No large family benefits yet for kids through age 23
Under a bill drawn up by the Ministry of Social Affairs, family benefits will be increasing from next year in accordance with the Reform-Isamaa-SDE coalition agreement. Children through age 23, however, will not yet count toward qualifying for large family benefits.
The brunt of the draft new Family Benefits Act is all but lifted directly from the text of the coalition agreement. Starting next year, families will receive €80 per month per first and second child, up from the current €60, while the benefit paid to single parents will see a sharp increase from the current €19 to €80 per month.
Large family benefits, meanwhile, will be going up from €300 to €600 per month for families with three to six children, and from €400 to €800 per month for families with seven or more kids.
Beginning in 2024, large family benefits will be indexed to increase based on the same equation as pensions. The index, which will be applied toward the benefits on May 1, will reflect both the consumer price index (CPI) and social tax receipts.
Minister of Social Protection Signe Riisalo (Reform) hopes that this change will help people at risk of poverty as well as encourage families to have more children.
While the Reform Party had long since maintained that such a sharp increase to large family benefits wasn't a reasonable approach, Riisalo confirmed that once increased, the size of these benefits won't later be reduced.
"People have to be able to count on the fact that decisions that have been adopted will remain in force across time and space," she said.
Next year, the increase in the size of family benefits will account for €149 million of the state budget; three years later, they'll account for €175 million.
Age limit not to increase for years
This summer, the Reform Party, Isamaa and the Social Democratic Party also agreed that families' exit from large family benefits would transition to happening in stages. Currently, the payment of large family benefits ceases once the oldest of three children turns 16 — or 19, if they remain in school through then.
According to the coalition agreement, however, family benefits will continue to be paid out in full until the oldest child in the family turns 24, after which the size of the benefit will be reduced by one third. The same pattern of reductions will continue until all of a family's children have turned 24.
The new bill includes no such change, however, and according to Riisalo, it isn't supposed to. "The exit in stages from large family benefits is slated to enter into force in the future, not next year," she said. "Which is why this can be done with a separate bill."
The minister explained that it isn't possible to implement the system for exiting the benefit in stages earlier than 2025. "And that's the timeframe and tempo we're working with," she added.
According to Riisalo, the development of the new system will require complex development work that will cost at least €1 million. Many agreements have yet to be concluded besides.
For example, what can a family with children aged 13, 17 and 22 expect in 2025? Will this family also start receiving large family benefits again in accordance with the new system, or will the new system only apply to those families whose children are all minors at the time the new law enters into force?
"I don't know how to answer that question," Riisalo admitted. "These are precisely the reasons why it wasn't possible to include this exit in stages in the legislation so quickly. Such detailed agreements weren't concluded as the coalition agreement was being drawn up."
She added that an entire slew of bigger and smaller questions alike remain yet unresolved.
Riisalo promised to introduce a bill for the exit in stages from large family benefits this December. "The coalition agreement likewise doesn't provide for the exit in stages having to be implemented as of next year," she added.
Single parent benefit to increase €130 for parent of three
The new bill will also change the formula used to calculate the minimum subsistence size as well. The current formula takes both large family benefits and child benefits received into consideration, meaning that if the benefits are paid out to a single parent raising a child, the other parent has to pay less child support.
The idea behind this system is that as the state is already paying for some of the child's expenses, it doesn't make sense to demand the other parent pay for them as well.
The new bill, however, would remove large family benefits from the equation. Riisalo explained that if it weren't, rapidly increasing benefits would drive child support payments so low that single parents would ultimately benefit much less from all of these changes than two-parent families.
"A three-child family with both parents living together would receive €340," she noted. "A parent raising a child alone would receive half that, or €170."
By removing large family benefits from the equation altogether, however, the minimum monthly support for families with three children will increase from the current €506 to €636.
Riisalo said that supporting single parents is crucial, as they are the ones at greatest risk of poverty.
Nonetheless, the change in calculation won't apply to single parents with one or two children.
"In the case of single parents, there are typically one or two children," the minister noted. For these parents, the legislative change will mean a decrease in child support along with the increase in the child benefit.
For example, if a single parent with one child currently receives €225.64 per month under current law, once the new bill enters into force, they will receive €215.64. Thus, while the monthly child benefit will go up €20, the support they receive will go down €10.
Riisalo explained that the increase in the size of monthly child benefits won't have such a big impact, which is why child benefits will initially remain part of the equation used to calculate support size.
"There are two sides to every coin," she said. "One side of the coin is children's welfare and subsistence, and the other side is the tax burden on the non-custodial parent. I believe the current choice is a balanced choice."
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Editor: Aili Vahtla