insurance provider is the defendant in the initial proceedings and their social care insurance provider was summoned as a mandatory third party in those proceedings.

In April 2015, the plaintiffs filed an application with the defendant, demanding that their monetary child-related expenses and their child-raising efforts be recognised, in lieu of payment, in the assessment of their mandatory contributions to […] public care insurance, and that the number of children they have also be reflected in this assessment. [...]

By decision of 29 June 2015, the defendant administrative authority refused to apply lower rates to insurance contributions borne by the plaintiffs as employees, stating that the law as it stands does not provide a legal basis for factoring in child-raising costs in this manner. [...]

b) By order of 23 January 2018, the social court suspended the proceedings and referred the following question to the Federal Constitutional Court: are §§ 54, 55, 57, and 131 to 136 SGB XI compatible with the Basic Law, specifically Art. 3(1) in conjunction with Art. 6(1), insofar as parents that have more than one child are liable for contributions to public social care insurance at the same rate as parents raising a single child?

[...]

2. The constitutional complaint lodged in proceedings 1 BvR 717/16 concerns the law on contributions to public social care insurance [...].

a) The complainant is married and the mother of four children born in 2001, 2002, 2004 and 2009. She worked as an employee, and was therefore liable for mandatory social security contributions, until 15 April 2008. She then became unemployed and later took time off from work due the birth of her fourth child. As of March 2017, she is back in gainful employment and again liable for social security contributions. [...]

b) […]

c) With her constitutional complaint, she challenges administrative decisions issued by her insurance provider as well as the social court judgments upholding these decisions. She claims that the rules set out in § 55 SGB XI, on which the challenged decisions are based and through which the economic costs of child-raising are factored into the contribution structure of the social care insurance system, violate her right to equality under Art. 3(1) GG on the grounds that the law does not adequately differentiate by providing different rates based on the number of children each contributor has.

[...]

3. The constitutional complaint lodged in proceedings 1 BvR 2257/16 concerns the law governing contributions to public social care insurance, public pension schemes and public health insurance [...].

a) The complainants have three children born in 1990, 1992 and 1995. As employees, they are both subject to mandatory enrolment in public health insurance, public pension schemes and public social care insurance. […]

[...]

b) […]

c) [...]

d) With their constitutional complaint, they [...] indirectly challenge the legal provisions governing contributions to these social insurances. [...]

aa) They claim a violation of Art. 3(1) in conjunction with Art. 6(1) GG on the grounds that the challenged decisions and the provisions on which they are based do not adequately factor in the costs associated with child-raising and childcare as these costs are either not reflected in the contribution structure at all (public health insurance and public pension schemes) or not reflected to a sufficient degree (public social care insurance).

[...]

bb) [...]

4. The constitutional complaint lodged in proceedings 1 BvR 2824/17 concerns the law governing contributions to public pension schemes [...].

a) The complainants have three children born in 1990, 1993 and 1996. Both complainants are employees. The first complainant is subject to mandatory enrolment in public health insurance; her health insurance provider is the defendant in initial proceedings lodged before the social courts. The second complainant was insured with the same insurance provider, until 2010 on the basis of mandatory enrolment, and from 2011 on the basis of voluntary enrolment as an employee exempt from mandatory insurance. The complainants have the same social care insurance provider and are enrolled in the public pension scheme provided by the German Federal Pension Insurance (Deutsche Rentenversicherung Bund) ; both insurance providers were summoned as mandatory third parties in the social court proceedings. […]

b) […]

c) With their constitutional complaint, the complainants indirectly challenge [provisions governing contributions] to public pension schemes [...], claiming that these violate their fundamental rights under Art. 3(1) in conjunction with Art. 6(1) GG. In their submission, they make reference to the complaint brief submitted in constitutional complaint proceedings 1 BvR 2257/16, with specific reference to the statements made in those proceedings regarding the 2001 constitutional court judgment on social care insurance, and assert that the findings of that judgment apply accordingly to public pension schemes.

[...]

III.

Statements on the referral for judicial review and the constitutional complaints were submitted by the Federal Government, the Federal Social Court, the Special Rapporteur of the Federal Government for the Care Sector, the German Federal Pension Insurance, the National Association of Public Health Insurance Funds (GKV-Spitzenverband ), the Social Advisory Council to the Federal Government (Sozialbeirat ), the German Trade Union Confederation (Deutsche Gewerkschaftsbund ), the Federal Organisation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände ), the German Women Lawyers’ Association (Deutscher Juristinnenbund e.V. ), the Federal Association of Single Parents (Verband alleinerziehender Mütter und Väter, Bundesverband e.V. ), Caritas Germany, the Federal Catholic Society for Family Welfare (Familienbund der Katholiken <Bundesverband> e.V. ) and the German Family Association (Deutscher Familienverband e.V. ), the Conference of German Social Courts (Deutscher Sozialgerichtstag e.V. ), the German Association for Large Families (Verband kinderreicher Familien Deutschland e.V. ), the Archdiocese of Freiburg, and the Cologne Institute for Economic Research (Institut der deutschen Wirtschaft ). Further statements were submitted by the plaintiffs in the initial social court proceedings that gave rise to the referral for judicial review in proceedings 1 BvL 3/18.

[...]

B.

The referral for judicial review from the social court is admissible. The constitutional complaint in proceedings 1 BvR 717/17 is admissible in its entirety. The constitutional complaints in proceedings 1 BvR 2257/16 and 1 BvR 2824/17 are only admissible in part.

I.

[...]

II.

[...]

III.

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IV.

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C.

The challenged provisions governing contributions to public social care insurance – § 55(1) first sentence, § 55(3) first and second sentence, and § 57(1) first sentence SGB XI – violate the right to equality in Art. 3(1) GG on the grounds that all parents are liable for contributions at the same rate, regardless of the number of children they have.

The provisions referred for review must be measured against Art. 3(1) GG (see I. below). Applying the same contribution rate to all parents enrolled in public social care insurance, regardless of how many children they have, amounts to equal treatment of matters that are inherently different (see II. below), which in light of the freedom of families protected in Art. 6(1) GG is not justified under constitutional law (see III. below).

I.

Art. 3(1) GG requires that all people be treated equally before the law. The resulting principle to treat equally what is essentially alike and to treat unequally what is inherently different applies to both burdens and privileges. At the same time, Art. 3(1) GG does not entirely prevent the legislator from differentiating (cf. BVerfGE 138, 136 <180 para. 121>; 139, 285 <309 para. 70> with further references). Nor is there an obligation to differentiate among unequal matters under all circumstances. Differentiations, however, must always be justified by objective reasons commensurate with the aim and the extent of the unequal treatment at issue. The standard of constitutional review applicable here, which derives from the principle of proportionality, is a fluid one whose contents and limits cannot be determined in the abstract, but instead, must be determined by the particular subject matters and regulatory areas affected by the law at issue (cf. BVerfGE 138, 136 <180 para. 121>; 139, 285 <309 para. 70> with further references).

When imposing contribution liability for social insurance schemes, the legislator must observe the principle of equal burdening, which derives from the general guarantee of the right to equality and applies to all state-mandated charges and contributions (BVerfGE 149, 50 <76 para. 75>).

For the purposes of Art. 3(1) GG, unequal treatment may arise from the factual consequences of a law that formally provides for equal treatment; whether or not this is the case must be determined by looking at the substantive contents of the provision in question and the effects that are attributable to the design of the law (cf. BVerfGE 24, 300 <358>; 49, 148 <165>; 149, 50 <78 f. para. 80>). Where constitutional review based on the right to equality concerns a law that formally accords equal treatment but results in unequal burdens, the prohibition of unequal treatment is the applicable standard of review if the burdening effect is inherent in the law itself (cf. BVerfGE 149, 50 <78f. para. 80>). By contrast, the requirement of differentiation (prohibition of same treatment) is the applicable standard if the burdening effect stems from existing factual inequalities that arise from the subject matter addressed in the law (cf. BVerfGE 149, 50 <79 para. 80>). In some situations the right to equality gives rise to a requirement of different treatment; however, this requirement is not necessarily violated simply because the legislator chooses not to make certain legislative distinctions when it would be constitutionally permissible to do so (cf. BVerfGE 90, 226 <239>; 110, 141 <167>). Rather, the legislator violates the fundamental right to equality when it fails to sufficiently account for existing factual differences, which arise in relation to a given subject matter addressed in legislation, where these differences carry such significance that they must be reflected in the law (cf. BVerfGE 110, 141 <167>).

II.

Based thereon, the current system of public social care insurance, which operates for the most part as a contribution-funded, pay-as-you-go system and applies the same contribution rate to all contributors with children, regardless of the number of children, results – within the group of contributing parents – in equal treatment (see 1. below) of matters that are inherently different (see 2. below), to the detriment of parents with more children (see 3. below).

1. The law on contributions to public social care insurance currently imposes the same contribution rates on all parents, regardless of the number of children they have. For the purposes of the applicable equality standard under constitutional law, this amounts to equal treatment of matters that are inherently different within the group of contributors with children. By contrast, the fact that the same formal contribution burden affects parents with more children differently (see below para. 248ff.) cannot be qualified as unequal treatment of matters that are essentially alike under constitutional law. Here, the unequal effects that result from the formally equal contribution burdens do not inherently stem from the law on social care insurance contribution itself in a normative sense. Instead, the unequal burdens are caused by factual differences underpinning the subject matter addressed by the law, as the unequal burdens are specifically linked to the number of children that contributors have and for which they have a legal obligation to provide care and maintenance.

