If you have children and take some time out to look after them, what does it mean for your state pension? Find out how having children affects your state pension.
How having children affects your state pension
If you have children and register for child benefit, you’ll also get National Insurance credits towards your state pension. By registering for child benefit, you’ll get National Insurance credits for every year you bring up your children, up until your youngest child’s 12th birthday.
SAVVY TIP: You are only entitled to National Insurance credits if you register for child benefit. You must register to get child benefit in order to protect your entitlement to your state pension. If you or your partner is a high earner, you can then opt out of getting child benefit payments if you or your partner earns more than £60,000. You can read more about the child benefit high income tax charge in my article called Child benefit changes: what to do if you or your partner earns £50,000 or more.
SAVVY TIP: You receive National Insurance credits for every week that you are registered for child benefit. You can combine incomplete years of National Insurance credits to make a full year.
- You can also receive NI credits if you foster a child but don’t receive child benefit. You don’t receive child benefit if you’re already receiving payments towards the costs of the child’s accommodation etc.
SAVVY TIP: In order to qualify for a National Insurance credit for caring, you must complete an application form, CF411A (available from the GOV.UK website) You will need to enclose a letter from the fostering organisation to confirm you have been registered as foster carers in the relevant tax year.
- If you’re adopting a child you will get National Insurance credits if you sign up for child benefit. You are entitled to receive child benefit as soon as the child comes to live with you. There’s further information about child benefit and adoption on the GOV.UK website.
SAVVY TIP: If you reach state pension age after 5th April 2016, you will have to have 35 years of National Insurance to get the full flat rate state pension.
State pensions pre-April 2016
For state pension you built up before April 2016, your National Insurance credits when you were registered for child benefit would have given you an entitlement to the additional state pension (made up of SERPS and/or the state second pension). Since April 2002 you’ve been able to get NI credits for the additional state pension for each complete tax year in which you have been caring for a child up to the age of six, or a sick or disabled person.
SAVVY TIP: In April 2010 the rules were changed so that you could claim NI credits if you were a registered foster carer or if you were looking after a child up to the age of 12.
Home responsibilities protection
Home responsibilities protection (HRP), was replaced by National Insurance credits in April 2010, but was available from April 1978 until then. HRP didn’t give mothers credits towards their National Insurance, but reduced the number of years a woman needed in order to get a full basic state pension.
1. You received home responsibilities protection for every year that you were registered for child benefit, up until your child’s 16th birthday. Unlike National Insurance credits, you only received HRP for every full tax year that you were registered for child benefit. You should have automatically received HRP without having to apply.
SAVVY TIP: Every year that you were eligible for HRP reduced the number of years you needed to pay NI in order to get a full basic state pension. So, if you didn’t work for 18 years while bringing up your two children, you’d have 18 years of home responsibilities protection. This would come off the total number of years of National Insurance you needed to have paid in order to get the full state pension.
2. HRP could not reduce the number of years you needed to pay National Insurance for below 20. So, if you didn’t work for 21 years while bringing up your children, in theory you’d need 39 minus 21 (which works out at 18 years) of National Insurance. However, in practice you’d need to pay 20 years.
3. The rules were changed from 6th April 2002. From then, HRP could be used to build up a state second pension as well as the basic state pension if you were claiming child benefit for a child up to the age of six.
4. The rules were changed again from 6th April 2003 so that foster carers could receive HRP.
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