Friday, September 20, 2019
Home Politics Stay at home parents could miss out on state pension thanks to...

Stay at home parents could miss out on state pension thanks to benefit cuts

Child Benefit changes mean some stay at home parents risk missing out on part of their State Pension, MPs warn.

Thousands of higher income stay at home parents risk missing out on part of their State Pension because of Government changes to Child Benefit entitlements, MPs have warned.

The Tory-led coalition announced in 2010 that it would axe Child Benefit for households with a higher earner. For couples, this meant that where one partner earns between £50,000 and £60,000, a progressively rising tax charge would be incurred, while those earning over £60,000 a year lost their Child Benefit entitlement entirely.

Parents in receipt of Child Benefit whose children are under 12 years of age, and those with an underlying entitlement, also build up an entitlement to State Pension. This means that not registering for Child Benefit will also affect the value of the their State Pension.

Households were informed about the change when it came into force in January 2013. MPs warn that parents who have started a family since January 2013 may have seen no advantage in registering for Child Benefit due to the tax charge.

“These families – for instance, consisting of a higher earner and one stay-at-home parent – could be missing out on the National Insurance Credits required for a full state pension”, the Treasury Select Committee warns.

Committee chair Nicky Morgan MP (Conservative) asked the Treasury in March how many people have been affected, and also whether the Government has carried out an impact analysis.

Government data shows a limited number of opt outs of new Child Benefit claimants, together with an increase in the proportion of male Child Benefit claimants.

Mrs Morgan said: “It’s concerning that parents who haven’t registered for Child Benefit for fear of the higher tax rate charge may be forgoing part of their future state pension. This is exemplified by the limited number of new opt-outs of Child Benefit claimants.

“The Committee will scrutinise HMRC’s Child Benefit consumer research to understand the scale of this risk.

“The data provided by HMRC also shows that the proportion of male claimants of child benefit has increased. A shift in Child Benefit applications from mothers to fathers, where there is no underlying change in household formation, who earns or childcare responsibilities, represents a potential future pension problem.

“There is a risk – to any household with one person earning and one person not earning but undertaking childcare commitments – that if the sole earner claims Child Benefit, the non-earner, with childcare commitments, forgoes National Insurance credits and, therefore, their entitlement to a full future state pension. The Committee has asked HMRC to provide it with any analysis of this risk.

“Parents can transfer National Insurance credits between themselves without transferring who receives the money, but HMRC does not monitor the number of transfers.

“This is concerning, so the Committee has asked HMRC what work it has done to publicise the possibility of National Insurance credits transfer.”



Latest News

Holyrood marks first anniversary of Social Security Scotland

Call for all social security powers to be devolved to the Scottish Parliament.

Universal Credit five-week wait fuels hunger and homelessness, says Trussell Trust

Government urged to end the minimum five-week wait for Universal Credit.

Scrap prison sentences for the non-payment of council tax, says think-tank

"Laws allowing imprisonment for council tax debt could and should be revoked by ministerial order", says lawyer.

Disabled people’s needs ignored by the UK fashion industry

75% of disabled people say their needs are not being met by mainstream fashion in UK.

One in four households facing homelessness are already in work

Campaigners calls for the reversal of social security benefit cuts.

‘Shocking’ impact of UK welfare cuts revealed

Impact of Tory welfare cuts on Scottish households laid bare in damning new report.