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Warning – 200,000 risk losing £1,000s as 'wrong' parent claims child benefit

Around 200,000 parents risk losing £1,000s from their future state pension because they don't earn enough to pay national insurance contributions and their partner – who does earn enough – is claiming the family's child benefit. That's according to new data released this week – here's how to check if your family is affected, and transfer national insurance credits across if needed.

This is all about national insurance credits, which are used to determine how much state pension you'll be paid. You usually build up your national insurance record by paying national insurance contributions from what you earn. Though if you don't pay national insurance but have or care for a child under 12, you can still earn national insurance credits by claiming child benefit instead.

According to HM Revenue & Customs analysis obtained via Freedom of Information requests from pensions firm Royal London, in around 200,000 families the higher earner of the couple claims child benefit despite the other parent NOT paying national insurance contributions. This often happens when one parent takes time out of paid work to care for children, but the working parent continues to claim child benefit.

That means the higher earner gets the credits even though they don't need them – because they're already making national insurance contributions – while the lower-earning parent could be left with gaps in their national insurance record. As you need 35 years of national insurance records to receive the full state pension, each year of missed contributions could cost you around £250/year in pension payments when you retire, and £1,000s over the course of your retirement.

We've help below on how to check if you're affected and how to transfer national insurance credits if you are. See our Child Benefit guide for full info on who's eligible and how to claim.

Who should claim child benefit in my family?

You can choose which parent claims child benefit for your child – only one person can claim for each child.

If you earn over £118 per week, claiming child benefit won't make a difference to your national insurance record, as you already will have paid or been credited with paying national insurance contributions.

But if you don't do paid work or earn less than £118 per week and you claim child benefit, you'll get national insurance credits you wouldn't otherwise have received.

So if your family has one partner who pays national insurance and one who doesn't, it's worth the lower-earning partner making the child benefit claim for any children under 12, to make sure they're still contributing to their national insurance record.

What if I or my partner earns £50,000+/year?

If you or your partner earns £60,000 per year or more, you don't get to keep any child benefit you claim – you'll have to pay it back through tax. And if you or your partner earns between £50,000 and £60,000, you'll have to pay some of it back on a sliding scale.

But if your family has one partner who isn't in paid work or earns less than the national insurance threshold, and one partner who earns £50,000+ per year, it's still worth the lower-earning partner registering for child benefit if you have a child under 12. While there's less – or in some cases no – immediate financial gain, it means the lower-earning partner will still receive national insurance credits, which may boost their pension in the long run.

How can I transfer my partner's national insurance credits?

The good news is if you're the parent of, or carer to, a child under 12 and don't pay national insurance, and your national insurance-paying partner has been claiming child benefit instead of you, you can still claim national insurance credits retrospectively.

You can do this by filling out form CF411A online (or sending it in by post). It will transfer the national insurance credits your partner has earned through claiming child benefit to you.

Officially, you need to do this before the end of the tax year following the year you want to transfer credits for. So for example, if your partner claimed child benefit for the tax year 2018/19 and wants to transfer their credits to you, you'd need to apply to do so by 5 April 2020.

However, HMRC says that if you've passed the time limit for transferring credits, you can still complete the form, giving the reason why you didn't apply on time. It says "if the circumstances are reasonable", it will still transfer the credits.

'This can be fixed – but many people will be unaware'

Steve Webb, director of policy at Royal London, which uncovered the data, said: "It is quite right that parents who are looking after children get protection for their state pension record if they are out of paid work. But this protection only works if the 'right' parent claims child benefit.

"It is very worrying that in around 200,000 families, one partner is potentially missing out on the state pension protection that is rightfully theirs. Whilst this can be fixed by filling in the relevant form, many people will be unaware of this."

An HMRC spokesperson said: "In line with the claim form we can confirm that if there is a couple, and one of the couple does not work or pay national insurance contributions, the non-working partner should claim child benefit to protect their state pension."

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