Parents could protect state pension amount for 12 years – how to ensure you don’t miss out
Martin Lewis explains who is eligible for Child Benefit
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Retirement may seem a long way off, however thinking about pension contributions and the UK state pension now could certainly pay off in the future. Parents and guardians, for instance, may be able to take action now in order to boost their state pension for 12 years.
This can be done via Child Benefit, although the rules differ depending on whether the situation in question was before April 6, 2010 or not.
By claiming Child Benefit, a person can get National Insurance credits which count towards the state pension.
Furthermore, the child will automatically get a National Insurance number when they reach 16-years-old, if Child Benefit is claimed.
For those who are a parent registered for Child Benefit for a child under the age of 12, even if they don’t receive the payment, the parent or guardian should qualify for Class Three National Insurance credits.
The Government points out foster carers, or kinship carers in Scotland, need to apply for these Class Three credits.
The rule means parents and guardians could potentially protect their state pension entitlement by up to 12 years.
However, it’s important that those who don’t get Child Benefit, such as those who have waived the payment due to being impacted by the High Income Child Benefit tax Charge (HICBC), have ensured they are still getting the credits.
The Government website issues a warning about this matter.
“If you choose not to get Child Benefit payments, you should still fill in and send off the claim form,” it states.
The issue is something which Kay Ingram, Director of Public Policy at national financial planning group LEBC, has warned about in the past.
On the topic of ways to boost the state pension, she said: “Parents not paying NI contributions through employment or self-employment may claim credits, which are automatically provided when claiming Child Benefit.
“To ensure the NI credit isn’t wasted it is essential that the adult who is not paying NI through employment or self-employment claims the Child Benefit.
“Credits continue until the youngest child is 12.”
She added: “Parents who have waived the benefit due to the High Income Child Benefit Charge can also claim the NI credit by applying for Child Benefit but then waiving payment.”
What is the High Income Child Benefit Charge?
Some people may have to repay some of the Child Benefit they receive in tax.
This is if a person or their partners’ individual income is more than £50,000.
The Government explains: “You may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have an individual income over £50,000 and either:
- You or your partner get Child Benefit
- Someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep.”
Some will choose to get Child Benefit payments and then pay any tax charge they face at the end of the tax year.
Others may opt against getting Child Benefit payments, and hence not need to pay the tax charge.
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