State Pension 

More women missing out on state pension credits

More women missing out on state pension credits

More mothers might be missing out on pension credit rights as the number of women claiming child benefit is decreasing, new official figures have shown.

Data published today (February 28) by HM Revenue & Customs showed there are 7.33m families on child benefit, down from 7.92m families in the summer of 2012, before child benefits rules were changed.

Women accounted for almost all of the fall in new claims for child benefit between 2012 and now.

In the year to August 2012, there were 340,000 new claims for child benefit made by women and around 75,000 made by men.

By August 2018, the number of new claims by women had dropped to 274,000, a fall of roughly 66,000, whilst the number of claims by men was 72,000, a fall of just 3,000. 

According to Sir Steve Webb, former pensions minister and director of policy at Royal London, this was "yet more damning evidence of the collapse of the system for protecting the pension rights of parents".

He said: "No-one should face poverty in retirement because they spent time at home bringing up young children. Huge numbers of families with young children are now missing out and the government now needs to act with urgency. 

"Without action, hundreds of thousands of mothers in particular are set to face retirement poverty."

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

According to Royal London, the decrease could be explained by two factors: families who were already in the system and opted out of receiving child benefit when the rules changed to avoid a tax bill; and growing number of new families started since 2012 never making a claim for child benefit.

According to calculations from the mutual insurer, one year of missed contributions can reduce state pension rights by 1/35 of the full rate.

This is about £244 per year of lost pension or £4,880 over the course of a typical 20-year retirement for each year of contributions missed. 

A mother who started a family in 2012 and has not claimed child benefit in each year from 2012/13 to 2017/18 could have lost up to six years' of credits, reducing her annual state pension by £1,464, a total of almost £30,000 in lost pension through her retirement.

Despite a petition launched by Sir Steve, the government has so far refused to allow people to backdate child benefit claims by more than three months.

maria.espadinha@ft.com