Over half a million families missing out on child benefit since rules change

More than half a million fewer families are receiving child benefit since rule changes were introduced six years ago, figures show.

Sir Steve Webb, a former pensions minister, said women are being “hit the hardest” by the decline and warned they could be missing out on future state pension rights.

Figures released by HM Revenue and Customs (HMRC) show that on August 31 2018 there were 7.33 million families in receipt of child benefit – a fall of around 51,000 compared with a year earlier.

Families living in the East of England, London and the South East – where earnings are often higher – are particularly likely to have opted out.

Women make up the vast majority of child benefit recipients, accounting for 87% in August. They are also particularly likely to be opting out of the benefit.

The report showed that after the introduction of the high income child benefit charge (HICBC) in January 2013, the number of families receiving child benefit decreased sharply.

In summer 2012, before the rules changed, 7.92 million families had been receiving child benefit.

The tax charge applies when one person in a couple receiving child benefit earns more than £50,000 – and if they are earning £60,000 or more the charge equates to all of the benefit, meaning families may think it is not worth claiming.

Sir Steve (pictured), director of policy at Royal London, said the downward trend is due to families already in the system opting out as well as growing numbers of families never claiming.

But he said it is possible to make a claim for child benefit and decline to take the cash payment, but sign up for national insurance credits to protect your state pension record.

Sir Steve said: “This is yet more damning evidence of the collapse of the system for protecting the pension rights of parents.

“No one should face poverty in retirement because they spent time at home bringing up young children.”

Generally, people need 35 qualifying years of national insurance to receive the full state pension.

One year of missed contributions can equate to around £244 per year of lost pension.

Royal London has launched a parliamentary petition to help make sure mothers get national insurance credits towards their state pension.

Copyright (c) Press Association Ltd. 2019, All Rights Reserved. Picture (c) Danny Lawson / PA Wire.