My state pension record has a big hole in the time I was looking after my child – Steve Webb replies

I worked from the age of 17 and stopped working aged 38, when my child was born.

At the time my husband and I did not claim child benefit money as my husband’s salary was over £65,000. However we did complete a form stating that I would like my contributions to continue.

When my husband was made redundant in 2022, he checked his National Insurance contributions and his were fully completed for each tax year. Not a problem.

He told me to check mine and I was shocked that my contributions were short from mid-2014 until 2021. I should tell you that I got myself a little part-time job in 2021.

Of course I was straight on the phone to the DWP, who were not very helpful and told me I would have to pay for the missing years.

I was under the impression that as I had a child my contributions wouldn’t have been affected.

I am now in receipt of child benefit, which was only backdated three months from February 2022 to the current date.

My husband now has a new job, but due to childcare issues I left my job in March of this year. I am still in receipt of child benefit, which we have to pay back in full and submit a tax return.

I have made complaints to the DWP and no one has ever got back to me. It just doesn’t seem fair that we felt like we did the right thing in not claiming money, but now I am being penalised. Could you point me in the right direction on what to do now?

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Steve Webb replies: You have been affected by something known officially as the ‘High Income Child Benefit Charge’.

In simple terms, where someone who gets child benefit earns over £50,000 per year, or where their partner earns over £50,000, there is a charge to be paid.

The rate of charge is 1 per cent of the value of your child benefit for each £100 of annual income in excess of the £50,000 threshold.

This means that, for example, someone on £55,000 per year would have a charge of 50 per cent of their child benefit, whilst someone on £60,000 per year (or more) would have a charge equal to 100 per cent of their child benefit.

Note that the way the system works is that the child benefit is paid in full to the person who claimed it, but the charge has to be paid by whoever in the family is the higher earner.

The higher earner has to fill in a tax return so that HMRC know they are in a family receiving child benefit and the charge can be collected.

To avoid a situation where people are being given money with one hand (in the form of child benefit) and having it taken away with the other (in the form of a High Income Charge), families are given the option to opt out of the child benefit payments.

However, there is a catch. One of the advantages of getting child benefit for a child under 12 is that you automatically get valuable National Insurance ‘credits’ towards your state pension.

If you simply out of receiving child benefit you would be at risk of damaging your National Insurance record.

To avoid this, HMRC give families an additional option which is to receive just the National Insurance credits but not the child benefit. This protects your state pension record without going through the hassle of receiving a benefit and then paying a tax bill.

From what you have said, it sounds as though you did indeed ‘tick the box’ to say you wanted NI credits only. If so, they have simply made an administrative mistake which can hopefully be fixed.

I have raised your case with HMRC and it says it cannot find any record of your initial child benefit claim, but I am continuing to investigate this to see if we can get it resolved.

But note that even though we are talking about a benefit (child benefit) and about your state pension record, it is actually HMRC who deal with all of this. It is possible that this is why your complaints to DWP have got nowhere.

A bigger problem affects those who were not aware of the option of choosing ‘credits only’, and simply did not claim child benefit at all.

In this case there is a risk that they may miss out on years of NI credits and suffer a reduced state pension in retirement. As you have discovered, anyone who goes back to claiming child benefit can only backdate their claim for three months, and the rest of the period will remain a blank in their record.

The good news is that Treasury and DWP ministers have finally accepted that this is a problem which needs to be addressed.

In April 2023 they announced that they would be looking to put in place a system to repair the damage done to people’s National Insurance record in this situation.

One way in which this might be done would be to invent a new category of NI credit for those who could have claimed child benefit, but did not do so.

Although this announcement is very welcome, we have not heard any further details. I hope that Ministers will soon set out details of how they plan to address this issue.

Unless it is addressed, many tens of thousands of parents – mostly mothers – could face a significant shortfall in their income in retirement.

If your claim cannot be found and the gap in your is not sorted out following my investigation, hopefully it will still be resolved by this means eventually.

What does the Government say?

A HMRC spokesperson told us it continues to encourage all parents to claim child benefit, regardless of income, to ensure that they receive the associated National Insurance credit.

The Government announced in April it would enable eligible parents who have not claimed child benefit to apply for National Insurance credits retrospectively.

It has issued no update since then but further information on this change, including eligibility, will be available in due course.

Parents who claim child benefit, including those who opt out of receiving the payments, automatically receive NI credits until their child turns 12. 

At present, if you claim child benefit, the payments and the associated NI credit can be backdated for up to three months.