HMRC has written to the Treasury Committee about the risk for households where one parent does not work, due to childcare commitments, while the other parent works and is also the Child Benefit claimant.
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 figures from the HMRC reveal 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.
Commenting, Nicky Morgan MP, Chair of the Treasury Committee said: “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.
“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.”
However, the Treasury Committee concedes this “does not mean that these individuals will miss out on State Pension entitlements”, because “the analysis is a snapshot in time and they may build up sufficient qualifying years over their working life”.
The Committee also says: “It is also possible that some of these individuals will be receiving NI credits if they have been transferred from their partner.”
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