Will you miss out on state pension cash?

Mother and baby

Pressure is mounting on ministers to relax rules that mean thousands of people have missed out on state pension benefits by failing to register for child benefit.

Parents of newborns who decide to take time out of work are entitled to national insurance credits for the period when they’re not working – until their child reaches age 12 – which means they go on building up rights to a full state pension in retirement. However, to get the credits, parents must register their babies for child benefit, and claims can only be backdated by three months.

Thousands of parents don’t bother, particularly since child benefit is no longer a universal benefit. Couples where one partner has an annual income of more than £60,000 usually have to repay child-benefit cash through the tax system, so they often don’t register for the benefit and therefore miss out on the credits.

Some families are forfeiting £23,000 of pension benefits in retirement because of the loophole, says insurer Royal London, prompting calls for
the government to change the rules.