Number of mothers missing out on state pension rights doubles

New HMRC figures show a doubling in the number of mothers missing out on pension rights because of a change in the rules on child benefit.

Related topics:  Retirement
Rozi Jones
27th March 2017
Mum family child save saving pig pension money
"Tens of thousands of mothers with young children are missing out on vital state pension rights. This risks setting back the cause of equality for mothers by a generation."

Royal London analysis found that together, these mothers have lost hundreds of millions of pounds in retirement.

In November, Royal London published a policy paper which highlighted the way in which mothers in higher income families were giving up claiming child benefit. This was because of the introduction in January 2013 of the ‘High Income Child Benefit Tax Charge’, a rule which means that couples where one partner earns more than £60,000 per year have the value of their Child Benefit wiped out by a tax charge. In response to this, growing numbers of mothers starting a family since January 2013 have declined to claim Child Benefit at all.

But this means they are missing out on vital National Insurance credits towards their state pension. Each year missed could cost 1/35 of the value of the state pension – around £231 per year or over £4,600 over the course of a typical 20 year retirement.

Prior to the 2013 changes, the number of families receiving child benefit had risen every year since 2007; since then, the number has been falling; HMRC themselves say: “The number of children for whom Child Benefit is being paid is now at its lowest level since HMRC began producing these statistics (in 2003)”.

Based on the new report, Royal London estimates that the number of mothers missing out on vital credits towards their state pension has more than doubled in the last two years and now stands at around 50,000.

Steve Webb, Director of Policy at Royal London, said: “Tens of thousands of mothers with young children are missing out on vital state pension rights. This risks setting back the cause of equality for mothers by a generation. HMRC were alerted to this problem last year and have done nothing about it. These new figures are a damning indictment of a system that is no longer working for families. The Government needs to take urgent action to ensure that mothers get the pension protection to which they are entitled”.

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