2. Based on the considerations that inform the current legislative design of the contribution scheme for the public social care insurance system (see a) below), there are relevant differences under the right of equality between different contributors depending on how many children they have (see b) below).

a) The 2001 constitutional court judgment instructed the legislator to alleviate the relative burden resulting from public social care insurance for contributors with one or more children as compared to contributors that have no children (cf. BVerfGE 103, 242 <270>). This was based on the consideration that in a social care insurance system which is designed to protect against risks associated with old age and relies on pay-as-you-go financing, the contribution of persons that have and raise children in securing the functioning of the system is not limited to their monetary contributions. Rather, parents – unlike contributors without children – make an additional ‘generational’ contribution (cf. BVerfGE 103, 242 <266>) by ensuring the existence of a new generation of contributors, which in turn safeguards the future existence and functioning of the system. When contributors without children need long-term care later in life, they benefit from the system in the same way parents do. The Court found that in exercising their childcare responsibilities and providing maintenance for their children, parents bear the ‘economic costs of child-raising’ (cf. BVerfGE 103, 242 <269>). Therefore, parents incur a cost disadvantage in comparison to persons without children, which must be compensated under constitutional law.

Parents bear the ‘economic costs associated with child-raising’, as well as the ‘relinquishment of personal consumer spending and asset accumulation’ also associated with child-raising (cf. BVerfGE 103, 242 <264>) during their employment years. For these reasons, the Court compelled the legislator, in its 2001 judgment, to reflect the childcare and child-raising efforts shouldered by parents in the law on social care insurance contributions. In this respect, the Court emphasised the broad leeway in terms of design afforded to the legislator when structuring the contribution scheme (cf. BVerfGE 103, 242 <270 f.>).

In response to this judgment, the legislator created the ‘supplement for contributors without children’, amending the contribution structure (only) insofar as the relation between contributors with children and contributors without children was concerned. According to the legislative materials – which explicitly refer to the reasoning of the 2001 constitutional judgment – the difference between the contribution rate payable by parents and the rate payable by contributors without children is justified by the “financial and other burdens associated with raising children” (cf. BTDrucks 15/3671, p. 4) and by the fact that contributors who raise children thereby make a “decisive additional contribution, beyond the mere monetary contribution, that secures the foundations of the pay-as-you-go funded public social care insurance system” (cf. BTDrucks 15/3671, p. 5). By increasing the contribution burden of persons without children, the legislator intended to reflect these differences.

b) However, based on these considerations that inform the current legislative design of the contribution structure, further relevant differences arise within the group of parents liable for contributions, depending on how many children a given contributor has.

Although a higher risk of poverty is not, as such, a decisive factor in this context (see aa) below), relevant differences do arise from the fact that the economic costs borne by parents increase the more children they have (see b) below).

aa) When assessing the contribution scheme against the right to equality, the higher risk of poverty borne by larger families as compared to families with fewer children is not a relevant factor. This is because constitutional law does not require that the law on public social care insurance contributions extend additional protection to the existential minimum of families, depending on the number of children within a given family.

This notwithstanding, it is true that two-parent households with three or more children bear a disproportionally higher risk of poverty than two-parent households with fewer than three children. In part, this can be attributed to the size of the family, as more persons are dependent on the family income. More importantly, it can also be attributed to the fact the percentage of mothers in gainful employment, despite positive trends in recent years, is still lower for women that have three or more children compared to women that have one child or two children, resulting in a lower available family income. For single-parent households, even those with just one child, the risk of poverty is on average significantly higher, and this risk increases if two or more children are being raised by a single parent ([...]).

However, as far as the law on social care insurance contributions is concerned, the higher risk of poverty for parents with more children as compared to those with fewer children does not create a disadvantage requiring an offset under the right to equality.

The law on income taxes gives effect to the requirement that the existential minimum of the entire family be exempt from taxation (cf. BVerfGE 82, 60 <85 f., 94>; 152, 274 <315 para. 105>). However, this requirement does not apply accordingly to contributions to public social care insurance because the latter, unlike taxes, are collected for a specific designated purpose and create specific entitlements in return (previously established in relation to public health insurance contributions, cf. Federal Constitutional Court, Order of the Second Chamber of the First Senate of 15 April 1986 - 1 BvR 1304/85 -, […]). […] Given the designated purpose of social security contributions and the future benefits for which contributors are eligible in return, it is constitutionally permissible for the legislator to determine contributions on the basis of contributors’ gross income, as a reflection of their (typical) economic capacity (cf. in this regard BVerfGE 103, 172 <185>; 115, 25 <43>), at the same time ensuring that persons with low incomes are still guaranteed an existential minimum in accordance with human dignity by means of basic needs benefits under general social welfare law, including the rules on booster subsidies for sub-minimum incomes.

The higher risk of poverty for larger families is therefore not specific to the public social care insurance, or to any other branch of the social security system, but instead concerns the burden on families in society generally and the overall question of how to alleviate that burden. It does not give rise to specific requirements relating to the subject matter at issue here, i.e. public social care insurance and the statutory framework governing contributions. To the contrary, the legislator is in principle free to decide how to offset these general risks born by families and how to promote family welfare in this regard (cf. BVerfGE 87, 1 <39> which previously confirmed these findings for the public pension system; cf. in general BVerfGE 82, 60 <81>; 103, 242 <259 f.>; 107, 205 <213>; 110, 412 <436, 445>; 112, 50 <65 f.>; 112, 164 <175>; 127, 263 <277 f.>).

bb) This notwithstanding, parents who are liable for contributions to public social care insurance not only incur the costs of the contribution amount payable by them but, additionally, the costs associated with raising children. These economic costs are two-fold: first, the direct costs of raising children, including child-related consumer expenses, and second, the costs of diminished opportunity, i.e. the costs resulting from loss of opportunities in terms of lower income and social security benefits (cf. BVerfGE 103, 242 <264, 269>: “costs of child-raising” and the relinquishment of “personal consumption and asset accumulation” also associated with raising children).

In order to assess the scope of the resulting cost disadvantage under the right to equality, legislative decisions on how to factor the costs of raising children into the law governing contributions to public social care insurance must take into account both of these sets of costs as the relevant point of reference. Both the direct costs of raising children (see (1) below) and the opportunity costs (see (2) below) increase substantially the more children one has. That the legislator has strengthened general measures to alleviate the burden on families, thereby ensuring that the law offsets child-raising costs to a greater extent since the 2001 constitutional court judgment, does not warrant a different conclusion (see (3) below). Likewise, the fact that the costs of raising children do not exactly increase proportionally with each child also does not merit a different conclusion (see (4) below).

(1) [...]

(2) The extent to which the raising of children entails costs of diminished opportunity correlates to the percentage of parents in gainful employment and to the share of those parents working part-time. For parents, raising children may lead to unemployment or diminished employment, which, in turn, leads to diminished income. Due to societal realities, these costs are typically borne by women. At the same time, such costs often result in a shifting of burdens within the family. In its submission in the present proceedings, the Federal Government made reference to a study provided by the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth, according to which the percentage of mothers in gainful employment, and their average income, has steadily increased since 2007. The extent to which women participate in employment opportunities still largely depends, in addition to their level of education, on the number of children a woman has and the age of the children. Upon the birth of their children, many mothers take time off work, at least temporarily. The majority of women who return to work do so on a part-time basis. The younger the youngest child is, and the more (young) children live in the household, the less likely it is that their mother is working in gainful employment and the longer the period of reduced employment capacity typically lasts ([...]). The Federal Government referenced another study focusing on the income earned by women from employment throughout their lifetime, which compared the overall income earned by women without children to the income earned by women with children ([...]). According to that study, a woman that raises a single child will earn over her lifetime on average 40% less than a women that has no children; a woman with two children will earn 50% less, and a woman with three or more children almost 70% less.

The opportunity costs associated with raising children carry significant weight because unlike the direct costs of child-raising, they affect the entirety of parents’ employment years and beyond. The effects of lost career opportunities and income losses can hardly be compensated for during the later stages of one’s working life and, in most cases, lead to diminished pension security in old age.

(3) It is true that, since the Court rendered its 2001 judgment, the legislator has introduced numerous measures and strengthened existing policies to alleviate the burden on families, seeking to (partially) compensate the costs associated with raising children. Some of these measures do indeed factor in the number of children raised by a given person.

The direct expenses associated with raising children are compensated, at least in part, by the ‘child benefit’ paid for each child and by the tax allowances granted under income tax law. Since 2001, these benefits and allowances have been considerably increased ([...]).

To a certain extent, the opportunity costs associated with raising children are mitigated by the parental allowance under the Federal Parental Allowance and Parental Leave Act that took effect on 1 January 2007 and has since been expanded, which effectively substitutes the parents’ salary while they take time off work ([...]). Moreover, as of 1 August 2003, all children from the age of twelve months are legally entitled to a place in a day care facility or with a registered independent childcare provider ([...]). These measures strengthen the ability of parents to return to work at an earlier date or to take up gainful employment in the first place, decreasing the opportunity costs associated with raising children.

