More than 200,000 people are missing out on a benefit that could provide them with extra cash in their retirement, new data obtained by the Money team shows.
At least 214,000 people are not claiming child benefit and the free national insurance credits that come with it, despite being eligible, according to HMRC data released after a Freedom of Information request.
That’s 66,000 people more than five years ago.
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Child benefit is worth £26.05 a week – or £1,354.60 a year – for the eldest or only child.
It’s worth £17.25 a week – or £897 a year – for each additional child.
You can claim it if you are responsible for a child under the age of 16 or under 20 and still in education or training.
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It’s automatically paid into your bank account every four weeks.
The often overlooked retirement upside
While many know about child benefit, they may not know about the free national insurance credits that come with it.
If you claimed child benefit for a child under 12 on or after 6 April 2010, you’ll get Class 3 credits, which count towards your state pension.
To get a full state pension in retirement, you need to have 35 years of qualifying national insurance contributions.
You can get these qualifying years through working and paying taxes on your earnings or national insurance credits.
When you claim child benefit, you’ll get these credits automatically until your youngest child is 12, even if you’re not earning.
How much could you be missing out on?
One year of national insurance contributions can increase your state pension by around £6.58 a week, or £342.16 a year (until you hit the maximum amount).
This means if you take time off work to care for your child until they start school at the age of four, you could be missing out on £1,368 a year in your state pension.
If you don’t go back to work until they start secondary school at 11, you could be missing out on £3,763 a year.
And if you don’t claim at all while you’re eligible, that amount can rise to around £4,105.
But by claiming child benefit during that time, you are plugging the national insurance contribution gap in your record and keeping hold of that amount.
“If parents have multiple children the gap could be even longer, if they don’t work for that entire period,” Laura Suter, director of personal finance at AJ Bell, told Money.
“Getting a free credit for national insurance is a lucrative move.
“You can pay to voluntarily top up your national insurance record, but it would cost you £923 to do this for every year you want to do it.”
How can you claim?
You can claim child benefit, and the national insurance credits that come with it, 48 hours after you have registered the birth of your child, or once they come to live with you.
It can be backdated for up to three months from the date you make the claim.
Only one person can claim the benefit per child, so you’ll have to decide whether it’s better for you or the other parent to claim (more on the reason why shortly).
If you have more than one child, you can both claim for different children.
The person who claims will get the national insurance credits, but these can be transferred to your partner at the end of each tax year, if necessary.
You can file your claim online here.
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What do you need to be aware of?
While everyone can claim child benefit, if you’re earning more than £60,000 for the tax year, you might have to pay the high income child benefit charge. But you will still get the national insurance credits.
The amount you’re charged depends on how much you earn. If it’s between £60,000 and £80,000, you have to pay back 1% of the child benefit for every £200 of income. So if you earn £65,000, you’ll pay back 25% of the benefit.
Once you get to £80,000 or more, that equals the full amount of the child benefit – so you repay it all.
You pay the charge through a self-assessment tax return.
“As incomes have increased during a period of high inflation and wage growth, more people will be hitting the high income charge for child benefit,” Suter added.
“The move to increase the upper limit from £60,000 up to £80,000 will help to mitigate some of this, but it still means that a couple with one higher earner won’t be eligible to claim child benefit.
“However, they can still claim the national insurance credit without claiming the actual money.”
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Can you opt out of the benefit but keep the NI credits?
If you don’t want to receive child benefit, but want to continue getting the national insurance credits, you can make that clear in a claim form.
You can do that online here, by post or over the phone.
If you’re unsure about how many qualifying years you have on your National Insurance record, you can check that here.
