HM Revenue and Customs (HMRC) has written to the Treasury Committee to raise concerns about the risk of parents, where one person doesn’t work, losing out on their State Pension.
Registering for Child Benefit builds up State Pension entitlement for parents of children under 12 who do not already pay National Insurance contributions (e.g. because they decide to stay at home to look after their children).
If the parent doesn’t register for Child Benefit, they may forgo their National Insurance credits, and therefore part of their future State Pension.
New data provided to the Treasury Committee by HMRC estimates that of the 7.9 million households in the UK receiving Child Benefit, around three per cent – over 200,000 households – may not be benefitting from National Insurance credits because the Child Benefit is claimed by the higher earner in the household.
“The Treasury Committee has long-warned the Government of the risk that for families with one earner and one non-earner, that if the sole-earner claims Child Benefit, the non-earner, with childcare commitments, forgoes National Insurance credits and, potentially therefore, their entitlement to a full future State Pension,” said Rt Hon. Nicky Morgan MP, chair of the Treasury Committee.
“New figures today from HMRC show that over 200,000 parents may be in this situation, and therefore missing out on their pension.
“Now we have an idea of the scale of this problem, the Government needs to pull its finger out and make sure people are aware of the issue and know how to put it right.”