Mums must wait until 2027 to apply for lost NI credits

Plans to let parents fix costly holes in their state pension records if they didn’t claim child benefit have been put back a year until April 2027.

The delay was dubbed ‘deeply frustrating by former Pensions Minister Steve Webb, who campaigned with This is Money for years to prevent parents – mostly mums – potentially losing out on thousands of pounds in state pension.

‘The whole thing has been a mess from the start,’ he told us.

Hardly anyone is aware there is a connection between child benefit and how much state pension you could receive decades from now.

But parents who earn too much to qualify for child benefit and therefore don’t claim it can miss out on valuable National Insurance credits.

These are worth around £359 a year, or £7,200 over a 20-year retirement, in state pension at the 2026/27 rate.

You do not miss out unless parenting duties create a gap in your National Insurance record, so those still making contributions as normal – for example during paid maternity leave – are not affected.

However, people might take unpaid maternity leave after statutory maternity pay runs out, and that wouldn’t be covered unless you are receiving child benefit. 

The number of families claiming child benefit slumped after a controversial overhaul in 2013.

Child benefit was originally reduced for those earning £50,000-plus a year, or wiped out entirely for those earning £60,000-plus – something officially known as the ‘high income child benefit charge’ or HICBC.

The rules are now eased so child benefit starts to be phased out if one member of the household earns £60,000, and payments stop altogether at £80,000.

After shunning parents’ pleas for years, the previous Conservative government promised to let them repair holes in state pension records by creating a new credit they can apply for – which was meant to be available starting next month.

Labour confirmed last year that it would go ahead with the plan but parents have been waiting for details about what to do to sort out their NI records.

The Government has now posted an update on the Gov.uk website asking parents to get in touch if they will suffer a financial loss because there will be a delay to launching replacement credits.

This says: ‘The National Insurance replacement credits service has been delayed until April 2027. Most eligible parents and carers will not be affected by the delay to the service and can still apply for credits when the service opens in April 2027.’

‘It is deeply frustrating to see a delay in a scheme designed to unpick a mess in the pension system,’ says Steve Webb, a partner at consultant LCP and This is Money’s pensions columnist.

‘When the High Income Child Benefit Charge was introduced in 2013, some parents – mostly mothers – decided it wasn’t worth bothering to claim Child Benefit only for them or a partner to get a tax bill for the same amount.

‘But by not claiming child benefit they also threw away valuable National Insurance credits towards the state pension.

‘The Government promised several years ago to fix this problem by creating “replacement credits”, but now we hear – just a few weeks before the new system was about to be introduced – that it has been delayed by a year.’

Many families have become ineligible for child benefit due to their income, so more new parents every year are at risk of not signing up and missing out on thousands of pounds in state pension they would otherwise qualify for in retirement.

Until it announced a u-turn in spring 2023, the Conservative Government shunned a This is Money campaign on behalf of families.

MPs have previously questioned why after that decision there had to be a three-year delay to fixing state pension holes for parents – a wait that is now extended to four years.

An HMRC spokesperson says ‘We can reassure parents and carers that when the service launches in April 2027, they will still be able to claim credits going back to January 2013, meaning no one will miss out on them.

‘Because those who benefit from the service will be families with children under the age of 12 since 2013, we expect very few to have reached state pension age by this April.’

The HMRC is understood to be fully committed to delivering the new NI credits service, with the current delay down to the complex technical nature of the project.