50,000 mothers miss out on ‘vital’ pension rights, claims Royal London

Julian Marr writes

The number of mothers unnecessarily missing out on ‘vital’ pension rights because of a change in the child benefit rules has doubled in the last two years, according to Royal London.

Following the publication on Friday of the latest child benefit statistics from HM Revenue & Customs (HMRC), the mutual insurer has calculated this means these mothers are set to lose hundreds of millions of pounds in retirement.

In November, Royal London published a policy paper entitled The Mothers Missing out on Millions, which highlighted how mothers in higher-income families were giving up claiming child benefit.

Royal London policy director Steve Webb explained this was the result of the introduction in January 2013 of the ‘High Income Child Benefit Tax Charge’ – a rule that means 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, growing numbers of mothers starting a family since January 2013 have declined to claim child benefit at all,” he added. “But this means they are missing out on vital National Insurance credits towards their state pension. Each year missed could cost 1/35th of the value of the state pension – around £231 per year or more than £4,600 over the course of a typical 20 year retirement.”

‘System no longer working’According to Webb, Friday’s figures show the problem is growing. “Prior to the 2013 changes, the number of families receiving child benefit had risen every year since 2007,” he said. “Since then, the number has been falling.”

Webb pointed to HMRC’s own admission the number of children for whom child benefit is being paid is now at its lowest level since it began producing those statistics in 2003.

Based on the new figures, Royal London estimated the number of mothers missing out on credits towards their state pension now stands at around 50,000.

“This risks setting back the cause of equality for mothers by a generation,” said Webb. “HMRC was alerted to this problem last year and has 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 mothers receive the pension protection to which they are entitled.”