Berlin – This week, the coalition government of the SPD and Union parties intends to finalize plans to overhaul the Bürgergeld system and replace it with the recent Grundsicherung. The upcoming changes could impact ETF investors, as assets exceeding the allowance may need to be divested, even if currently at a loss. The existing Karenzzeit, or grace period, will also be eliminated.
Currently, investments in ETFs are protected as private retirement savings during a Karenzzeit of up to 40,000 Euro. This protection will end with the implementation of the new Grundsicherung. The asset thresholds for receiving support will also be lowered. Starting in July, the allowance for those 20 years and under will be 5,000 Euro, between 21 and 40 years it will be 10,000 Euro, between 41 and 50 years it will be 12,500 Euro, and those 51 and over will have an allowance of 15,000 Euro.
ETF Investors Affected by Bürgergeld Reform: Grundsicherung Without a Karenzzeit
The rationale behind the change is to prioritize the use of an individual’s own income and assets before Grundsicherung benefits are provided. Anyone with assets exceeding the set limits will be required to deplete them before being eligible for Grundsicherung. This also impacts ETF investors who are looking to save privately for the long term.
According to a response to an inquiry from our newsroom, the BMAS stated, “The Grundsicherung for job seekers is a tax-financed benefit that ensures that people who are temporarily unable to finance their livelihood from their own resources do not fall into existential need. It is a secondary benefit. This means that those affected must first use their income and assets to secure their livelihood.”
For individuals who privately invest in ETFs and unexpectedly find themselves unemployed, the new regulations are particularly challenging. An alternative would be to sell ETF shares and invest the proceeds in a Riester pension or similar product exempt from the asset allowance.
The reform of the Bürgergeld is primarily intended to introduce stricter rules for the approximately 5.3 million recipients of the benefit – including total sanctions for missing three appointments at the job center. Marc Biadacz (CDU), the labor market policy spokesman for the Union parliamentary group, told the Deutsche Presse-Agentur on Monday (March 2nd) that “the chapter of Bürgergeld is over.” He stated that the reform will usher in a new chapter, creating a system that offers genuine prospects for those who make a serious effort and makes it clear that anyone seeking support must also take responsibility.
According to research by Stern magazine, job centers may in the future require an official medical certificate for missed appointments, rather than just a doctor’s note. The law, which still needs to be approved by the Bundesrat, is largely expected to arrive into force on July 1, 2026. (Sources: dpa/Stern/own research)
Frequently Asked Questions
What is Grundsicherung?
Grundsicherung is a new benefit that will replace the Bürgergeld starting July 1, 2026. It is a tax-financed benefit intended to prevent individuals temporarily unable to support themselves from falling into financial hardship.
How will the new rules affect ETF investors?
ETF investors may be required to sell assets if their holdings exceed the new asset thresholds. The Karenzzeit, which previously protected ETF investments up to 40,000 Euro, will be eliminated.
What asset allowances will be in place under the new system?
The asset allowance will vary by age. It will be 5,000 Euro for those 20 years and under, 10,000 Euro between 21 and 40 years, 12,500 Euro between 41 and 50 years, and 15,000 Euro for those 51 and over.
How might these changes impact long-term financial planning for individuals relying on social support?
