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Retirement may seem like a long way off, however claiming National Insurance credits is something which parents and guardians may want to think about doing, should they be at risk of having gaps in their National Insurance record. That’s because this record has an impact on whether a person can get a state pension – as well as how much.
The link between Child Benefit claims and the state pension is something which Kay Ingram, Public Policy Director at LEBC Group, has commented on.
“The state pension is earned by paying national insurance (NI), with 35 years contributions required to get the full state pension from 2016,” she told Express.co.uk.
“Each credit buys 1/35th of the state pension.”
As such, at the moment, a National Insurance credit can secure a significant amount when it comes to retirement income.
“On the current weekly amount of £175.20 means that a credit will secure £260.29 per year of state pension, payable for life, once state pension age is reached,” Ms Ingram commented.
“The Department for Work and Pensions (DWP) oversees this.”
While some parents and guardians will not face gaps in their National Insurance record, some – for instance non-earning or low-earning people – may do.
As such, they may want to look into whether they can fill in the gaps.
And, as Ms Ingram has pointed out, this can be done via Child Benefit, for a certain period of the child’s life.
“Parents who receive Child Benefit automatically get a credit for the state pension until their youngest child is 12 (aged 17 if the child is registered disabled),” she explained.
“This is credited to the parent who claims the benefit.”
Due to this rule, Ms Ingram issued a warning to those in households where there are two parents and/or guardians.
She continued: “Where one parent is not in paid employment or self-employment and paying National Insurance, it is important that they make the claim for Child Benefit or the credit is wasted.”
However, there is action which can be taken, should a person wish to pass the credit to another.
“To transfer the credit from one parent to the other, DWP form CF411A should be used,” she commented.
Another issue to note is the importance of ensuring those at risk of gaps ensure they continue to claim the credit, even if they have waived Child Benefit.
Waiving the payment is something which some may opt to do, should there be a person in the household with an individual income of more than £60,000, and hence would all Child Benefit would be lost via the High Income Child Benefit Tax Charge (HICBC).
“Parents who are not working, or are earning less than the national insurance threshold and have waived payment of Child Benefit, due to the High-Income Child Benefit charge, can still get state pension credits, providing they apply for the child benefit but then waive payment of it,” Ms Ingram explained.
“If they do not apply for it, they will lose the credits.”
What’s more, there’s a need to take action sooner rather than later – due to backdating rules.
“The credits given to parents as part of their Child Benefit claim can only be backdated for three months.
“Parents who have waived payment of the Child Benefit need to act fast to reinstate state pension credits.
“Completing form CH2 from the DWP website is required for new claimants or telephone 0300 2003100 to amend a claim.”
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