Families claiming child benefits could be losing £1.5bn in pension rights

Families across the UK could be losing over £1bn a year in pension rights where child benefit is being paid to the “wrong parent”, Royal London has warned.

The figure follows an announcement by HMRC, which said that 237,000 “one-earner” families are getting child benefit paid to the working parent, meaning the non-working parent misses out valuable National Insurance (NI) credits.

Currently, the parent which receives the child benefit for a child under 12 will receive the NI credits towards their state pension, meaning if the non-working parent is not receiving the benefit, they could receive a lower state pension.

The insurer has urged parents to transfer the credits between partners “where necessary”.

Commenting, Royal London director of policy, Steve Webb, said: “If you are part of a couple where the higher earner is claiming child benefit, it is vitally important to check your National Insurance record.

“The good news is that it is possible to fix this problem by applying to have the credits transferred. I would urge families affected to investigate this option so that they do not lose out on significant amounts of state pension rights.”

According to Royal London, each year the NI credits are not missed could cost 1/35 of a pension, amounting to £244.18 a year, or £4,883 over a typical 20-year retirement.

Transferring NI credits can be done online through the government website.

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