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Three-year freeze on child allowance increases

One of the casualties of the government’s billion-euro cost-cutting programme is the monthly child support allowance paid out to families with children under the age of seventeen. The government has proposed a three-year freeze on index increases in the child welfare payments.

Vauva katselee lastenvaunun kuomun takaa.
Image: Pekka Sipilä / Yle

The government’s 2013 budget plan includes a proposal to hold child allowance payments at their current levels for the next three years. The next index review of the allowance will take place in 2016.

It is hoped the measure will save some 38 million euros next year.

A freeze on index increases in 2014 is expected to save about 78 million euros in expenditure, while the state will save 118 million euros in a similar fashion in 2015. The government does not plan to pay out retroactive index increases after 2016.

The Ministry of Social Services and Health has estimated that families who receive the child allowance will experience a shortfall in their incomes. It’s estimated that in 2015 the allowance will fall short of requirements by eight percent.

However the government says the proposed change will not affect the position of low income families, as the level of child allowance paid out will be considered in income support programmes. Government spending on income support programmes will grow by 2 – 3 million euros next year.

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