The secretary of state for Work and Pensions, Esther McVey, is urging parents to ensure they do not miss out on National Insurance credits that could improve their state pension.
Child benefit recipients with a child under the age of 12 get a national insurance credit towards their state pension.
This means even if they are not in paid work, they are still treated as having contributed when it comes to claiming their retirement benefits.
However, stay-at-home parents can only receive these credits if they apply for child benefit but then waive the payment of it.
According to data shared by HM Revenue & Customs (HMRC) with the Treasury select committee in July, a mere 7 per cent of the 7.4 million claimants of child benefit in 2017 had opted out of the benefit.
In 2013, the government introduced a high-income child benefit tax charge for couples, where one partner earns £60,000 per year or more, which effectively wipes out the value of the child benefit and may deter some couples from signing up.
According to analysis conducted by Royal London, changes to the child benefit system in 2013 could have cost mothers, or fathers, more than £23,000 in state pension rights, based on a 20-year retirement.
The total amount in future pension rights lost since 2013 is estimated to exceed £1bn.
Ms McVey said: "I urge everyone to check their eligibility and apply for any credits for which they qualify and are entitled to. Don’t miss out on potentially increased pay-outs from your future state pension.
"The state pension is a foundation for retirement. If you are caring for a child or a relative, then you may be eligible for National Insurance credits which will strengthen this foundation."
The full new state pension is £164.35 per week – or about £8,500 a year – however, the actual amount the person gets depends on an individual’s National Insurance record.
National Insurance credits aim to ensure that someone’s state pension is not affected if they are unable to work and pay National Insurance contributions, the government said.
People who are in receipt of child benefit (even if they don’t receive any payment), carer’s allowance, universal credit, jobseeker’s allowance or employment and support allowance and some other income replacement benefits receive National Insurance credits automatically, it added.
maria.espadinha@ft.com
