Parents who sign up for child benefit also get valuable credits towards their state pension, providing they are not working and building up their National Insurance record that way.
It’s therefore important a parent who is not working is the one named on the form to get the child benefit, as these credits are worthless to someone employed and already paying enough NI.
This week, Steve Webb helps a reader who filled in her husband’s name, although he was working, without realising the connection between claiming child benefit and her eventual state pension.
Child benefit form: ‘Although the guide and the claim form talk about “protecting” your state pension, it could certainly say more clearly that the person who does not claim could end up with a smaller pension,’ says Steve Webb
I really would like some help in finding out why when I had my son in November 2006 that for the first few years National Insurance credits were not paid?
I have looked at my NI contributions since having my son and I have been credited every year apart from the first two years.
I applied for child benefit when he was born but put my husband’s name first on the form so he received the payments at first rather than me, though this was later corrected.
My son is eleven years old, and my husband is a Royal Marine. We lived and my son was born in Somerset, then we moved to Scotland.
I would be very grateful if you could help me with this, as trying to get through to these people is just ridiculous.
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Steve Webb replies: Your question raises two separate issues about how you can receive valuable National Insurance ‘credits’ towards your state pension for periods when you weren’t in paid work and paying National Insurance contributions.
The first issue is the way in which receipt of child benefit can help you to build up the National Insurance record you need to get a full state pension.
Currently, a person receiving child benefit for a child under 12 gets a year of National Insurance credits for each year that they are getting child benefit.
Have you lost state pension credits by not signing up for child benefits?
If this has happened to you, contact firstname.lastname@example.org and tell us your story.
New parents who don’t sign up for child benefit are losing valuable credits towards their state pension, an issue This is Money columnist Steve Webb has urged the Government to address.
Many people, predominantly women, fail to register for child benefit if they don’t qualify for the payments, without realising this will damage their state pension rights when they reach retirement age.
Read Steve’s column about this here.
This adds exactly the same amount to your state pension as a year spent in paid work and paying NI contributions.
Incidentally, when your child was younger, the rules were more generous and credits were available regardless of how old children were.
However, the crucial point regarding your question is that the credits go to the person ‘receiving child benefit’.
Child benefit is paid to a named individual rather than a couple, and unfortunately in your case it was your husband’s name that was put on the form.
This means that he could, in principle, qualify for National Insurance credits, but assuming that he was in work at the time and paying NI contributions then these credits would have been of no value to him.
In the past when I have raised this issue with HMRC they have said that nothing can be done to rectify matters.
But when This is Money contacted them recently about my response to your query, HMRC said that you can still apply to have these credits transferred for any year up to and including 2009/10. To do this you have to complete a form CF411 which you can find here.
There is no time limit on transfer applications before that tax year, but you cannot apply for such transfers for the years from 2010/11 to 2016/17 because there is now a time limit.
Credits can however be transferred for the tax year just ended, if you claim before 5 April in the following tax year. To do that you should complete form CF411A which is here. See below for more details on transfer rules.
Incidentally, I’ve been looking at the current child benefit application form and I think there is still a danger that people could be getting this wrong today and losing out.
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Alongside the child benefit application form is an eight page information leaflet and it says very clearly ‘you should fill in this form if you’re responsible for a child’.
It is easy to imagine a scenario where, for example, a dad is trying to spare a mum from having to fill in forms when she’s just had a baby so he fills in the form.
Like the mum, he is ‘responsible for a child’ so he could put his details on the form and thereby potentially leave the mum with a reduced state pension in later life.
To be fair, the guide does say later on that in essence the person not in paid work is the one who should claim, but if you’ve already read that you should fill the form in if ‘you are responsible for a child’ then you might stop there.
In addition, although the guide and the claim form talk about ‘protecting’ your state pension, it could certainly say more clearly that the person who does not claim could end up with a smaller pension as a result.
The other issue that you mention is service with your husband in the military. If at any point you were outside the UK and therefore could not work and pay NI contributions, the good news is that there is a very generous system of National Insurance credits in such circumstances.
Women who were born after 5 April 1953 – that is, those who come under the new state pension system starting in April 2016 – can get a week of NI credits for each week that they were outside the UK with their husband on military service.
You can apply all the way back to 1975 and there is currently no deadline. You can read more about the credit for ‘military spouses’ here.
What does HMRC say?
HMRC is understood to be looking at improving the guidance it gives on the child benefit form.
An HMRC spokesperson said: ‘No-one should miss out on the state pension and HMRC has always urged families to claim child benefit to help protect their future right to the state pension.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
‘The child benefit claim form and guidance notes were updated in April 2017 to stress further the importance of making a claim.
‘Child benefit claimants on a high income can opt not to receive payments in order to avoid having to pay back their child benefit through the High Income Child Benefit Charge.
‘But they should still complete the claim form in order to qualify for National Insurance credits and thus build qualifying years towards the state pension.
‘Parents are advised to do this on the child benefit claim form (which is available in the bounty packs that go to new parents), through the HMRC helpline [0300 200 3100], online at GOV.UK and through partners such as Citizen’s Advice.
‘HMRC is looking at ways in which it can improve its communications further, both at the birth of a child and for existing child benefit claimants.
‘In the case cited, the individual can apply to transfer the previous year’s National Insurance credits, if that is relevant in this case.’
How do you apply for credit transfers if you filled in the form wrongly?
When a working partner who is already paying National Insurance contributions claims child benefit, their non-working live-in partner can apply to have the state pension credits transferred to them for tax years up to 2009/10 using form CF411. There are no time limits on these applications.
A non-working live-in partner cannot now apply to have the tax years 2010/11 until 2016/17 transferred because there is a time limit which has passed.
But a non-working live-in partner can still apply to have the last tax year transferred, so long as they claim by 5 April in the following tax year, using form CF411A.
Claims can only be made if the original child benefit claimant has a full state pension qualifying year from another source, for example paid employment.
ASK STEVE WEBB A PENSION QUESTION
Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Since leaving the Department of Work and Pensions after the May 2015 election, Steve has joined pension firm Royal London as director of policy.
If you would like to ask Steve a question about pensions, please email him at email@example.com.
Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.
If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.
If you have a question about state pension top-ups, Steve has written a guide which you can find here.
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