Stay at home mums could lose out on pensions

Research commissioned by the TUC estimates that more than 350,000 stay-at-home mothers will face cuts to their state pensions because of their link to child benefit, which is being withdrawn from families with at least one higher rate taxpayer next year.

The figures prompted campaigners to call for the Chancellor to abandon the changes to child benefit, despite the Treasury insisting that National Insurance credits for state pension entitlement would not be affected.

Fears have been raised that the cuts to child benefit will have a knock-on effect on womens’ pensions, which are calculated on the basis of National Insurance contributions.

Contributions over 30 years are needed to get a full state pension. Currently full-time mothers receive National Insurance credits towards their state pension, in recognition of their responsibilities to care for children under the age of 12. 

If women lose their National Insurance credits along with their child benefit in January next year, their state pension contributions could also be affected.

According to the economist Howard Reed, who was commissioned to assess the impact of the reforms by the TUC, an estimated 351,000 full time parents or those on low wages will lose up to 12 years’ worth of state pension contributions.

From January 2013, anyone living in a household where someone earns more than £43,000 will be barred from receiving child benefit. Campaigners have said that a typical family with two children will be £1,700 worse off as a result.

General secretary of the TUC Brendan Barber, said that child benefit recognised the contribution that full time parents make to society.

“Scrapping it would be deeply unfair,” he said. “The Chancellor has managed to create a broad coalition of opponents to his child benefit cut.

“He must put fairness before political pride and use next week’s Budget to reverse his badly thought out scrapping of child benefit for higher rate taxpayers.”

Alison Garnham, the chief executive of the Child Poverty Action Group, said:

“The child benefit plans now look like another strike on womens’ financial security, which brings with it greater risks for children too.

“The Chancellor needs to scrap the child benefit cut and find a much fairer way of ensuring that all higher rate taxpayers are contributing their fair share to reducing the deficit, not just families with children.

“Women are already disadvantaged enough under the current pension system, and they are already targeted far too much by the cuts.”

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