State Pension  

Govt dismisses calls for pension credit extension

Govt dismisses calls for pension credit extension

The government has dismissed calls for extending the period in which mothers can claim backdated state pension credits in relation to child benefits.

Currently, these claims can only be made for the past three months, which has motivated former pensions minister Sir Steve Webb, now director of policy at Royal London, to launch a petition about this issue.

But Elizabeth Truss, chief secretary to the Treasury, said in a written answer to Parliament on Friday (November 23), that successive governments had considered three months to be a "fair and reasonable time" in which to allow those wishing to claim child benefit to do so.

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She said: "Even though there may be no question that some parents would have been entitled to child benefit had they claimed earlier, such certainty is not obvious in every case.

"The longer the delay, the harder it is to establish entitlement, given the need to verify evidence and ensure consistent treatment."

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.

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

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 wiped out the value of the child benefit and may deter some couples from signing up.

Sir Steve told FTAdviser the idea that the government could not work out entitlement to child benefit if a claim is made after more than three months was "absurd".

He said: "The vast majority of child benefit claims are clear cut and a late claim could be assessed with little difficulty.

"It is totally unacceptable that tens of thousands of mothers are missing out on millions of pounds worth of pension rights because of a problem of the government’s own making."

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 earlier this month 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.