Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

Tens of thousands risk missing out on full state pension

Failing to claim benefits could cut your retirement income

An estimated 63,000 parents could receive reduced state pension payments, after new tax rules led many to opt out of benefits, new research has found.

Parents who claim child benefit and aren’t working are entitled to receive National Insurance credits – but the number of claimants has dropped since new rules were introduced in 2013, analysis by Royal London found.

As a result, thousands of people caring for children may be cutting into their entitlement to the state pension.

Which? explains how child benefit affects your National Insurance record, and why you should claim even if you’re a high earner.


Child benefit claims drop from 2013

Child benefit can be claimed by anyone caring for a child under the age of 16. You’ll receive £20.70 per week for the eldest child, and a further £13.70 for any additional children.

But since 2013, a parent earning more than £50,000 has been required to pay additional tax if they receive child benefit. If your (or your partner’s) individual income is more than £60,000, you’ll end up repaying 100% of the value of any child benefit you’ve received.

Following the introduction of the rules, a significant number of families chose not to claim child benefit at all, and the number of claimants has continued to decline each year. In August 2012, 7.9 million families were claiming child benefit. By August 2017, this had dropped to 7.3 million.

Royal London warned that women were likely to be hardest hit by gaps in their National Insurance record by choosing not to claim.

Since the changes were introduced, Royal London estimated that around 50,000 mothers with a child under five had stopped claiming child benefit, while around 160,000 had started a family since that time.

If even 30% of these parents are not in paid work, it estimated up to 63,000 could be losing out on credits towards their state pension.

Why should you claim child benefit?

For high earners, it may seem to make sense not to claim a benefit they’ll just pay back as tax. But these families may be missing out on valuable retirement income down the road.

When you claim child benefit and are not working, you receive credits towards your National Insurance record. You need 35 years of qualifying National Insurance contributions to claim the full state pension.

A parent who stops working to care for a child until school age could miss out on five years’ worth of National Insurance contributions. Over the course of a 20-year retirement, this could equate to over £23,000, Royal London found.

How can I claim child benefit?

If you’re currently caring for a child, you should consider submitting a claim for child benefit, regardless of your family’s income.

Even if you or your partner earns more than £60,000, you can choose to claim the benefit, but opt out of receiving payments. You can do this by selecting the option ‘No’ in section four of the application form. You’ll receive credits towards your National Insurance record, but won’t receive any money.

Alternatively, you can choose to receive the payments and then pay the tax charge through self-assessment each year. You can find out more in our guide to self-assessment tax.

You can make a claim for any child under 16, or under 20 if they’re in approved education or training. Only one person can claim per child. So if you’re looking after someone else’s child, you need to decide with their parent or guardian who will make the claim.

How do I fix my National Insurance record?

You can backdate claims for child benefit by three months, which can help you reclaim some National Insurance credits for recent periods. Unfortunately, you can’t make claims any further back.

You can, however, make voluntary Class 3 contributions. This allows you to fill in gaps in your National Insurance record by paying for missing years.

For 2018-19, a full year’s worth of National Insurance contributions will cost you £761.80. You can normally go back six years to top-up your record.

Back to top