"It is vital that HMRC takes action to ensure that these women get the National Insurance credits which should be theirs by right."
The insurer is calling on HMRC to take action to deal with this problem "before a whole generation of women reach pension age with incomplete pension records".
Under the current National Insurance system, a parent receiving child benefit for a child under 12 gets a year of NI credits towards their state pension record, meaning their pension is protected even if they are not in work or paying NI contributions.
But a new Royal London policy paper shows that this system is not working for new mothers affected by the High Income Child Benefit Tax Charge.
This is a rule which was introduced in January 2013 which means that families receiving Child Benefit where one parent earns more than £60,000 per year incur a tax charge which wipes out the value of their Child Benefit.
In response to this, growing numbers of mothers are simply not claiming Child Benefit in the first place and thereby losing out on valuable credits towards their future state pension rights.
If the problem grows at its present rate, Royal London estimates that more than half a billion pounds in pension rights will have been forfeited by the end of the current financial year.
The insurer believes that around 38,000 mothers are missing out, with this number rising at roughly 20,000 per year.
HMRC acknowledge that this is an issue in their own statistical publications where they say: "Families subject to the High Income Child Benefit charge, whose first child was born since January 2013 would have had a choice between either registering for Child Benefit and then opting out or not registering to begin with. These figures suggest that some of these families may have chosen not to register after learning about the High Income Child Benefit charge."
Royal London Policy Director Steve Webb, said: “Providing National Insurance Credits to parents looking after young children is a vital part of the system. It has protected millions of mothers over the years since it was first introduced. But there is now clear evidence that this protection is being undermined because of Child Benefit changes introduced in 2013. In a relatively short period of time, mothers have lost out on hundreds of millions of pounds in state pension rights and this situation is getting worse with every passing year.
"It is vital that HMRC takes action to ensure that these women get the National Insurance credits which should be theirs by right. Otherwise the cause of gender equality in state pensions will have been set back a generation. We would also encourage any new mother who has not yet made a claim for Child Benefit to do so. Even applying for a nil award will ensure that her state pension rights are protected.”