Despite these efforts, the percentage of mothers in gainful employment, and their average income, is still substantially lower for women with larger numbers of children as compared to women who have fewer children.

(4) At the same time, the economic costs associated with child-raising do not increase proportionally with each child. In other words, parents liable for public social care insurance contributions who raise four children do not incur four times the cost burden of parents raising a single child.

This is true for the direct expenses associated with raising children. To a certain extent, the resources available in a multi-person household benefit the needs of or can be used jointly by all members of that household. Advantages of scale and synergy effects thus contribute to a more efficient use of existing resources ([...]). For instance, consumer goods purchased for the first child can in some cases be used by the other children as well, in which case it is not necessary to make new purchases.

In addition to this ‘factual degression’ in additional costs, the law extends privileged treatment to larger families, which also reduces the cost burden relative to the number of children. For instance, laws governing fees for public day care or other forms of childcare outside school, as well as for education and leisure facilities and services, often waive fees or offer discounts for additional siblings ([...]).

With regard to opportunity costs, the time resources needed to raise and care for children – which consequently cannot be invested in employment – do not increase proportionally with each child either. This is due to the fact that multiple young children can typically be cared for together, while in families with larger age gaps among the children, older children can help take care of their younger siblings. This, too, results in a more efficient use of time resources and creates synergy effects. However, while the overall economic costs associated with raising children may not increase in a strictly proportional manner with each child, they do increase substantially the more children one has.

3. Within the system of public social care insurance, applying the same rate to all contributors with children, regardless of the number of children, specifically leaves those with more children at a disadvantage when compared to contributors who have fewer children (see (a) below). The current design of public social care insurance does not sufficiently offset this disadvantage.

a) Within the system of public social care insurance put in place by the legislator, applying the same rates to all contributors with children, regardless of the number of children, specifically leaves those with more children at a disadvantage when compared with contributors who have fewer children (see aa) below). This effect is already appreciable in the case of parents with two children (see bb) below).

aa) In the present case, a relevant disadvantage under the right of equality arises because persons with more children only benefit from lower contribution rates to the same extent as parents with fewer children, even though the economic costs associated with raising children increase the more children one has.

bb) This disadvantage is already appreciable when comparing parents raising two children with those raising a single child. [...]

In determining the contribution structure for public social care insurance, the legislator relied on categories of typical cases (legislative typification). The sole decisive factor was whether contributors have children or not. According to the legislative materials, the legislator opted for this model because it understood the 2001 constitutional court judgment to indicate that constitutional law prescribed a ‘mandatory gap’ between the contribution burden imposed on persons without children and that imposed on parents, on the grounds that the latter bear additional financial and other costs associated with raising children. This legislative concept generally extends the same relative advantage, in the form of a fixed privileged contribution rate, to all parents, regardless of whether they raise a single child or multiple children. This gives effect to the obligation on the part of the legislator to alleviate the burden on families (already) “for the first child”, as set forth in the 2001 judgment (cf. BVerfGE 103, 242 <271>). It cannot therefore be argued that the legislator assumed a two-child family to constitute the typical case for which the law should provide relative relief in the form of lower contribution rates, but nevertheless decided upon a generalised contribution scheme that extended the same privileged treatment to contributors raising a single child in a manner that is permissible, but not mandated, under constitutional law. Thus, it is not ascertainable that the legislative intent behind the challenged provisions was focused on a two-child family as the typical scenario.

Based on these considerations, according the same comparative benefit to all contributors with children relative to contributors without children creates a disadvantaging effect within the first group (parents), which is already noticeable for parents raising more than one child. When comparing contributors with larger families to contributors with fewer children, the law fails to factor in the substantially increased costs associated with raising a larger number of children, as no further reduced rate is available to larger families within the group of parents.

b) The system of public social care insurance does not adequately compensate this disadvantage suffered by contributors with larger families compared to parents who raise fewer children (on the legislator’s obligation to offset disadvantages under the right to equality, cf. Federal Constitutional Court, Order of the First Senate of 8 July 2021 - 1 BvR 2237/14 inter alia -, para. 106).

aa) This relevant disadvantage is somewhat mitigated by the fact that contributors with more children, who are subject to the same rate as contributors with fewer children, benefit to a comparatively greater extent from public social care insurance coverage being extended to a higher number of dependent family members, i.e. their additional children (cf. BVerfGE 103, 242 <269>). Parents liable for contributions increasingly benefit from this co-insurance the more children they have. This constitutes an appreciable advantage that already materialises during the contribution phase, as parents effectively save funds they would otherwise have to spend on insurance for their children. However, children are generally at a very low risk of needing long-term care, which means that the burden on public social care insurers arising from non-contributory co-insurance for additional family members ([...]) is relatively small. The advantage of having more children co-insured therefore is not significant enough to offset the disadvantage resulting from raising additional children.

bb) The disadvantage incurred by contributors with larger families is also not compensated by ‘caregiver benefits’, i.e. insurance benefits extended to persons taking on the long-term care of family members under public pension and unemployment insurance schemes ([...]) or rights and benefits granted persons taking ‘caregiver family leave’, such as caregiver subsidies ([...]). These benefits are not contingent upon how many children, if any, the recipient caregivers have and can therefore be claimed regardless of whether the caregiver in question bears economic costs associated with raising children in addition to the costs associated with taking on the caregiver role as such. Caregiver benefits serve to compensate the costs of providing long-term care and to encourage family members to take on caregiving roles. However, they are not aimed at compensating the costs of child-raising.

III.

Given that the disadvantaging effect at issue here affects the fundamental freedom of families protected by Art. 6(1) GG, it must be measured against a strict proportionality standard (see 1. below). Based on this standard, it follows that applying the same contribution rate to all parents enrolled in public social care insurance, regardless of how many children they have, is not justified under constitutional law (see 2. below).

1. In determining whether the same contribution rate for all parents regardless of the number of children can be justified under constitutional law, a strict proportionality standard must be applied.

a) Depending on the matter addressed in legislation and the criteria for differentiation, the general guarantee of the right to equality in Art. 3(1) GG results in different constitutional requirements regarding the objective reasons capable of justifying unequal treatment. The legislator may be subject to different constitutional limits depending upon the particular case, ranging from the mere prohibition of arbitrariness to strict proportionality requirements. Stricter constitutional requirements may arise, for instance, where unequal treatment affects specific fundamental freedoms. Moreover, the less control that individuals have over the criteria on which the statutory differentiation is based, the stricter the constitutional requirements for justifying unequal treatment; the same applies the more the grounds of differentiation resemble prohibited grounds of discrimination listed in Art. 3(3) GG (cf. BVerfGE 138, 136 <180 f. para. 122>; 148, 147 <183 f. para. 94 f.>; 148, 217 <242 f. para. 103 f.>, each with further references; established case-law).

Where constitutional review concerns the equal treatment of matters that are inherently different rather than the unequal treatment of matters that are essentially alike, the applicable standard of review is in principle determined by the same considerations. Specifically, equal treatment of matters that are inherently different is subject to stricter constitutional requirements the more such treatment adversely affects constitutionally protected fundamental freedoms. Another relevant factor is the extent to which individuals have control over the criteria that result in the disadvantaging effect of equal treatment, i.e. whether affected individuals themselves have the power to change their situation to more beneficial factual and legal circumstances. Lastly, it must be taken into account whether constitutional law affords the legislator a prerogative of assessment when appraising the status quo and the effects of the intended legislative measures thereon (cf. BVerfGE 110, 141 <167 f.>). Similar to cases in which constitutional review concerns unequal treatment of matters that are essentially alike, these factors may result in stricter proportionality requirements when considering whether equal treatment of matters that are inherently different is justified (cf. Federal Constitutional Court, Order of the Third Chamber of the First Senate of 18 July 2019 - 1 BvL 1/18 inter alia -, para. 100 f.).

b) Based thereon, justification of according the same treatment to all parents under the law on public social insurance contributions, and the disadvantaging effect it creates, is subject to strict proportionality requirements.

aa) Applying the same contribution rate to all parents liable under the system of public social care insurance affects the constitutionally protected fundamental freedoms of parents differently, depending on the number of children they have.

(1) This stricter standard of review does not result from the fact that the general freedom of action under Art. 2(1) GG is affected, even though the statutory provisions on mandatory enrolment in and mandatory contributions to public social care insurance do interfere with this freedom (cf. BVerfGE 115, 25 <42> with further references). It is true that as a fundamental freedom, Art. 2(1) GG protects individuals against any state-imposed financial disadvantages resulting from payment obligations that do not have a sound constitutional basis in law. Nonetheless, the mere fact that a measure affects the general freedom of action does not necessarily translate into application of a stricter standard of review for corresponding impairments of the right to equality (cf. Federal Constitutional Court, Order of the First Senate of 8 July 2021 - 1 BvR 2237/14 inter alia -, para. 117).

(2) However, a stricter standard may arise on the grounds that imposing the same burden on all parents liable for social care insurance contributions affects the fundamental rights protection afforded families under Art. 6(1) GG. Where statutory provisions have a disadvantaging effect on families, the state must uphold the special protection guaranteed families under Art. 6(1) GG (cf. BVerfGE 87, 1 <37>; 103, 242 <258>; 111, 176 <184>; 130, 240 <254 f.>; 133, 59 <87 para. 73>; 151, 101 <128 para. 67>). This obligation also applies in cases where statutory provisions have a disadvantaging effect on certain types of families as compared with other families (cf. BVerfGE 106, 166 <176>; 127, 263 <278>).

