'I HAD NO IDEA' Mum-of-two nearly missed out on £8,550 a year state pension due to child benefit error

Parents who aren't working or who don't earn enough to pay National Insurance can claim child benefit in order to qualify for vital credits needed to access the state pension

28 November 2018 - 09:24

MUM-OF-TWO Carolyn Inness had "no idea" she was damaging her chance of getting £8,546 a year in state pension payments by not claiming child benefit.

For the 39-year-old it was a chance encounter with her husband's accountant that alerted her to the fact she was would end up missing out.

Luckily, she was notified in time to claim back the three months she'd already been off work.

But thousands of parents won't be fortunate, and a petition started by ex-pensions minister Steve Webb and pension firm Royal London is now calling on the Government to allow people to make claims for child benefit going back further than just three months.

The problem is a bigger issue for women - with nine in 10 cases affecting mums according to Royal London - because more are stay-at-home parents than dads.

Mr Webb is also urging the government to use its records to identify and contact women who may be missing out.

Can I claim child benefit?

YOU can claim child benefit if you’re responsible for one or more children under 16 (or under 20 if they stay in approved education or training).

You get £20.70 a week for your eldest or only child, and then £13.70 a week per child for any additional children.

You may have to pay a tax charge if you (or your partner’s) individual income is over £50,000. This is known as the ‘high income child benefit charge’.

If you don't want child benefit but still want to qualify for National Insurance Contributions, you can tick a box on the application to apply for a ‘zero rate’ of child benefit.

The petition currently has nearly 550 signatures, but it needs to hit 10,000 in order for the Government to respond, and a whopping 100,000 before it will be considered for debate in Parliament.

Carolyn said: "I’ve got two children – one who is nearly five and one who just turned three.

"I worked right up till having my children but when I stopped working I assumed I wasn't entitled to state pension.

"It wasn’t until my husband did his tax return with his accountant and the accountant asked if we were claiming child benefit and he said 'no', that we realised we were missing out.

"The accountant explained that by not claiming I was missing out on National Insurance Contributions (NICs) needed to build my state pension.

"It’s confusing, and I can see why others would find that too, but as someone who has worked their whole life and only recently stopped it’s important to still feel that you’re valued by society.

"As a stay at home mum there can be a stigma about not working, so it's important for women to realise that they’re entitled to this."

How is child benefit linked to the state pension?

YOU need at least 10 year's worth of National Insurance Contributions (NICs) to qualify for the state pension, and 35 year's worth to get the full amount - currently £8,546.

Missing out on just one month's worth of NICs could see you lose £5,000 from the total value of your state pension, according to the HMRC.

Parents who aren't working or who don't earn enough to pay NICs can claim child benefit if their child or children are under 12 in order to qualify for NICs.

Where it gets complicated - and why many families are missing out - is due to a rule change in 2013 on who qualifies for child benefit.

This saw anyone earning more than £50,000 having to pay a charge to continue receiving the benefit.

This charge increases by 1 per cent for every £100 earned over £50,000. Once you earn £60,000, the charge effectively wipes out the gain you'd get by receiving child benefit.

But you can tick a box on the child benefit form to say you don't want to receive the benefit, which will ensure you still qualify for NICs.

And many parents don't realise this.

Mr Webb, who is now director of policy at pension firm Royal London, said thousands of mothers - as well as fathers who take on childcare duties - are  missing out on these "vital" credits.

He said: "Carolyn’s case shows how easy it is for mothers to miss out on this vital protection for their state pension.

"That is why we have launched our campaign to get the Government to change the rules so that mothers don’t continue to miss out on what is rightfully theirs."

An HMRC spokesperson said: “The Government has always urged families to claim child benefit to help protect their future right to the state pension.

“We think three months is a fair and reasonable time to allow people to claim child benefit.

"Even though there may be no question that some parents would have been entitled to child benefit if they had claimed earlier, this is not certain in every case.

"The longer the delay, the harder it is to establish entitlement because of the need to verify the evidence to ensure consistent treatment.”

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Earlier this year, the Government warned that half a million working parents with children under 12 may be missing out on state pension income.

We also revealed last month that hundreds of thousands of families will receive letters chasing thousands in child benefit tax charges.

Although HMRC has since U-turned saying some could see the unfair charges wiped.

 

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