Plan to fix state pension child benefit mess pushed back: Mums must wait until 2027 to apply for lost NI credits
- Not claiming child benefit could leave parents facing costly gaps in state pension
Plans to allow parents to clear costly gaps in state pension records if they don’t claim child benefit Delayed for one year until April 2027.
The delay was described as “extremely frustrating” by former Pensions Secretary Steve Webb, who campaigned with This is Money for years to prevent parents (mostly mothers) from potentially losing thousands of pounds from the state pension.
‘Everything was chaotic from the beginning,’ he told us.
Almost no one realizes that there is a link between child benefit and how much state pension you can receive decades from now.
However, parents who earn too much to qualify for child benefit and therefore do not claim it could miss out on valuable National Insurance credits.
These are worth around £359 a year in a state pension at the 2026/27 rate, or £7,200 over a 20-year pension.
It’s Money and Steve Webb campaigned for years to get the Government to give mothers the NI loans they owe – and they’re still waiting for the promised fix
Unless your parenting duties create a gap in your National Insurance record, you won’t miss this opportunity; so those who continue to pay premiums as normal (for example, during paid maternity leave) are not affected.
However, people can take unpaid maternity leave after statutory maternity pay runs out and this is excluded unless you receive child benefit.
The number of families claiming child benefit decreased after the controversial regulation in 2013.
Child benefit was initially reduced for those earning more than £50,000 a year or eliminated entirely for those earning more than £60,000; something officially known as the ‘high income child benefit charge’ or HICBC.
The rules have now been relaxed and child benefit will be phased out if one member of the household earns £60,000 and payments stop altogether at £80,000.
After years of avoiding parents’ pleas, the previous Conservative government promised to allow them to repair gaps in their state pension records by creating a new loan for them to apply for; This loan was planned to be used starting next month.
Labor confirmed last year that the scheme would go ahead, but parents were waiting for details on what they would do to streamline their NI records.
The government has now published an update on the Gov.uk website asking parents to: Contact them if they will experience a financial loss. because there will be a delay in starting renewal loans.
Here it says: ‘National Insurance renewal loans service postponed until April 2027. ‘Most eligible parents and carers will not be affected by the delay in service and will be able to continue to apply for credit when the service opens in April 2027.’
This is Money asked the Government why it was delaying introducing the new loans but did not receive a response by the time of publication.
‘It is extremely frustrating to see the delay in a scheme designed to remove confusion from the pensions system,’ says Steve Webb, partner at consultant LCP and retirement columnist for This is Money.
‘When High Income Child Benefit Charge was introduced in 2013, some parents (mostly mothers) decided it wasn’t worth the trouble to claim Child Benefit only to get a tax bill for the same amount for themselves or a partner.
‘But by not claiming child benefit they have also thrown away valuable National Insurance credits towards the state pension.
‘The government promised a few years ago to solve this problem by creating “replacement loans”, but now – just weeks before the new system is due to be introduced – we hear that this has been delayed by a year.’
Many families have become ineligible for child benefit due to their income; So every year more new parents risk not signing up and missing out on the thousands of pounds of state pension they would otherwise be entitled to in retirement.
The Conservative Government stayed away from the This is Money campaign on behalf of families until it announced a U-turn in spring 2023.
MPs have previously questioned why there should be a three-year delay in repairing gaps in parents’ state pensions after this decision; this waiting period has now been extended to four years.
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