Simple paperwork error could see thousands of parents miss out on pension contributions

The Chair of the Treasury Committee, Nicky Morgan MP, has highlighted that more than 200,000 parents may face a smaller state pension due to a simple error involving child benefit.

In order to receive the full state pension, workers need to make a minimum of 35 years of National Insurance contributions.

However, parents with children under the age of 12 are entitled to build up their National Insurance Credits in the years that they are not paid for employment because they are looking after children.

To register for the credits, parents have to apply for child benefits. However, those who do not apply because they know they are not eligible for the benefit, often due to the amount that they or their partner earns, could lose out on these contributions.

Unfortunately, where the mistake is discovered years later, most people are unable to recover credits as they can only be claimed back for up to three months. This can lead to a significant shortfall in a person’s state pension that could see the amount they can claim cut by thousands during the length of their retirement.

Nicky Morgan MP, Chair of the Treasury Committee, said the committee had “long warned” the Government about the issue.

“Now we have an idea of the scale of this problem, the Government needs to pull its finger out and make sure people are aware of the issue and know how to put it right,” she said.

Those who have missed out on credits should consider supplementing their state pension with a private pension where possible, so as to avoid missing out in later life.