Why parents need to make a Child Benefit claim to protect their State Pension

Lynn Beattie

by , CEO and Founder at Mrs Mummypenny

at Mrs Mummypenny

27 June 2024 /  

Why parents need to make a Child Benefit claim to protect their State Pension

The gender pension gap and the gender pay gap for women is a big issue - and one that isn’t going away! Research carried out by PensionBee in May 2024 showed that the average pension pot in the UK for men is £23,474. Whereas the average pension pot for women in the UK is only £14,631. A 38% difference which can, at least in part, be attributed to the gender pay gap and the time women take off work to have children.

Back in 2013, the government changed the claim rules around Child Benefit. I remember it clearly, as it was the first time I appeared in the media sharing my views. I’d just given birth to Jack, my third child, and was just about to lose the Child Benefit payment for my three children as I was earning more than £60k.

If one partner earns more than £60k per year, they’re no longer eligible for Child Benefit. Or, if one partner earns between £50-60k then the benefit is tiered at 1% for each £100 they receive between £50-60k. As a result, many parents simply didn’t apply for Child Benefit as they knew they weren’t eligible under the new income rules.

Mind the National Insurance credit gap

What many parents might not know is that when you don’t claim Child Benefit, you also give up the right to National Insurance (NI) credits. NI credits are accumulated when you work and pay your NI, or when you receive certain benefits. An individual needs 35 years of NI payments or credits to become eligible for the full State Pension.

There will be a significant population of women who didn’t apply for Child Benefit, thinking that they weren’t entitled to receive it. They’ll now have a significant NI credit gap.

Everyone needs to claim for Child Benefit, as this will ensure they keep accumulating NI credits. Parents can then opt out of payments if the salary limits apply or they can continue to receive the payment and then pay it back via a tax charge. It’s really important to make that claim and keep your NI credits!

Can I back date my claim?

Unfortunately, you can only backdate a Child Benefit claim for three months. So if you read this and realise you have a gap in your NI record, it can’t be rectified after the three month limit. If you aren’t sure how many NI credits you have, you can check your record on the government website. There are many companies campaigning to change this time limit, and to backdate further, but at the moment the government’s not moving on this rule.

How to take action now

If you’re a stay-at-home parent, consider making a claim for Child Benefit to ensure that you continue to receive NI credits. And spread the word, share this article with people you know who might be in this situation. The government provides some useful information on the topic:

  • All those eligible for Child Benefit must claim it to protect their NI contributions record. Doing so means they’ll also get an NI number for their child automatically when they reach 15 years and nine months.

  • Having made a claim for Child Benefit, those liable to the High-Income Child Benefit Charge (HICBC) can then either choose to opt-out or continue to receive Child Benefit payments and pay the tax charge.

  • For people with income between £50-60k, the tax charge is a proportion of the Child Benefit received; 1% for each additional £100 income. Where income is over £60k, the amount of the charge is equal to Child Benefit received.

  • Many individuals won’t need these NI credits to maintain full eligibility for the State Pension. They may already be achieving qualifying years through other means. For example, if they’re working (and paying NI contributions) or receiving NI credits through claiming other state benefits.

  • Individuals can access a State Pension forecast on demand using the Government’s online Check your State Pension service. This includes details on how to increase entitlement either through NI credits or voluntary contributions.

Lynn Beattie is a PensionBee customer and CEO/Founder of Mrs Mummypenny, a personal finance website. She’s also an ACMA management Accountant, previously working in commercial finance for Tesco, EE & HSBC. Lynn is a single mum to three boys, living in Hertfordshire, and is the author of ‘The Money Guide to Transform Your Life‘ published in September 2020.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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