Tell parents child benefit errors can hit state pension, warns NICKY MORGAN

Pull your finger out and tell parents child benefit errors can hit their state pension, NICKY MORGAN MP warns the Government

Nicky Morgan MP, chair of the Treasury Committee: ‘The problem was wholly foreseeable and preventable’

This is Money is campaigning against the unfairness of parents ending up worse off in retirement due to innocent mistakes made over child benefit forms.

Damning research just published by the taxman has revealed how parents are confused – and gutted – to discover child benefit errors can lead to a lower state pension.

Nicky Morgan, chair of the influential Treasury Committee of MPs, called the findings ‘dire’, but not surprising.  

Below, she responds to the research, revealing virtually no public understanding of the link between child benefit and the state pension, and tells the Government to ‘pull its finger out’ and help parents.

Since the High Income Child Benefit Charge was announced in the last Parliament by the previous Chancellor, the Treasury Committee has warned that it may have stark implications.

The charge meant that for couples where one parent earns over £60,000, the value of the child benefit would be wiped out.

It would seem, if that were all there were to it, entirely logical for those in households where one parent earned more to decide not to register for child benefit.

But registering for child benefit builds up entitlement to the state pension for parents of children under 12 who do not pay National Insurance contributions (e.g. because they decide to stay at home).

Have you lost state pension by not signing up for child benefits or filling form in wrong? 

If this has happened to you, contact [email protected] and tell us your story.

If that parent doesn’t register for child benefit, they may forgo their entitlement to National Insurance credits, and therefore part of their future state pension.

Recently published independent research, commissioned by HMRC, suggests many people just do not know about this additional benefit.

In fact, so low was the knowledge of this additional benefit that the researchers often had to explain what they were talking about.

And when told, the comments from contributors to the report speak for themselves: ‘I have no pension and might have to rely on the state pension…I’m gutted I didn’t know this.’

The problem was wholly foreseeable and preventable.

In fact, almost a decade ago, the previous Treasury Committee warned that ‘clear information will be essential to ensure that parents are aware that if they simply cease to claim child benefit it could affect their pension entitlement’.

 So low was the knowledge … that the researchers often had to explain what they were talking about

The Treasury Committee has also previously warned that clear information from HMRC and the Department of Work and Pensions would be essential to close this knowledge gap, and make sure that parents are aware that if they simply cease to claim child benefit, or get the higher-income parent to claim, it could affect their pension entitlement.

Yet data provided to the Committee by HMRC recently showed that of the 7.9million households in the UK receiving child benefit, over 200,000 households may not be benefiting from National Insurance credits, and therefore missing out on their entitlement to a full future state pension, because the child benefit is claimed by the higher earner in the household.

The Government needs to pull its finger out, take heed of its own research, and make sure that people are aware of the issue and know how to put it right.

HMRC stated last year that a clear communications strategy was being developed. Let’s hope it gets this important message across.

Why we are campaigning to help parents who lost out on pensions

Child benefit and state pension – It’s not the most obvious link. 

Unfortunately, some mums or dads who stopped work to look after children are now finding they’ve missed building up their state pension.

It should be easy to fix, but HMRC and the government have been stalling parents affected. That’s why This is Money has started a campaign to get this child benefit mess fixed, before it gets any worse.

Listen to the podcast below to find out why we are campaigning. 

Press play to listen on the player above, or listen (and please subscribe and review us if you like the podcast) at Apple Podcasts, Acast, Audioboom and Spotify or visit our This is Money Podcast page.    



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