State pension alert: Thousands at risk of ‘wasting money’ on National Insurance contributions as new credits announced

The Government announced plans to introduce new state pension credits for those who missed out due to the High Income Child Benefit Charge.

With the deadline looming for filling historic NI gaps, experts are warning that many parents could soon receive the same credits for free.

Steve Webb, former Pensions Minister and now a partner at LCP, has urged parents to think carefully before making voluntary contributions, warning that some could be throwing money away.

He said: “It is good news that the Government has now confirmed it will press ahead with plans to create a new category of NI credits for parents who opted out of Child Benefit because of the High Income charge.

“But it also means that parents who were thinking of paying voluntary NI contributions before the April 5 deadline might need to think again, as they are at risk of wasting their money.”

The issue stems from changes made in 2013, when then-Chancellor George Osborne introduced the High Income Child Benefit Charge.

The charge meant that parents earning over £50,000 had to pay back some or all of their Child Benefit through an additional tax bill, leading hundreds of thousands of families to opt out of claiming the benefit altogether.

However, many parents were unaware that Child Benefit claims automatically provide NI credits towards the state pension for the lower-earning parent, typically the mother.

By not claiming Child Benefit, parents were also unknowingly creating gaps in their NI record, potentially leaving them short of the 35 qualifying years needed for a full state pension.

Although the Government had previously suggested that parents could apply for “credits only” without receiving the Child Benefit payments, many missed this option.

Child Benefit claims automatically provide NI credits towards the state pension

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As a result, thousands now face paying voluntary contributions to plug the gaps in their NI record.

But with the Government confirming it will introduce a new category of credits from 2026 to fix this issue, some parents could be paying unnecessarily.

The Government has yet to confirm full details of who will qualify for the new NI credits and for which years, leaving some uncertainty for those who have already paid. Webb has called on the government to clarify the situation as soon as possible.

Webb added: “It would be helpful if the Government set out—as a matter of urgency—precisely who will be entitled to these new credits so that parents know whether or not there is any point making voluntary contributions for these years.”

While the new credits will be welcome relief for those who missed out, the delay in introducing them has left many parents in limbo.

Thousands risk ‘wasting money’ on National Insurance contributions

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Some will have already paid voluntary NI contributions that could soon be unnecessary, with no clear indication yet on whether they will be refunded.

Others may be at risk of missing the deadline to top up their records if they are later deemed ineligible for the free credits.

Parents who opted out of Child Benefit in recent years due to the High Income Charge are now being urged to check their NI record before making any payments.

If they already have 35 years of contributions, topping up may not be necessary. If they are short, they should wait for further government guidance before paying, to avoid losing money on unnecessary contributions.

With just weeks to go before the April deadline, time is running out for parents to make an informed decision about their NI record.

While the new credits could offer a lifeline for thousands, the lack of clarity means some parents are still at risk of paying for something they may get for free.