State pension Don't lose out

Beware you don’t lose state pension rights if someone in your household is earning over £50,000.

As the state pension is linked to child benefit claims, it appears that many parents are missing out on millions in state pension rights. Many families where child benefit is claimed and someone is earning over £50,000; some or all of that benefit will need to be paid back through the tax system. As a result of this many are choosing to not claim their child benefit.

In order to qualify for a state pension, an individual will need at least 10 qualifying years of working and earning enough to exceed various NIC thresholds. To qualify for the full state pension they would need 35 years of qualifying years. A person that is eligible for child benefit for a child under 12 can earn qualifying years when they claim. So if they are not claiming due to the effect of the high income child benefit charge (HICBC) they will not be gaining qualifying years towards their state pension.

To ensure that the individual will gain their qualifying years, they will need to claim child benefit using the Form CH2 but then tick the relevant section on the form to say they do not want it to be paid. This way they don’t receive the money but are still claiming child benefit without having to pay it back through the tax system. The individual will continue to earn qualifying years until the child is 12. If they have another child they will need to go through the same process again to continue accumulating qualifying years based on the age of the younger child.

If you need advice on this or any other financial issue contact us.

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