In the present case, imposing the same contribution rate on parents within the system of public social care insurance has a disadvantaging effect on larger families, which becomes more severe the more children a contributor raises and cares for. Certain types of families, i.e. contributors with large families, carry a greater burden in the current public social care insurance system than other types of families, i.e. families with fewer children (see above para. 248 ff.). It follows that a stricter equality standard is applicable here, beyond the mere prohibition of arbitrariness that may apply in other equality cases (cf. BVerfGE 130, 240 <254 f.>; 133, 59 <87 para. 73>).

bb) Despite the expansion of day care capacity, parents have little choice when comes to incurring economic costs associated with raising children, which increase with each additional child and cause the disadvantaging effect at issue here. This is not least due to the fact that parents have a legal obligation vis-à-vis their children to provide care and maintenance. Although the economic costs associated with raising children are, in many cases, a consequence of the parents’ deliberate decision to have a certain number of children in the first place, this does not merit a different conclusion under constitutional law. The fundamental right enshrined in Art. 6(1) GG requires that the state respect the decision of parents to have children. As a result, the choice to have children is not comparable to other life choices in that the state cannot justify a disadvantage to parents on the grounds that the choice to have children is “avoidable” (cf. in relation to tax law: BVerfGE 82, 60 <87>; 89, 346 <352 f.>; 107, 27 <49>).

c) When deciding on how to give effect to equality requirements in the contribution scheme for public social care insurance, the legislator is nevertheless afforded a wide margin of appreciation and assessment as well as leeway in terms of design (cf. BVerfGE 103, 242 <270 f.>). The legislator not only has latitude in determining the extent to which the economic costs of raising children should be factored into the contribution system; it can also decide how exactly these costs are to be compensated, and allocate the financial burden arising therefrom.

Most notably, in deciding how to offset the disadvantage at issue, the legislator is not limited to an approach focused on levelling the advantage enjoyed by the relevant comparison group. The legislator is only required to bring about a specific outcome, namely, to bring the law in conformity with the right to equality. How this is to be achieved is ultimately left to the legislator’s discretion. Art. 3(1) GG does not require that a disadvantage incurred by one group be directly offset by eliminating, in a symmetrical fashion, an advantage currently enjoyed by another group. The legislator is therefore not obliged to alleviate the burden on the disadvantaged group by shifting the cost burden to the non-disadvantaged group and stripping them of privileges.

Instead, the legislator could opt to allocate tax funding to compensate the cost disadvantage at issue. While the Basic Law does not impose an obligation on the legislator to partially finance the public social care insurance from tax revenue, it also does not prevent the legislator from doing so (cf. BVerfGE 113, 167 <219>). […]

2. Imposing the same contribution rate on all contributors with children, regardless of the number of children they have, does not meet the stringent proportionality requirements applicable in the present case. In order to justify equal treatment of matters that are inherently different, the principle of proportionality requires that the lack of differentiation in the law at issue specifically serve a legitimate purpose; furthermore, the legislative design must be suitable, necessary and appropriate (proportionate in the strict sense) for achieving this purpose. The design of the current contribution structure in the system of public social care insurance serves several legitimate purposes (see a) below). It is also suitable (see b) below) and necessary (see c) below) for achieving this purpose. However, the currently applicable framework on contributions is not proportionate in the strict sense, given that the legislator exceeded the limits of permissible legislative typification (see d) below).

a) In according equal treatment to all parents, without differentiating based on the number of children, the legislator pursues several purposes that are considered legitimate under constitutional law, both when viewed in isolation and when viewed together. In its review, the Court is not limited to taking into account only those purposes expressly stated by the legislator (cf. BVerfGE 151, 101 <136 para. 89>; Federal Constitutional Court, Order of the First Senate of 19 November 2021 - 1 BvR 781/21 inter alia -, para. 169).

In the current legislation governing contributions, adopted in response to the 2001 judgment on public social care insurance, the legislator aimed [...] to adequately compensate the economic costs associated with raising children for parents of single children as well as for parents with more than one child (see aa) below). In addition, the legislator aimed to secure the financial stability of the public social care system (see bb) below) while also seeking to make administrative implementation of the contribution scheme simple and practical (see cc) below).

aa) By imposing a premium supplement on contributors without children, the legislator intended to alleviate the contribution burden on parents as compared to other contributors – without regard, however, to the number of children – on the grounds that parents bear a higher contribution burden stemming from the costs associated with raising children (cf. BVerfGE 103, 242 <263 ff., 265 f., 270>; cf. BTDrucks 15/3671, p. 4). In this respect, the law serves a legitimate purpose. While the issue of whether the privileged treatment of parents ought to differentiate further depending on the number of children was raised repeatedly during the legislative proceedings, the legislator ultimately decided against adopting such a solution (see above para. 69 f.). The legislator therefore clearly assumed that the current legislative design was sufficient to offset the additional burden carried by parents, including parents with more than one child.

bb) By imposing the same contribution rate on all parents, regardless of how many children they have, the legislator aimed to secure the stability of the public social care insurance system and avoid financial strains (cf. § 21 SGB IV and BTDrucks 15/3671, p. 4). This is in line with the mandate imposed on the legislator in the 2001 constitutional court judgment on social care insurance (cf. BVerfGE 103, 242 <270>). In addition to this aim, the legislative design of the contribution scheme also serves other complementary purposes.

(1) The legislator intended to alleviate the relative burden on parents solely by shifting part of the cost burden to contributors without children. Given this legislative concept, providing even lower contribution rates for parents with larger families while exclusively relying on contribution-based, pay-as-you-go financing of the system would potentially have further increased the cost burden shifted to contributors without children than is currently the case. Keeping the additional cost burden for contributors without children within reasonable limits was one of the central arguments informing the current framework (cf. BTDrucks 15/3671, pp. 4 f., 6). These considerations constitute a legitimate purpose under constitutional law even when – as is the case here – the cost burden at issue would not create a ‘crushing effect’ (cf. Chamber Decisions of the Federal Constitutional Court, Kammerentscheidungen des Bundesverfassungsgerichts – BVerfGK 13, 372 <380>) and therefore would not exceed the absolute limit set by the Constitution for imposing public fees and charges, a limit that must also be observed in the law governing social security contributions. It was unobjectionable for the legislator to assume that “demanding an even higher contribution [from contributors without children] as an expression of solidarity towards contributors who raise children” (cf. BTDrucks 15/3671, p. 5) would run counter to ensuring a broad funding basis of the public social care insurance system. The legislator could assume that raising the contribution burden on contributors without children might jeopardise the stability of the system, in that it would create, especially for contributors with high incomes, an incentive to switch from public social care insurance to a private care insurance scheme.

(2) In the context of limiting the cost burden resulting from the supplement payable by contributors without children, the legislator further decided that the supplement should be borne fully by the individual contributor ([...]). This deviates from the general contribution model applicable to employment-based enrolment in public social care insurance, which provides for an equal split of contribution costs ([...]) between employer and employee. By making the supplement for contributors without children fully payable by the employee, the legislator wanted to avoid a situation in which employers faced different levels of social security costs depending on whether their employees had children or not (cf. BTDrucks 15/3671, pp. 4, 6 f.). Another argument cited by the legislator was that the economic costs of raising children, which the supplement aims to offset, are also solely borne by parents (cf. BTDrucks 15/3671, loc. cit.).

In the overall legislative design of the contribution scheme, these two elements are inherently intertwined: first, the decision to apply the same privileged rate to all parents regardless of how many children they have, thereby keeping the cost burden shifted to contributors without children via the aforementioned supplement within reasonable limits; and, second, the decision to make the supplement solely payable by the individual contributor, in deviation of from the general principle of costs borne in equal parts by the insured employee and their employer. Had the legislator instead opted to provide further contribution reductions for parents depending on the number of children, the likely legislative consequence would have been to split this increased cost burden for contributors without children between employee and employer to prevent an unreasonable burdening of contributors without children. In practice, the social security costs borne by employers would then be different in scope depending on whether the insured employee has children. It was within the legislator’s leeway to forego this option.

cc) Lastly, it is generally permissible for the legislator to take into account considerations pertaining to the simplification and practicability of administrative implementation. This applies all the more so in this case because the collection of social security contributions is a massive administrative operation requiring a vast number of cases to be processed. These administrative efforts concern not only insurance funds but also employers who [...] are overall liable for social security contributions vis-à-vis the insurance funds and responsible for processing the contributions internally borne by their employees. Given that the administrative implementation of the contribution scheme relies on employers to collect and transfer contribution payments, the legislator pursues a legitimate aim in seeking to standardise the assessment basis and contribution rates to the greatest extent possible and thereby keep the resulting data processing and management burden on employers to a minimum.

b) According equal treatment to all parents liable for contributions regardless of the number of children constitutes a suitable means for achieving these legitimate purposes under constitutional law.

