Pensions blunder hits stay-at-home mothers

A GOVERNMENT blunder may have resulted in 50,000 stay-at-home mothers missing out on a full state pension due to changes to the child benefit system, MPS have warned.

Nicky Morgan, the chairman of the Commons Treasury committee, has written to officials to raise concerns over a “preventable” flaw in the system which has resulted in parents missing out on up to £4,851 when they retire.

Following an overhaul in 2010, married couples where one parent earns more than £50,000 face a tax charge if they sign up for child benefit, with those earning more than £60,000 having the perk wiped out altogether.

Stay-at-home parents can still build up their entitlement, providing they officially opt out of receiving the payments. But those that fail to notify HM Revenue and Customs forego the National Insurance credits needed to qualify for the full pension, meaning they miss out on up to £231 per year.

Despite the Treasury committee warning ministers that it was “essential” that parents were made aware of the changes, recent analysis has found that tens of thousands of mothers are missing out. In a recent report by Royal London, researchers found that tens of thousands of mothers from high income families had chosen not to register for child benefit after learning about the tax charge.

It suggested many were unaware of the ramifications for their pensions, despite the Government promising a “clear communication strategy”.

Mrs Morgan said the problem had been “wholly foreseeable”, adding that her committee had made issues known to ministers, who have seemingly failed to heed the warning.

“The Treasury committee warned that this may happen seven years ago. It urged the Government to provide parents with clear information about how their pension entitlement could be affected by the charge.

“HMRC stated that a clear communications strategy was being developed. It appears that this strategy has not been up to scratch, to the cost of thousands of parents.”

A spokesman for HMRC said: “We urge everyone to claim Child Benefit to help protect their future right to the State Pension. It is hugely important that they do this. If anyone is worried about their National Insurance record, they can contact HMRC at any time to check how many years of credits and contributions they have built up.”