Warning for thousands of parents as Child Benefit mistake could cost you £5,500 | The Sun

THOUSANDS of parents have been warned that an easy Child Benefit mistake could cost them £5,500.

Families who receive the payment are being urged to be careful when filling out the form, as a "common mistake" could "eat away" at their pension.

Finance experts at Hargreaves Lansdown have warned that putting the wrong parents name down could result in a £5,500 of lost income.

This is because it can affect your National Insurance contributions (NICs) and could cost you your full State Pension when you retire.

To claim a State Pension, you need 35 years worth of NICs, which you typically build up by working.

But where parents are out of work because they're caring for children, they may still be able to claim these NICs.


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Rules introduced in January 2013 say that if parents don't claim child benefit, they won't get the credits.

According to the Hargreaves Lansdown missing out on one year of contributions equates to around £275.

So, over a 20-year retirement this works out at over £5,500.

Of course, if you are out of work for longer than a year, the amount lost would be even more.

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In order to avoid this the parent who stays at home should put their name down to claim Child Benefit.

It means that they will get the NIC towards their State Pension, rather than the parent who is already earning them by being at work.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown: “Making sure the parent who stays at home claims Child Benefit in their name is essential in making sure the right person claims the national insurance credit for their state pension.

"A common mistake is that the working parent fills out the form and claims the benefit in their name without realising their non-working partner is missing out on a national insurance credit towards their state pension."

How you can top-up your contributions

If you have been making this mistake though, there are ways you can fix it.

Helen explained: "If this has happened to you then you can apply to transfer National Insurance credits to your partner so they can start to rebuild any gaps.”

So, parents who have these gaps in NICs can top-up their record in order to benefit from their full State Pension when they retire.

But, earning back the years isn't free so your voluntary contributions do come at a price.

It works out to be worth £15.85 a week which means it costs £824.20 to buy one year of contributions.

As the state pension is currently £185.15 per week, this boost would add £5.29 per week or around £275 per year.

This means that someone who gets the boost for at least four years would make their money back and even make a profit.

Though before making voluntary contributions, you need to get a pension forecast and speak to the Government's Future Pension Centre.

This is because there are some situations in which paying historic contributions wouldn't boost your state pension. 

This could be the case for those who are short of a full state pension because of long periods of "contracting out".

Thousands are thought to be missing out on these credits, leaving them worse off in retirement.

You can check the full list of who's eligible for claiming credits on the government website.

It explains the circumstances where you'll need to claim and when you'll get it automatically.

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Besides topping up missing NI payments, we explain other ways you can boost your state pension by up to £700 a year.

Plus, there's less than three months left for Brits to take advantage of a scheme which could boost state pensions by thousands.

Do you have a money problem that needs sorting? Get in touch by emailing [email protected]

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