200,000 parents may be missing out on state pension entitlements, warn MPs

More than 200,000 parents may be missing out on entitlements which could boost their state pension, a committee of MPs has warned.

Figures provided to the Treasury Committee by HM Revenue and Customs (HMRC) estimate that of the 7.9 million households in the UK receiving child benefit, around 3% – more than 200,000 households – may not be benefiting from national insurance credits because the child benefit is claimed by the higher earner in the household.

Registering for child benefit builds up state pension entitlement for parents of children under 12 who do not already pay national insurance contributions, for example, because they stay at home to look after their children.

If the parent does not register for child benefit, they may forgo their national insurance credits, and therefore part of their future state pension.

In general, people need 35 qualifying years of national insurance contributions to be entitled to the full new state pension, and the snapshot figures do not mean these people will definitely not get their full state pension entitlement as they may build up sufficient qualifying years over their life.

Nicky Morgan, who chairs the committee, said: “The Treasury Committee has long-warned the Government of the risk that for families with one earner and one non-earner, that if the sole earner claims child benefit, the non-earner, with childcare commitments, forgoes national insurance credits and, potentially therefore, their entitlement to a full future state pension.

“New figures today from HMRC show that over 200,000 parents may be in this situation, and therefore missing out on their pension.

“Now we have an idea of the scale of this problem, the Government needs to pull its finger out and make sure people are aware of the issue and know how to put it right.”

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