The number of families claiming child benefits has fallen by 44,000 to 7.28 million in one year, putting more parents at risk of worse old age.
Parents – usually mothers – can be tens of thousands of pounds worse off when they retire because they do not claim to be deprived of valuable credits for their state pension.
This is Money is campaigning to get the government to return all lost credits when parents claim child support too late. It currently refuses to change them for more than three months.
Child benefit: many parents do not claim because they are not entitled to the benefits and do not realize the important link with their future AOW pension
Child benefit applications have fallen by more than half a million since 2012, according to new HMRC statistics for the period up to August 2019.
The tax authorities attribute this sharp drop to new rules introduced in 2013, known in official jargon as the High Income Child Benefit Charge, which is stopping parents from signing up.
HMRC says it urges families to sign up for child benefit and that forms are included in premium packages that are handed over to new parents. Read the full statement below.
A controversial revision seven years ago reduced child support entitlement for those earning £ 50,000 plus a year, or completely overturning it for those earning £ 60,000 plus.
Many parents are not entitled to child benefit because they are not entitled to the benefit.
And HMRC research has shown that they are almost completely in the dark about the link with the AOW and that they could deteriorate through retirement by not claiming.
Sharp drop: Child benefit applications have fallen by more than half a million since 2012, according to new HMRC statistics
Steve Webb, former Secretary of Pensions and now a partner at LCP advisor, said of the latest drop in child benefit claims: “This is even more bad news for the future of women’s retirement.
‘The vast majority of people who apply for child benefit are mothers, and if child benefit drops, it is mainly women who lose it.
How much AOW pension do parents lose?
Each National Insurance credit is worth 1/35 of the value of the state pension – approximately £ 251 per year or £ 5,020 over the course of a typical 20-year retirement.
So those who had a child in 2013 and have not signed up for child support since then are losing £ 35,000 in credits so far.
High earners who want to avoid completing tax returns and reimbursing child benefits, but who still want the valuable AOW credits, can check the form that chooses not to receive payments, but only signs up for credits.
HMRC says the number of families who opted out of payments through August 2019 has gone up 7 percent or about 36,000 to 582,000, the largest annual increase in recent years.
These families are not included in the general child benefit figures.
Those who have started a new family since the rules changed in 2013 and made no claims are at risk of losing vital vital insurance premiums on their AOW.
“Even worse, government rules are only three months late, so some of these credits will be lost forever unless the rules are changed.”
Webb again called on the government to change the rules for going back so that those who have already missed can get what they are entitled to.
HMRC argues that a retroactive effect of more than three months would make it more difficult to verify evidence, as the right rests on being responsible for a child every week.
But this view has been called “ridiculous” and “nonsense” by critics, who believe that in most cases it will be clear that parents were in charge of their children at the time.
A mother who lost two and a half years of credits told us that she has enough evidence that she was responsible for her daughter since birth.
This includes correspondence with her employer on maternity leave and with the family doctor, details of her daughter’s nursery, and attendance records at baby and toddler care and swimming lessons.
Meanwhile, families who had their first child in 2013 and who have not claimed so far for seven years will see a bigger gap in their AOW record every year unless they realize and sign up for child support or the government surrenders and full consent gives backdating of credits.
And more new parents are unconsciously joining their ranks every year, as the latest figures show.
Have you lost AOW by not registering for child benefit or filling in the form incorrectly?
If this happened to you, please get in touch [email protected] and tell us your story.
Some will make up for lost ground when they return to work and rebuild their sovereign debt base.
But Steve Webb estimates that tens of thousands of parents, almost all of them women, will receive a lower state pension unless the government changes its mind about backdating.
Emma Maslin, who lost four years of credits for her state pension, highlighted the issue on her blog for families, The Money Whisperer, and she also advocates full backdating in things like hers.
She says, “These last numbers are so disappointing. I am concerned about all other parents, and especially mothers, like me, who may have a negative effect on their AOW as a direct result of not registering for child benefit.
“I was lucky enough to discover and correct my mistake by registering and opting out of receipt. However, I only received credit retroactively three months before my claim.
Others who realize they must have registered along the track are also faced with the penalty of only receiving overdue credits for the three months prior to the claim.
“Obviously, the government needs to do a lot more work to encourage everyone to register at the birth of their child.”
Call for full refund of pension credit: Former Pensions Secretary Steve Webb, pictured left, met Emma Maslin, right, gathered to discuss campaign last year
The government’s independent tax gurus, in the Office of Tax Simplification, released a report last October stating that it was “unreasonable” for parents to lose AOW due to child support errors they cannot correct later.
They said people “can easily harm themselves” under a system that “seems illogical” and “is inherently confusing,” and told the government to find a way to return AOW credits to parents who lost them .
What does HMRC say?
To ensure that no one misses full AOW benefits, HMRC has always urged families to apply for child benefit, even households subject to the High Income Child Benefit Charge.
The child benefit application form – which is included in premium packages given to families after a child is born – highlights the importance of this information.
HMRC’s child benefit policy is in line with the government’s long-standing approach to wellbeing.
“We are committed to ensuring that backdating is available to protect vulnerable claimants who may experience delays if they file a claim through no fault of their own.
“If no one has applied for child benefit, the law allows claims with an expiration date of up to three months to be covered.
“Going back further than this would make it more difficult to verify evidence and establish entitlement, since entitlement to child benefit depends on each week being responsible for a child.”
Why we campaign for parents affected by child benefit rules
The government wrongly condemns many mothers and fathers to worse retirement.
An innocent paperwork expires just after having a child should not result in a fine of tens of thousands of pounds in old age.
At the start of the campaign we asked the following:
– full retroactive effect of the AOW credits for those who claim child benefit too late;
– An overview of how credits are awarded, including the feasibility of enrollment when registering a birth not via child benefit;
– A revision of the credit swap between couples after errors on child benefit forms – HMRC has since changed the system for parents trying to correct these errors.
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