The constitutional requirement of suitability does not demand that the aim pursued be achieved in its entirety; it is sufficient that the measures at issue are suitable for promoting the legitimate aim (cf. BVerfGE 138, 136 <189 para. 139>; 151, 101 <140 para. 100>; established case-law). When appraising the suitability of legislative provisions, the legislator has a prerogative of assessment. It is, in principle, sufficient under constitutional law if there is at least a possibility that the provision will achieve the desired purpose. In this respect, the legislator is afforded latitude with regard to the appraisal and assessment of the underlying circumstances, any prognoses that may be necessary and the means chosen to achieve the legislative aims (cf. BVerfGE 151, 101 <140 para. 100>; 152, 68 <130 f. para. 166>). A provision can only be found unsuitable if it cannot further the legislative purpose in any way or if it actually counteracts this purpose (cf. Federal Constitutional Court, Order of the First Senate of 8 July 2021 - 1 BvR 2237/14 inter alia -, para. 131).

Based on these standards, treating all parents equally in terms of their contributions to public social care insurance, regardless of how many children they have, is a suitable means for achieving the following purposes: factoring in the economic costs associated with raising children, including for parents with more than one child (see aa) below); securing the financial sustainability and stability of the public social care insurance system (see bb) below); and making administrative implementation of the contribution scheme easier and more practical (see cc) below).

aa) By setting a lower contribution rate for parents in relation to contributors without children, the legislator sought to factor in the economic costs of raising children in line with the 2001 constitutional court judgment on public social care insurance. In this respect, the legislator sought to alleviate the burden on all parents, including those with more than one child. Despite the fact that the contribution scheme put in place in response to the 2001 judgment relies on legislative typification (see (1) below), it can still be regarded as somewhat suitable to achieve this aim (see (2) below).

(1) In designing the provisions referred for judicial review, the legislator relied, in several respects, on generalised categories based on what it assumed to be the typical case (legislative typification). The additional cost burden placed on contributors without children, resulting from the supplement, is necessarily independent of the individual circumstances of parents benefiting from the lower contribution rate. The contribution scheme therefore accords the same privileged treatment to all parents regardless of how many children they have and – because the law only distinguishes between parents and non-parents in an abstract sense – regardless of whether or over what period of time the individual parent actually incurred economic costs stemming from raising children. With the birth of one’s first child comes a life-long exemption from the supplement otherwise payable under public social care insurance. The actual amount of the child-raising costs borne by a given parent is not taken into account at all.

(2) Nevertheless, this contribution structure does alleviate the contribution burden of parents with more than one child, at least to a certain extent.

[...] The supplement collected from contributors without children has generated sufficient additional funds to cover the current expenditure on insurance benefits. It was therefore not necessary to raise the basic rate for contributions beyond the increases effected by the legislator. This provides an economic advantage to parents who are generally only liable for the lower basic rate, an advantage that extends to all parents, including those with more than one child. [...]

Contrary to the referring court’s view, the recent increase of the basic contribution rate (from 2.05% to 2.35%), which serves to finance the newly-established Social Care Insurance Sustainability Fund, did not neutralise this advantage for parents with more than one child. [...] As long as the additional revenue generated by higher contributions is used within the system of public social care system, the scope of the resulting advantage remains the same, regardless of which specific aspect of public social care insurance is ultimately financed by the funds in question. This is the case here: the increased contribution rate serves to build up the Social Care Insurance Sustainability Fund, which seeks to secure the future financing of the public social care insurance system in expectation of a surge in benefit-related expenditures due to demographic developments.

bb) According the same privileged treatment (made possible by the supplement payable by contributors without children) to all parents, in a generalised manner regardless of the number of children they have, furthermore contributes to secure a robust funding basis for the public social care insurance system. It specifically serves to limit the additional cost burden on contributors without children. Without such limitation, there would be greater incentive for high-income contributors to switch from public social care insurance to a private care insurance plan. By making the supplement payable solely by the insured contributor, the legislator also achieved the aim of preventing disparate social security costs for employers depending on whether the insured employee in question has children or not.

cc) Lastly, the design of the supplement payable by contributors without children furthers the purpose of making administrative implementation of the contribution scheme easier and more practical. [...] A different contribution model with privileged treatment for parents based on the number of children they have [...] would inevitably have increased the administrative burden placed on employers, collecting agencies and insurance funds [...]. [...]

c) Applying the same contribution rate to all parents regardless of the number of children is also necessary under constitutional law to achieve these legislative purposes.

aa) Unequal treatment of matters that are essentially alike only satisfies the necessity test under constitutional law if no other means are available with which the legislator can achieve or promote the aim pursued with the same level of effectiveness while also resulting in less inequality (cf. BVerfGE 138, 136 <190 para. 142>; 151, 101 <141 para. 103>) and without shifting a more severe burden to third parties or the general public (cf. BVerfGE 148, 40 <57 para. 47> with further references; 151, 101 <141 para. 103>). When appraising the necessity of a measure, the legislator is afforded a margin of assessment and prognosis (cf. BVerfGE 155, 238 <280 para. 105> with further references; established case-law). It is not for the Federal Constitutional Court to review whether the legislator has found the best possible solution for the issues the relevant law seeks to address (cf. BVerfGE 149, 86 <120 para. 94>). Measures that the legislator considers necessary are therefore only objectionable under the necessity test if it can be determined, based on the facts available to the legislator and on prior experience, that the aim pursued could be achieved through alternative means that would promise the same effectiveness, but create a lesser degree of inequality (cf. on the necessity test for measures interfering with fundamental freedoms, BVerfGE 126, 112 <225>; established case-law). In this regard, it must be clearly established that the alternative measure is equally effective for achieving the purpose pursued in every respect (cf. BVerfGE 81, 70 <91> with further references; for a general overview, cf. Federal Constitutional Court, Order of the First Senate of 8 July 2021 - 1 BvR 2237/14 inter alia -, para. 142).

Conversely, equal treatment of matters that are inherently different only fails the necessity test if a more differentiating approach that would benefit currently disadvantaged parties could be taken, while also ensuring the same level of effectiveness in achieving or promoting the legislative aim without imposing additional burdens on third parties or the general public. Where legislation aims to resolve matters that affect a multitude of heterogeneous interests, further examination is required: in order to demonstrate that a measure is unnecessary, it must be established that alternative means could achieve the same result without creating additional burdens in relation to each of the conflicting interests affected (cf. BVerfGE 115, 205 <233 f.>). Most notably, it cannot be argued, based on the necessity test, that the legislator were required to implement the intended privileged treatment of certain contributors within the social security system by providing tax-based funding as a “less intrusive” alternative means and, to this end, raise taxes (cf. BVerfGE 117, 272 <298 f.>). Under the necessity test, alternative measures that merely shift the cost burden do not constitute less intrusive means (cf. BVerfGE 103, 172 <183 f.>; 109, 64 <86>).

bb) Based on these standards, the current statutory contribution scheme – which does not differentiate within the group of parents based on the number of children – satisfies the necessity test. It is true that the economic costs associated with raising children would be compensated to a greater extent if the law on public social care insurance contributions were to differentiate further based on the number of children each contributor has. However, given the heterogeneous conflicting interests affected by the law, lowering the cost burden for those with a large number of children cannot be achieved without shifting costs to other stakeholders: by increasing the costs borne by contributors without children or with fewer children; by increasing tax-based funding and thereby shifting costs to the general public; or by cutting benefits, to the detriment of current recipients under public social care insurance. Whether such a more differentiated contribution scheme – which would lower the burden on parents with more than one child but increase the burden on others – satisfies constitutional law is not a question of necessity, but of proportionality in its strict sense (cf. BVerfGE 109, 64 <86>). Lastly, if the legislator were to put in place a more differentiated contribution scheme, additional data would have to be collected and processed to determine how many children contributors have, thereby increasing the administrative burden at the level of implementation.

d) While the current contribution scheme satisfies the necessity test, imposing the same contribution rate on all contributors with children, regardless of the number of children they have, is nonetheless not appropriate under constitutional law and thus violates the principle of proportionality in its strict sense.

aa) Equal treatment of matters that are essentially alike is only proportionate in the strict sense if the scope of unequal treatment is appropriate to both the significance of the aim pursued and the scope and extent to which unequal treatment furthers that aim (cf. BVerfGE 138, 136 <197 para. 156>). The present proceedings do not concern unequal treatment of matters that are inherently alike, but instead, equal treatment of matters that are inherently different. Nevertheless, the aforementioned standard still applies accordingly, meaning that the lack of differentiation is proportionate in the strict sense if the significance of the aim pursued by the measure is appropriate to both the scope of the factual inequalities arising from the subject matter addressed and the scope of the disadvantaging effect resulting therefrom.

Moreover, the present case concerns legislation that relies on typification. In such cases, constitutional review must in particular consider that the use of typification for the purpose of simplifying administration may serve as a factual justification for why matters are treated equally despite inherent differences. The law must strike an adequate balance between the advantages arising from typification and the unavoidable disadvantages arising from equal treatment being accorded to inherently different matters (cf. BVerfGE 145, 106 <146 para. 107>; 148, 147 <202 para. 136>; established case-law).

