Women to lose thousands from pensions as men ‘wrongly’ claim child benefit, alarming figures reveal

Exclusive: Charge on high earners imposed by David Cameron’s government backfires by leaving female partners out of pocket in old age

Thousands of pounds will be swiped from the pensions of women because their male partners are “wrongly” claiming the family’s child benefit, alarming new figures reveal.

Mothers who give up work to care for children are unaware that a surge in claims by men leaves them facing the misery of lower state payments in old age, a pensions expert is warning.

The problem – which will cost £2,500 each year, if a woman fails to claim for a decade – follows the taxing of child benefit for high earners by David Cameron’s government.

Since a charge was introduced in 2012, the proportion of new claims by men has leapt from about 16 per cent to about 20 per cent, the government figures show.

At the same time, the number of women applying to receive the help towards child costs has plummeted from around 438,000 a year to just 348,000.

Most will be unaware that, if they are not working and do not claim benefit for a child under 12, they will not receive a national insurance credit – and will lose some of their pension rights.

Steve Webb, a former Liberal Democrat minister and now director of policy at pension firm Royal London, said men paying the new charge appeared to be “insisting that child benefit be paid to them”.

“If the stay-at-home parent is not getting child benefit, then they don’t get these credits,” he warned.

“HM Revenue and Customs has admitted that this is an issue for hundreds of thousands of families, yet has failed to take action to address this issue.

“Their own data shows that a much higher proportion of child benefit recipients today are men than was the case and this is bound to mean more mothers missing out.”

Sir Steve urged the government to change the rules to ensure “the person who claims the child benefit in the first place is the one who can most benefit from it”.

Otherwise, he warned, families had to go through a complex and little-known process of transferring credits between partners, adding: “Few people take up this option.”

It’s probable that some of the increased claiming by men is the consequence of more stay-at-home dads, but that appears unlikely to provide a full explanation.

Instead, when the charge came in seven years ago – reclaiming some or all of the benefit through income tax self-assessment, for those earning £50,000 or more – many mothers stopped claiming altogether.

HMRC has admitted previously that, in up to 250,000 families, the “wrong” person – the higher earner – is claiming the benefit, currently £20.70 a week for a first child and £13.70 for additional children.

“It seems likely that some fathers have responded by insisting that child benefit be paid to them instead of their partner. If that is right, then we have a problem with women’s pensions,” Sir Steve added.

The size of the pension loss facing the women concerned will depend on how many years of missed claims, and missed national insurance credits, they incur.

Because a person requires 35 years for a full state pension, a one year loss will deduct one-35th from the annual payment of £8,767 per year – around £250, or £5,000 over a typical 20-year retirement

That rises to £1,250 each year, or £25,000 in total, if no credits are earned for five years, or £2,500 a year and a total of £50,000 if 10 years are missed.

But a Treasury spokesperson dismissed the idea that the charge on top earners had backfired on women, insisting there was simply a long-term trend towards male claims.

“HMRC has no evidence to suggest changes in the gender balance of child benefit claimants is related to the high-income child-benefit charge,” the department said.

“There has been a continuing trend of an increasing proportion of male child benefit claimants. Child benefit remains a universal benefit and can be claimed whether someone is liable for the charge or not.”

Women already face a glaring gender pension gap, receiving almost 40 per cent less than men because of low pay and career breaks, a government study calculated last year.

That divide – around £7,000 – is more than twice the much-criticised gender pay gap, when state, personal and workplace pensions are combined.