State Pensions Affected When Child Benefit Missed

30 January 2019

State Pensions Affected When Child Benefit Missed

Child Benefit & Higher Earners

With the introduction of the High Income Child Benefit Charge (HICBC) in January 2013, those households with an individual earning over £60,000 are no longer entitled to Child Benefit whilst those where the highest earning individual’s income reaches £50,000, the HICBC starts to claw back Child Benefit through the tax system.

Many couples in this situation end up not bothering to claim Child Benefit so that they don’t have to pay it back.  However, whilst understandable, this can be a costly mistake as each year Child Benefit is claimed provides one of the qualifying years for the 35 years needed to qualify for the full state pension for a stay-at-home parent.

Even if a parent has only one child, they may losing out on up to 12 qualifying years.  The Financial Times has recently reported that over 200,000 parents may be in this situation and will lose some or all of their state pension entitlement.

What can higher earners do?

Parents affected by HICBC should still claim Child Benefit so that they get the National Insurance credits which count towards the State Pension.  However, they can then opt to stop receiving payments by filling out an online form.  If circumstances subsequently change, for example, if the family income falls and the HICBC no longer applies, then the parent can restart the Child Benefit payments by completing a different online form.

Additionally, by claiming Child Benefit, the child will automatically receive their own National Insurance number shortly before their 16th birthday.  They do not have to apply for one themselves.

As Child Benefit claims can only be back-dated 3 months, you should apply as soon as possible.  Don’t miss out on your qualifying years for the State Pension.

For more information on the HICBC and how to apply for Child Benefit and details of the online forms to ‘opt out’ of payments click on the link: https://www.gov.uk/child-benefit-tax-charge

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