Relying on typification is only permissible if the legislator ensures that the law is realistically based on the typical case and does not use an atypical case as the point of reference(cf. BVerfGE 145, 106 <146 para. 107>; 148, 147 <202 para. 136>; established case-law). Hardships and injustices arising in individual cases due to the use of typification in legislation must be limited to a relatively small number of cases (cf. BVerfGE 84, 348 <360>; 145, 106 <146 f. para. 108>; 151, 101 <146 para. 116>; established case-law). Moreover, typification must not result in severe interference with equality standards (cf. BVerfGE 84, 348 <360>; 145, 106 <146 f. para. 108>; 151, 101 <146 para. 117>; established case-law). Furthermore, constitutional review must take into account whether the hardships resulting from typification could only be avoided with great difficulty. Relevant concerns in this regard include the practical demands of administrative implementation (cf. BVerfGE 84, 348 <359 f.>; 145, 106 <146 f. para. 107 f.>; 148, 147 <202 para. 136>; 151, 101 <146 para. 118>; established case-law). Where typifying legislation aims to resolve matters that affect a multitude of heterogeneous interests – as is the case here – further examination is required. Specifically, the reasons supporting a typifying approach must be balanced against the disadvantages and burdens that would be imposed on third parties or the general public if a more differentiating approach were taken (see above para. 311 f.).

bb) The provisions referred for review do not satisfy these requirements and can therefore not be considered proportionate in the strict sense. In determining the contribution structure of public social care insurance, the legislator exceeded its permissible margin of typification by imposing the same contribution rate on all parents regardless of the number of children they have.

(1) [...]

[...]

(2) The typification undertaken by the legislator has a disadvantaging effect on all contributors with more than one child, which concerns a considerable number of cases. Since the number of children a given contributor has is not relevant under the current contribution scheme, no exact data is available on the percentage of contributors enrolled in public social care insurance with more than one (dependent) child. However, sufficiently reliable data can be inferred from the representative sample survey (Microcensus) conducted in 2019. Of all surveyed families with minor children, 50.7% had one child, 37.4% had two children, 9.2% had three children, 2.1% had four children and 0.6% had five or more children ([...]). It can be assumed that the demographics among persons enrolled in public social care insurance, which in 2019 accounted for 87% of the general population, are largely similar. Based on this data, it can be concluded that there are roughly as many one-child families in the general population as there are families with two or more children. Among contributors to public social care insurance, the percentage of persons that bear higher economic costs associated with raising children is therefore by no means negligible, but instead, quite significant.

(3) By applying the same contribution rate to all contributors with children, the law creates a disadvantage of considerable weight for contributors with more than one child. The more children contributors raise, the less they benefit from the privileged rate applicable to parents as compared to contributors with fewer children, who enjoy the same privilege but do not incur increased child-rearing costs to the same extent. The additional cost burden on contributors with more children is not fully compensated by the benefit of having the additional children insured without further contributions. The exact scope of the disadvantage arising in relation to how many children a given contributor has is not quantifiable in absolute terms, given that it stems from the economic costs associated with raising children, which also cannot be put in an exact number. It is nevertheless possible to assess these costs in relative terms, which is sufficient for constitutional review under the right of equality. While the economic costs associated with raising children does not increase proportionally with each additional child (see above para. 264 ff.), and the additional burden on parents – which creates a relevant disadvantage that must be compensated under the right of equality – also does not increase proportionally, it can still be concluded that the burden on parents increases substantially with each child.

[...]

(4) The fact that, in absolute terms, the amounts of social care contributions are comparatively low does not justify the extent of typification used here. In its case-law, the Court has yet to decide on the question of whether negligibility can be invoked as a valid defence under constitutional law (cf. BVerfGE 148, 147 <204 para. 141>); it is also not necessary to resolve this question in the present proceedings. From the outset, the argument that the resulting burden is negligible cannot justify a substantial and extensive disadvantaging effect that directly concerns the essential elements of legislation (cf. BVerfGE 148, 147 <204 para. 141>). Such is the case here: the lack of differentiation in the contribution rate, and the resulting disadvantage, indiscriminately affects a large number of contributors. It also cannot be assumed that a contribution structure that differentiates depending on the number of children would make only a marginal difference in the amounts owed by contributors ([...]).

[...]

(5) The typification undertaken by the legislator in the present case also cannot be justified by the argument that it makes administrative implementation easier and more practical. It is generally permissible for the legislator to take into account considerations pertaining to the simplification and practicability of administrative implementation, not least because the collection and processing of social security contributions is a massive administrative operation and because implementation is partly incumbent upon employers. However, if a legal provision fundamentally and substantially infringes upon the right to equality, not even a maximum of administrative simplification or a significantly optimised cost-benefit relation between the efforts undertaken to collect contributions and the resulting revenue could justify such a violation in the long run (cf. BVerfGE 148, 147 <201 f. para. 133> regarding the collection of taxes). In the present proceedings, it is in any case not ascertainable that applying different rates based on the number of children would disproportionally increase the burden of administrative implementation in the first place.

[...]

(6) Lastly, it cannot be argued that expanding the privileged treatment of contributors with children, in the form of lower rates depending on the number of children, would necessarily burden contributors without children or those with fewer children to an extent that exceeds constitutional limits.

It is not ascertainable that the ‘shifting of cost burdens’ resulting from further differentiation would inevitably entail disproportionate financial strain for contributors without children, or those with fewer children, and would therefore have a ‘crippling effect’ in terms of costs ([...]): such a risk of excessive burdens can be ruled out, not least because the actual contribution owed depends on the individual income of the contributor and because the applicable rates for social care insurance contributions are generally set at a low level.

[...]

Within its leeway of design, the legislator may in principle take into account that “demanding an even a higher contribution as an expression of solidarity towards contributors who raise children” (cf. BTDrucks 15/3671, p. 5) from contributors without children and those with fewer children may only be feasible up to a point. In determining how to account for the varying differences in child-rearing costs incurred by contributors, the legislator may furthermore decide against fully or partially ‘shifting the extra burden’ from contributors with more children to those with fewer children or to contributors without children. Instead, the legislator may choose to finance these costs in other ways, such as by providing (supplementary) funding from tax revenue (Art. 120(1) fourth sentence GG) or by making use of other available means for the design of public contribution and benefit schemes. Thus, there are several options available to the legislator in designing a contribution scheme that differentiates based on how many children a contributor has, while at the same time maintaining the financial stability of the public social care insurance system.

D.

I.

The administrative decisions challenged by the constitutional complaint lodged in proceedings 1 BvR 717/16, which determined the complainant’s contributions to public social care insurance for the periods in dispute, were based on legal provisions that – for the reasons stated above in relation to the judicial review proceedings 1 BvL 3/18 – are incompatible with Art. 3(1) GG. Specifically, these provisions violate the right to equality to the extent they impose the same contribution rate for public social care insurance on parents who raise a larger number of children and on contributors that raise fewer children. For these reasons, the challenged administrative decisions [issued by public insurance providers], as well as the court decisions upholding them, violate the complainant’s fundamental right to equality under Art. 3(1) GG.

II.

1. For the same reasons, the provisions governing contributions to public social care insurance applicable during the periods in dispute ([...]), which are challenged indirectly by the constitutional complaint lodged in proceedings 1 BvR 2257/16, violate the right to equality under Art. 3(1) GG to the extent that all parents are liable for contributions to public social care insurance at the same rate, regardless of the number of children they have.

2. By contrast, the constitutional complaint is unfounded to the extent that it challenges provisions governing contributions to public pension schemes. The law governing public pension contributions does not conflict with Art. 3(1) GG (on the applicable constitutional standard see above para. 239 ff.) insofar as parents pay contributions based on the same rate as persons that have no children. By applying the same contribution rates to persons with and without children, the law governing public pensions accords equal treatment to matters that are inherently different (see a) below); however, this does not result in an unconstitutional disadvantaging effect, as the design of the public pension system ensures that the extra burden on parents is sufficiently compensated (see b) below).

a) Based on the legislative design of the public pension system, applying the same contribution rates to contributors with and without children in the law governing public pension schemes accords equal treatment to matters that are inherently different. Nevertheless, the legislative design as such is aimed at recognising the economic costs associated with raising children, and effectively factors these additional costs into the contribution system.

aa) In the public pension system, ‘child-raising periods’ (Kindererziehungszeiten ) are equivalent to contribution periods, thereby serving to prevent a reduction of old age pension benefits due to time spent caring for a child in lieu of gainful employment. In the current system of contribution-based (pay-as-you-go) financing, this also serves to honour the value of raising children, which ultimately benefits the public pension system (see (1) below). By contrast, further ‘child-related’ periods (Kinderberücksichtigungszeiten ), which can be claimed under public pension law, primarily serve to compensate child-related gaps in a contributor’s employment history (see (2) below).

(1) ‘Child-raising periods’ refer to the period spent by a parent in raising a child during the first three years of life (§ 56(1) first sentence SGB VI). Eligible child-carers are credited pension points that translate into normal pension expectancies once the general qualifying period is met [...]. [...] The pension points accrued for child-raising periods are added to the pension points accrued during regular contribution periods up to the maximum income limit for contribution assessments ([...]).

