Thousands of mothers risk needlessly spending money to boost their state pension after ministers confirmed new support would be made available. Parents who opted out of receiving Child Benefit to avoid the High Income Child Benefit Charge, who may now be missing National Insurance (NI) years, will be offered a new category of credit to claim.
While this may come as good news for many, as it’ll mean not having to fork out hundreds – if not thousands – to fill gaps in their NI records to get a full state pension, others unaware of the development may pay when they don’t necessarily have to. Sir Steve Webb, former pensions minister and now a partner at consultancy LCP, said: “It is good news that the Government has now confirmed it will press ahead with plans to create a new category of National Insurance credits for parents who opted out of child benefit because of the high-income charge. But it also means that parents who were thinking of paying voluntary National Insurance contributions before the April 5 deadline might need to think again, as they are at risk of wasting their money.”
To receive the “full” state pension – currently worth £221.20 a week – people must have enough “qualifying years” on their NI records.
People accumulate these through active employment or by receiving NI credits, which are granted during periods of unemployment, illness, or while receiving support, such as Child Benefit, for fulfilling parental responsibilities. Typically, people need around 35 NI years to get the full new state pension.
Child Benefit was a universal payment to families with children until January 2013, when former chancellor George Osborne introduced the High Income Benefit Charge. The charge meant that from that year onwards, parents with adjusted income of over £50,000 a year were required to pay back some or all of their Child Benefit through a self-assessment tax return.
Subsequently, thousands of couples decided to opt out of receiving the benefit to avoid a hefty tax bill. This threatened their state pension entitlement, as many mothers were not receiving the credits despite being eligible.
To address this issue, the government introduced a tick box on the Child Benefit claim form for parents to indicate they wanted “credits only”, rather than a benefit payment. However, many did not know about this option, so didn’t tick the box, meaning no credits were recorded.
With the rush to make “voluntary contributions” to fill in NI gaps ramping up, it has now been confirmed eligible parents who were impacted will be able to claim credits rather than pay for missing years.
James Murray, exchequer secretary to the Treasury, confirmed the credit would be made available from April 2026 in response to a parliamentary question last week.
This will come as welcome news, as it can cost up to £824.20 to fill a year-long gap in a National Insurance record.
However, Sir Simon urged: “It would be helpful if the Government set out – as a matter of urgency – precisely who will be entitled to these new credits so that parents know whether or not there is any point making voluntary contributions for these years.”
People are urged to check their state pension forecast in case they find they will benefit from contributions. HM Revenue and Customs (HMRC) and the Department for Work and Pensions (DWP) offer an online service to help you calculate.
People have until April 5, 2025, to plug gaps dating back to 2006. After April, they can only make contributions for six tax years.
