Child benefit reforms could mean stay at home mothers miss out on pensions, MPs warn

Child benefit reforms could mean tens of thousands of stay at home mothers lose out on pensions, MPs warned today.

The Treasury Select Committee has raised concerns that reforms in the 2010 spending review could mean women receiving lower state pensions on retirement.

Committee chairwoman Nicky Morgan said this was because registering for child benefit was essential for stay at home mothers to claim National Insurance Credits, enough of which need to be accrued over a working life to get a full pension.

But households earning over £60,000 no longer get child benefit – meaning mothers are unlikely to register for the payments rather than take advantage of the opt out designed to work around the problem.

Mrs Morgan wrote to Treasury Minister Mel Stride in March to demand details of how many people are effected.

The statistics show only a small number of people are using the opt-out system for fear of higher tax bills. 

Mrs Morgan said: ‘It’s concerning that parents who haven’t registered for Child Benefit for fear of the higher tax rate charge may be forgoing part of their future state pension. This is exemplified by the limited number of new opt-outs of Child Benefit claimants.

‘The Committee will scrutinise HMRC’s Child Benefit consumer research to understand the scale of this risk.’

The Treasury Committee has demanded the Chancellor commission analysis of the scale of the problem and come up with a fix to stop mothers losing out in future 

Mrs Morgan said more men were applying for child benefit in another signal women could miss out on their full pensions in future.

She said: ‘There is a risk – to any household with one person earning and one person not earning but undertaking childcare commitments – that if the sole earner claims Child Benefit, the non-earner, with childcare commitments, forgoes National Insurance credits and, therefore, their entitlement to a full future state pension.

‘The Committee has asked HMRC to provide it with any analysis of this risk.

‘Parents can transfer National Insurance credits between themselves without transferring who receives the money, but HMRC does not monitor the number of transfers.

‘This is concerning, so the Committee has asked HMRC what work it has done to publicise the possibility of National Insurance credits transfer.’