Over 200,000 parents receiving child benefits could be forgoing part of their future state pension HM Revenue and Customs has told the Treasury select committee today.
In a letter to the Treasury, HMRC writes that if child benefits are being claimed by the higher earner in a household, the partner earning less could be missing out on National Insurance credits, and therefore decreasing their state pension entitlement.
The tax office estimates this issue affects 3 per cent of households claiming child benefits, around 200,000 households in total. It has gathered the data from a Department for Work and Pensions family resources survey of over 19,000 UK households and warns that as the estimate is sample-based, it is subject to a high degree of uncertainty.
It writes: “Our work suggests there may be around 3 per cent of households claiming child benefit and not benefiting from NI credits because the child benefit is claimed by the higher earner in the household.
Treasury select committee chairman and MP Nicky Morgan says: “The Treasury committee has long-warned the government of the risk that for families with one earner and one non-earner, that if the sole-earner claims child benefit, the non-earner, with childcare commitments, forgoes National Insurance credits and, potentially therefore, their entitlement to a full future state pension.
“New figures today from HMRC show that over 200,000 parents may be in this situation, and therefore missing out on their pension.
“Now we have an idea of the scale of this problem, the government needs to pull its finger out and make sure people are aware of the issue and know how to put it right.”