(aa) Traditionally, recognition of child-raising periods solely serves to compensate the disadvantages associated with raising children in terms of diminished pension expectancies ([…]). […]

In its Trümmerfrauen judgment [named after the female workers involved in the clean-up and reconstruction of German cities during and after the Second World War], rendered on 7 July 1992, the Court instructed the legislator to ensure that the law on public pensions consider, to a greater extent than had previously been the case, the economic disadvantages stemming from the raising of children (cf. BVerfGE 87, 1 <39>, second headnote). Prior to that judgment, the law on public pensions was designed in a manner that effectively placed families at a disadvantage, especially larger families with many children. Under the old framework, parents that took time off work in order to raise children had lower income from employment compared to persons with no children, and thus had much lower pension expectancies as a result. This legislative design disregarded the existential significance of child-raising for the future functioning of the public pension system, which operates as a pay-as-you-go system in which future generations of contributors are needed to fund the future benefits for current contributors (cf. BVerfGE 87, 1 <37 f.>). The Court found that the disadvantages borne by families in which one parent dedicates their working years to raising children was neither compensated by state-provided benefits nor by any other means. It also held that these disadvantages were not limited to the law on public pensions; consequently the legislator was not required to rely only on public pension legislation to fix the issue (cf. BVerfGE 87, 1 <39>). However, the Court also stated that to the extent that these disadvantages specifically affect pensions of family members that raise children, they must be addressed primarily within the public pension system. Given the legislator’s considerable constitutional leeway in terms of design, the Court held that the legislator is not per se required to recognise the raising of children as exactly equivalent to the payment of contributions for purposes of accumulating pension expectancies. However, the Court did find that recognising child-raising periods as periods that establish and increase pension expectancies, in principle, is a suitable and system-compatible means of strengthening pension security for contributors who raise children (cf. BVerfGE 87, 1 <40>).

Disadvantages in the form of diminished pension expectancies in old age only materialise later in life. While these diminished pension expectancies can typically be attributed to the opportunity costs associated with raising children, especially for women, this type of disadvantage must be distinguished from economic costs borne by parents during the actual period of child-raising (cf. also BVerfGE 82, 60 <80 f.>).

(bb) The traditional legislative treatment of child-raising periods was limited to addressing the disadvantages resulting from diminished pension expectancies. As a consequence of this narrow understanding, child-raising periods in which parents continued to make employment-based contribution payments were not recognised as relevant statutory periods in pension law or only recognised to a limited extent. In a subsequent decision, the Court held that this legislative treatment violates the right to equality under Art. 3(1) GG on the grounds that it has a disadvantaging effect on contributors who continue to work, and thus must make mandatory contributions to public pensions schemes, during the first few years of their child’s life (cf. BVerfGE 94, 241 <260 ff.>). In its reasoning, the Court stated that the legislator failed to fully appreciate the value to the public pension system from raising children, given the need for a new generation of contributors to guarantee the functioning of the pay-as-you-go system in the future. The value of child-raising is by no means diminished or eliminated when a parent who takes care of their children during the early years of the child’s life continues to pay mandatory contributions into the system, or voluntarily pays pension contributions during or shortly after child-raising periods, thereby avoiding any pension deficit from the outset (cf. BVerfGE 94, 241 <263 f.>).

In response to that constitutional court decision, the legislator amended the law (cf. BTDrucks 13/8011, p. 81) […], which now allows child-raising periods to be recognised in a cumulative manner even when they overlap with normal contribution periods, so long as the maximum income limit for contribution assessment is not exceeded ([...]). Under the currently applicable law, child-raising periods are thus generally recognised as additional contribution periods – subject to the maximum contribution assessment limit – regardless of whether and to what extent they overlap with normal contribution periods, in particular, those resulting from (continued) employment. It follows that the privileged treatment of parents under the current framework accords an ‘overhang advantage’ that goes beyond compensating disadvantages in terms of diminished pension expectancies, but may also compensate other disadvantages borne by parents such as the present economic costs of raising children.

(2) By contrast, the ability to claim further ‘child-related’ periods under public pension law only serves the purpose of increasing pension expectancies to offset pension deficits that parents would otherwise incur in the future. Thus, it is not capable of compensating the economic costs of child-raising borne by parents in the present.

[...]

bb) Moreover, by treating child-raising periods as equivalent to regular contribution periods, the law effectively alleviates the contribution burden on parents. Without such privileged treatment, contributors raising children would have to make greater direct contributions to earn the same level of expected pension benefits.

[...]

b) This legislative design of the public pension system does not [...] constitute a disadvantaging of parents under constitutional law. It cannot be argued that crediting child-raising periods as contribution periods, in a cumulative manner subject to a maximum limit, were insufficient to ensure that the economic costs of raising children are sufficiently factored into public pension schemes.

aa) By recognising child-raising periods under public pension law, the legislator provided an appreciable compensation for contributors that reduce their employment activities in order to care for their children and would otherwise incur disadvantages in the form of diminished pension expectancies. If a parent takes leave or works part-time in order to raise children, they would normally earn less pension points due to the reduction in income-based pension contributions. However, during the first three years of the child’s life, the potential loss in expected pension benefits that would otherwise result is fully compensated for contributors with low and average incomes. In this respect, the privileged treatment of child-raising periods in the law governing public pension schemes already creates an appreciable economic advantage during the years of employment. In the absence of such recognition of child-raising periods, contributors would have to pay additional contributions into the public pension system to avoid future pension deficits due to their reduced employment income.

[...]

Whether and to what extent the cumulative recognition of child-raising periods confers further advantages on parents beyond compensating the potential social security deficits in old age depends on the individual case, specifically, the amount of the potential pension deficit and the extent to which the advantage of gaining pension expectancies from child-raising periods is already “used up” to cover that gap. The potential ‘overhang advantage’ conferred upon parents through the recognition of child-raising periods under public pension law depends on the opportunity costs incurred as a result of raising children: the higher these opportunity costs, the smaller the additional benefit for parents; conversely, the lower the opportunity costs, the greater the additional benefit. In light of this, women in gainful employment who raise more than one child are particularly affected by these disadvantages, given that they typically incur opportunity costs for a longer period of time than contributors with only a single child (see above para. 258).

Moreover, the aforementioned ‘overhang’ in compensation stemming from the recognition of child-raising periods only materialises, and only to a limited extent, when the contributor’s liable income under public pension law ([...]) moderately exceeds the average monthly income; for contributors whose income matches or exceeds the maximum income limit for contribution assessment, there is no additional compensating effect at all. [...]

The number of contributors benefiting from the recognition of child-raising periods is also limited, given that such periods can only be credited to one parent, even when more than one parent raises the child and is liable for public pension contributions ([...]). Parents that do not benefit from the crediting of child-raising periods, but still bear costs from raising children do not therefore partake in the intended compensation of the economic cost burden. [...] Lastly, child-raising periods that are recognised under public pension law as conferring and increasing pension expectancies are limited to three years, which is significantly shorter than the actual time needed to raise a child to independence.

cc) Despite these restrictions, the recognition of child-raising periods under public pension law, in a limited cumulative manner, ultimately ensures that the economic costs associated with raising children are adequately compensated.

By capping the credit for child-raising periods, the law simply gives effect to the general principle that contribution-based social security benefits are only awarded up to a maximum limit. Such a limit strikes a balance between maintaining the existential social security function of public pensions and protecting the general public against excessive burdens arising from the financing of such a system ([…]).

While child-raising periods are allocated to only one parent, the savings resulting from that parent not having to pay contributions typically benefits the family income as a whole; and in the event of divorce, the pension expectancies resulting from child-raising periods are subject to statutory pension sharing, just like other pension expectancies ([...]). It follows that even parents who cannot directly claim child-raising periods still benefit, at least to certain extent, from the privileged treatment accorded to the eligible parent.

The limits on the recognition of child-raising periods and other child-related pension periods take into account that the costs of diminished opportunities associated with child-rearing in terms of income and employment are particularly high in the first years of the child’s life. Moreover, the legislator did not exceed its latitude by assuming that non-pension related measures, taken as part of the state’s mandate to promote gender equality under Art. 3(2) second sentence GG and which serve to further the reconciliation of career and family life, contribute to increasing the percentage of working mothers and the share of income earned by women with children.

Ultimately, it is not ascertainable for the Court that the measures to alleviate the cost burden on parents under the law on public pensions, most notably through the recognition of child-raising periods, were manifestly insufficient to compensate for the disadvantages associated with raising children.

3. Similarly, the constitutional complaint is unfounded to the extent that it concerns contributions to public health insurance. The law governing public health insurance contributions is not in conflict with Art. 3(1) GG (on the applicable constitutional standard see above para. 239 ff.) on the grounds that parents pay contributions based on the same rate as persons that have no children. By applying the same contribution rates to persons with and without children, the law governing public health insurance accords equal treatment to matters that are inherently different (see a) below). However, this does not result in an unconstitutional disadvantaging effect, as the design of the public health insurance system ensures that the burden on parents is sufficiently compensated (see b) below).

a) Similar to the law on public pensions, the law governing public health insurance accords equal treatment to matters that are inherently different by applying the same contribution rates to contributors with children and those without children. In light of the structural principles of the public health insurance system, there are relevant differences between parents and contributors that do not have children, which must be taken into account in the constitutional review based on the right of equality. By establishing non-contributory family insurance, which is complemented by further child-related and family-specific benefits, the legislator has made it clear that the law on public health insurance aims to factor in the economic costs associated with raising children.

