Victory for mums after five-year This is Money campaign! Government FINALLY agrees to fix child benefit fiasco denying parents valuable state pension credits
Victory: We have campaigned for change
Mums are to be handed valuable state pension credits in a massive government climbdown, after years of shunning a This is Money campaign on behalf of families.
Innocent child benefit errors mean many parents stood to lose tens of thousands of pounds in old age, but until now their pleas were ignored.
The Treasury announced today that it plans to address the fact parents who have not claimed child benefit could miss out on building their state pension.
Victoria Atkins, Financial Secretary to the Treasury, said: ‘Those affected will in future be able to claim National Insurance credit retrospectively as ministers move to tackle this issue.
‘The Government wants to ensure that parents who have not claimed child benefit are not disadvantaged when they start claiming their state pension and is announcing a resolution for affected parents.
‘Parents do not need to take any action immediately. The Government intends to legislate to allow eligible individuals to retrospectively claim National Insurance credit, and the next steps to be taken will be published in due course.’
Former Pensions Minister Steve Webb, who has lobbied in partnership with This is Money since we launched our campaign in 2018, said today’s announcement was extremely welcome.
‘Whilst it is understandable that some parents may choose not to claim child benefit payments, it is vital that parents do not damage their state pension as a result.
‘Until now the problem has been that there was a three-month time limit on backdating of child benefit claims, meaning that the damage would be permanent.’
‘I am delighted that the Government has finally listened to campaigners and plans to make changes which will boost the state pension of thousands of parents, and particularly many mothers who might otherwise have missed out.’
Webb, who is a partner at LCP, launched a high profile petition in 2018 demanding full-backdating of mums’ pension credits.
But the Government rejected his call, arguing that it is too hard to verify child benefit claims older than three months.
Meanwhile, the Government’s in-house tax gurus, the Office of Tax Simplification, said in a report issued four years ago that it was ‘unreasonable’ for parents to lose state pension over child benefit errors they can’t later correct.
However, no action was taken in response.
This is Money campaigned for mums for five years
Thousands of parents faced a poorer retirement for failing to fill in a form within three months of having a baby, before today’s surprise u-turn by the Government.
Many parents don’t realise mistakes in the hectic weeks after children are born can end up costing them tens of thousands of pounds in old age.
When mums contacted us we highlighted the scandal, and launched a campaign urging the Government to fully backdate their state pension credits.
Our pensions columnist Steve Webb spearheaded the campaign with us, and many people wrote about the issue on our pages, including former Pensions Minister Ros Altmann and ex-MP and Treasury committee chairman Nicky Morgan.
The number of families claiming child benefit has slumped since a controversial overhaul in 2013.
But this also blasted a hole in many women’s future state pensions due to the crucial but little known link between the two payments.
Up until now, parents faced being tens of thousands of pounds worse off in retirement by failing to claim child benefit because they aren’t entitled to receive the payments.
When parents belatedly realised this would hit their state pension and signed up, they were allowed to backdate credits for three months but lost their right to the rest for good.
Parents could submit a claim for child benefit but tick a box to opt out of receiving payments, and only get state pension credits.
However, many families have assumed they should not make a claim since they do not qualify to receive the money.