Monday, 15 November 2010

Child Benefit cut set to hit mums’ pension entitlements

Last month I raised the issue of state pension entitlement for women who will lose Child benefit under cuts announced by the Chancellor at the Tory Party Conference in Birmingham.

Described by the Conservative Leader of the House, Sir George Young MP as a ‘legitimate point’ (Hansard: Thurs, 14th Oct Col 498), I unearthed a potential disastrous consequence, of the Chancellor’s announcement, for the state pension entitlements of mums who stay at home to raise their children.

New rules implemented in the current tax year 2010/11 will mean that parents are able to build up qualifying years through new weekly credits for the basic State Pension and additional State Pension.

If you are a parent (or carer), you will get a credit for each week in which you:

• are getting Child Benefit for children aged under 12
• are an approved foster carer
• are caring for at least 20 hours a week for people who are getting Attendance Allowance, the middle-rate or highest-rate care component of Disability Living Allowance, or Constant Attendance Allowance, or the need for care has been certified
• There will be no limit to the credits awarded to parents and carers after April 2010, as long as you meet the qualifying rules.

If you reach State Pension age on or after 6 April 2010, complete tax years of Home Responsibilities Protection that have already built up before 2010 have been converted into qualifying years up to a maximum of 22 years. These qualifying years will also count towards bereavement benefits.

The Chancellor, in withdrawing Child benefit cash from higher rate tax earner households will hit mums across Makerfield who stay at home as it would appear, based on the new rules, that they will lose entitlement to credits towards their state pension as a result.

At present mums with children under 12 years of age can build up credits towards their state pension by virtue of the fact that they receive Child benefit. The change announced at the Tory conference would stop credits being awarded to those mums.

As was reported at the time, this is an ill thought out change to the benefit system announced in a rush without due consideration to the ‘knock on’ effects to parents who will now face a double whammy of losing their child benefit and seeing their state pension entitlement eroded.