Stay-at-home mums could be owed tens of thousands in pension credits
he Department of Work and Pensions (DWP) and HMRC are to write to around 500,000 parents who may miss out on getting the maximum state pension allowance because they didn’t accrue National Insurance credits while staying at home to look after their children.
The problem, which was first highlighted last year by the former pensions minister Sir Steve Webb, affects anyone who left work to look after their children and didn’t claim child benefit because their household fell into the higher income bracket.
By not claiming, they didn’t earn National Insurance credits - you need 35 years to be able to claim the full state pension - meaning they could miss out by as much as £66,000 at retirement.
At the time, they were not advised that they still needed to complete the child benefit application form even if they weren’t claiming to make sure they still built-up credits.
To fix the problem, the government is to introduce new legislation on 27 November that allows parents to claim backdated National Insurance credits for the tax years they missed from 2013 onwards.
However, qualifying parents will have to wait a while before they can claim any missing National Insurance credits, as the changes aren’t due to come into force until April 2026.
What is child benefit?
Child benefit is paid to eligible parents and carers to help them with the cost of raising a child. It’s currently paid at a rate of £24 a week for the first child and £15.90 for any subsequent children.
Child benefit is due to increase this April to £25.60 per week for the first child and £16.97 for any subsequent children.
Child benefit is usually paid every four weeks on a Monday or Tuesday. However, you can get child benefit paid weekly if you’re a single parent or if you or your partner are getting certain benefits, such as income support.
What’s high income child benefit charge?
Parents who earn over £50,000 shouldn’t claim the benefit as it’ll put them into the high income child benefit charge.
If your income is over the threshold you can choose to either:
- Get child benefit payment and pay any tax charge at the end of each tax year
- Opt out of getting payments and not pay the tax charge
If you choose to opt out of getting child benefit payments, you should still fill in the claim form. You need to state on the form that you don’t want to get payments.
By still filling in the form, you will:
- Get national insurance credits, which count towards your state pension
- Get your child a national insurance number without them having to apply for one – they’ll usually get the number before they turn 16 years old
Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.
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