Extending non-contributory co-insurance to children of contributors under public health insurance [...] serves to alleviate the burden on families in the interest of social equity (BVerfGE 107, 205 <213>). Pursuant to §§ 1601 ff. of the Civil Code (Bürgerliches Gesetzbuch – BGB), parents have a statutory obligation to provide maintenance for their children (cf. BVerfGE 108, 52 <72>; 113, 88 <109 f.>), which includes the costs of adequate health insurance (cf. BVerfGE 107, 205 <217>). This statutory obligation gives effect to the constitutional duty of parents to care for and raise their children in accordance with Art. 6(2) GG, which includes the duty to provide maintenance (cf. BVerfGE 108, 52 <72>; 113, 88 <109 f.>). Families with children have a higher number of persons needing health insurance, which in the absence of non-contributory family health insurance coverage would place a higher cost burden on the family, requiring parents to increase their own contributions to secure such coverage. Instead of choosing to address these additional health insurance costs through general family welfare legislation, the legislator opted to incorporate non-contributory family insurance within the system of public health insurance as a means to effectively alleviate the contribution burden on parents (‘internal solution’).

b) The design of the public health insurance system does not result in a disadvantage for parents. By providing for family co-insurance and other child-related benefits, the legislator not only recognised, but also sufficiently compensated, the economic costs associated with raising children and the resulting additional burden borne by families.

aa) In contrast to the services covered by public social care insurance, children and young people benefit to a considerable extent from the treatments and services covered by public health insurance, including preventive healthcare. [...] As noted above, non-contributory family insurance under public social care insurance mitigates the disadvantages borne by parents, at least to some extent, although the risk of children needing long-term care is comparatively low (see above para. 275). By contrast, the benefits of non-contributory health insurance being extended to family members are about ten times higher compared to those for public social care insurance [...] and without the contribution burden increasing ten-fold. Both the actual benefits claimed and the underlying insurance cover constitute an appreciable economic advantage for families that is directly appreciable during the phase of child-rearing and childcare; all the more given that non-contributory family health insurance relieves parents of the duty to provide and fund separate health insurance for their children (see above para. 362).

bb) The complainants in proceedings 1 BvR 2257/16 call into question the extent of the advantage conferred by non-contributory co-insurance for family members, claiming that, on average, families pay more into the public health insurance system in contributions than they receive in benefits and healthcare services [...]. This argument is not persuasive for two reasons: first, this disparity is not unique to parents and therefore does not constitute a parent-specific disadvantage under constitutional law; second, this argument is based on a ‘profit-oriented view’ that fundamentally runs counter to the rationale of the public health insurance system.

The purpose of public health insurance is to protect those in need of healthcare, and thus in a situation of social vulnerability, against the financial risks associated with illness. To this end, the public health insurance system comprehensively aims to ensure social equity, reconciling the interests of persons with pre-existing medical conditions and persons in better health, the interests of the younger generation and the interests of the elderly, the interests of contributors with lower incomes and those with higher incomes and, finally, the interests of contributors without children and the interests of parents (cf. BVerfGE 113, 167 <220>). The advantage conferred by non-contributory cannot be called into question by arguing that parents with dependent children paid on average more into the public health insurance system, in terms of contributions, than they receive in return, in terms of insurance-paid services for themselves and for co-insured family members. Even if this were the case, it would in no way negate the advantage arising from the insurance coverage conferred by non-contributory family insurance in the first place. Contributions to public health insurance are not directly reciprocal to the cost of healthcare services claimed in the actual event of illness, but to the protection of insurance coverage as such, which not only protects against typical risks associated with old age but also more general risks applicable to all age groups. Parents that are net contributors, i.e. persons that pay more into the pay-as-you-go system of public health insurance than they claim in terms of benefits for themselves or for family members, are in no different of a position than persons without children that likewise make income-based contributions. For the latter group, the difference between the amounts paid into the system and the insurance benefits claimed is typically even greater, meaning that their contributions effectively subsidise family insurance coverage. If – based on the aforementioned argument – contributors that have no children and therefore claim less benefits were to be given privileged rates, this would ultimately increase the cost burden on parents.

III.

To the extent that it is not already inadmissible, the constitutional complaint lodged in proceedings 1 BvR 2824/17, which indirectly challenges the law governing contributions to public pension schemes, is unfounded for the reasons stated above.

E.

The provisions referred for review – those relating to public social care insurance contributions in § 55(1) first sentence, § 55(3) first and second sentence, and § 57(1) first sentence SGB XI – […] violate the right to equality in Art. 3(1) GG on the grounds that all parents are liable for contributions at the same rate, regardless of the number of children they have. For the same reasons, the constitutional complaints in proceedings 1 BvR 717/16 and 1 BvR 2257/16 – insofar as they are admissible – are partly successful to the extent that they concern public social care insurance. The constitutional complaint in proceedings 1 BvR 2257/16 is unfounded to the extent that it concerns contributions to public pension schemes. The constitutional complaint in proceedings 1 BvR 2824/17 – insofar as it is admissible – is unfounded in its entirety.

I.

1. In cases where the Court finds provisions referred for judicial review incompatible with the Basic Law, it declares the provisions in question unconstitutional (§ 81 of the Federal Constitutional Court Act, Bundesverfassungsgerichtsgesetz – BVerfGG). However, this does not mean that such provisions are invariably declared void (§ 82(1) in conjunction with § 78 first sentence BVerfGG). The Court may choose instead to merely declare an unconstitutional provision incompatible with the Basic Law rather than void, particularly where the legislator has different options to remedy breaches of constitutional law. This generally holds true for violations of the right to equality (cf. BVerfGE 99, 280 <298>; 105, 73 <133>; 117, 1 <69>; 122, 210 <245>; 126, 400 <431>; 148, 147 <211 para. 165>; established case-law).

The provisions referred for judicial review in the present proceedings are incompatible with the right to equality in Art. 3(1) GG on the grounds that all parents are liable for contributions at the same rate, regardless of the number of children they have. In the present case, the legislator has many different options available to design a differentiated contribution scheme that adequately accounts for the number of children each contributor has and to secure the funding needed to afford privileged treatment to parents. Constitutional law does not prescribe a specific approach in this regard but leaves the decision to the legislator.

The legislator not only has latitude in deciding how to structure a more differentiated contribution scheme that factors in the number of children, it is also afforded a broad margin of appreciation and leeway in determining the extent and scope of further privileged treatment accorded to parents with more than one child. The legislator is further free in choosing how to ensure the necessary financing of a revised contribution scheme that alleviates the cost burden for parents, based on how many children they have. Lastly, it is for the legislator to decide – when revising the current framework – whether parents should benefit from life-long privileged treatment, as is currently the case, or whether privileged contribution rates should only apply for a limited duration, namely the periods in which parents (typically) incur actual economic costs associated with raising children.

2. Following a declaration of incompatibility, the legislator is in principle required to remedy the constitutional deficits by amending the law in question with retroactive effect (ex tunc) for the entire period for which the law was found unconstitutional; a declaration of incompatibility generally also extends to all decisions rendered by courts and authorities on the basis of the unconstitutional law to the extent these decisions have not yet become final and can still be appealed under ordinary law (cf. BVerfGE 133, 377 <423 para. 108> with further references). This notwithstanding, provisions that have been found unconstitutional may provisionally continue to apply based on a special justification; one such justification is the interest in securing a reliable basis for budgetary and fiscal planning by the state (cf. BVerfGE 138, 136 <250 para. 287>; 139, 285 <319 para. 89>; Federal Constitutional Court, Order of the First Senate of 8 July 2021 - 1 BvR 2237/14 inter alia -, para. 250).

Based on these standards, it is appropriate here to order the continued applicability of the provisions referred for review, and to set a deadline for the legislator to bring the law into conformity with the Basic Law (only) for the future (ex nunc effect). Requiring the legislator to revise the law on public social care contributions with ex tunc effect would severely affect the interest of the general public in maintaining a reliable financial planning basis for the public social care insurance system. Moreover, implementing a retroactive reform of the contribution scheme might require the processing of considerable reimbursements, straining the capacities of the various bodies involved.

3. When the Court orders the continued application of unconstitutional provisions, it must set a deadline for the legislator to undertake the necessary legislative reforms. In the present case, many different approaches are available to the legislator regarding the design of a more differentiated contribution scheme that alleviates the cost burden on parents in relation to the number of children they have as well as regarding underlying funding options. In view of this, the legislator is given a deadline until 31 July 2023 to enact a revised framework. Until new legislation is passed, the current law remains applicable.

II.

In the constitutional complaint proceedings 1 BvR 717/16 and 1 BvR 2257/16, the Court’s declaration that the law governing contributions to public social care insurance is incompatible with Art. 3(1) GG leads to the finding that the complainant’s fundamental right to equality has been violated to the extent that – despite the number of children they have – they were held liable for contributions at the same rate as contributors with fewer children. However, because the Court also ordered the continued application of the provisions in question, the finding of unconstitutionality has no bearing on the social court judgment and administrative decisions challenged by the complainants, which hence remain in force; in this respect, the constitutional complaints are admissible but ultimately unsuccessful on the merits (cf. BVerfGE 103, 1 <20>; 109, 64 <96>; 111, 289 <306 f.>; 115, 276 <319>).

III.

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