State Pension  

Webb launches petition for pension credits

Webb launches petition for pension credits

Former pensions minister Sir Steve Webb has launched a petition urging the government to allow parents to claim backdated state pension credits in relation to child benefits.

Child benefit recipients with a child under the age of 12 get 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.

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However, stay-at-home parents can only receive these credits if they apply for child benefit but then waive the payment of it.

Sir Steve, now director of policy at Royal London, told FTAdviser some parents don’t make a connection between child benefit and state pension, and when they do, they can only make a backdated claim in relation to the past three months.

"All the lost years will be permanent on your state pension record," he said.

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.

The petition, launched on the UK government and Parliament website, has received 199 signatures so far (November 16), but Sir Steve’s goal is to reach 10,000, so the government has to provide a response to it.

Sir Steve is also asking the government to contact affected parents to make them aware of the possibility of missing out on state pension credits.

He said: "There is a list of children that have been born since 2013, and there is a list of children on child benefit. If you compare the lists, you can write to the mothers that are not claiming to make them aware to it."

The petition states that eight out of nine child benefit recipients are women, but the issue would apply to some fathers as well.

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.

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.

In September, the secretary of state for Work and Pensions, Esther McVey – who quit her role yesterday (November 15) due to the Prime Minister's proposed Brexit deal - urged parents to ensure they do not miss out on the national insurance credits that could improve their state pension.