HMRC warns 200,000 parents risk losing out on state pension

Over 200,000 parents are at risk of missing out on their future state pension in families where one parent does not work, due to childcare commitments, and the other is the higher household earner and claiming child benefit.


Registering for child benefit builds up state pension entitlement for parents of children under the age of 12, who do not already pay National Insurance contributions. This includes instances where a parent decides to stay at home to look after their children. If the parent does not register for child benefits, they may miss out on their National Insurance credits, and therefore part of their future state pension.


There are 7.9 million households in the UK that receive child benefits. New data that has been provided to the Treasury Committee by HMRC estimates that 3%. This means that more than 200,000 households in the UK receiving child benefit may not be benefitting from National Insurance credits because the child benefit is claimed by the higher earner in the household.


Parents can transfer National Insurance credits between themselves. Households can either change the child benefit claimant from the higher earning parent to the lower income earning parent, or the higher earning parent is able to stay as the claimant and just the National Insurance credits can be transferred to the other parent.


HMRC pointed out that some parents who might be counted amongst those affected will be able to claim a full state pension by virtue of number of years of National Insurance contributions paid over the rest of their working life.


However, HMRC have also said that it continues to work with the Department for Work and Pensions to raise awareness of the issues and the options available to address them, and to improve the process for claimants.


HMRC only allow for three months of back claims if you discover you have been missing out on National Insurance contributions entitlement.



Blog post uploaded 24 Jan 2019