Higher income earning mums with young children are being warned they could face a hit to the tune of £23,000 to their state pension due to changes to the child benefit rules.
The government introduced a ‘high income child benefit tax charge’ in 2013, which affects couples where one partner earns £60,000 or more, which prompted many families to opt out of claiming child benefit, or failing to claim the benefit after having their first child.
In fact, figures published by HM Revenue and Customs show the number of families receiving child benefit fell to 7.38 million in 2017, compared with 7.92 million in 2012, just before the rules changed.
This has lead to a situation where tens of thousands of women have gaps in their National Insurance records, and have been restricted from making backdated claims for missing credits. Royal London personal finance specialist, Helen Morrissey, said: “For the last forty years, the National Insurance record of mothers has been protected through valuable credits which mean that time spent at home with young children does not impact on their state pension.”
“But since 2013, growing numbers of mothers have either opted out of child benefit or have not claimed in the first place because of a new tax charge on higher income couples. This is doing permanent damage to their state pension prospects.”
She went on to say that; “It is outrageous that in the anniversary of women winning the right to vote, the government is overseeing a state pension system which penalises women for having children…”
Planning the right strategy for retirement is something we all need to consider, especially when big life decisions are on the horizon – you would like to arrange a pension or investment consultation, please call Tim Norris or Alan Clifton on 0800 731 7614 and we would be delighted to arrange a meeting at our offices in the heart of Teddington.