Will child benefit axe hit women's pensions?

Dan Hyde, This is Money's pensions correspondent, replies: Currently, mums looking after children full-time qualify for 'childcare pension credits' every time they claim child benefit. These credits build up their entitlement to the state pension.

So one week of child benefit also qualifies the claimant for a week of National Insurance contribution towards the state pension.

But with the Government scrapping child benefit for higher earners, experts fear that stay-at-home mums could lost out when they get to retirement.

That's because you to have worked for 30 'qualifying years', making full National Insurance payments along the way, to get the maximum basic state pension. Currently, that's £97.65 a week.

However, just 30% of women who in retirement today get the full amount, with many receiving less because they took career breaks to look after their children, thus sacrificing 'qualifying years'.

To combat this perceived injustice, the Government introduced a credit system last April. It was designed to stop women being penalised if they chose to be stay-at-home mums by using the credits accrued as substitutes for qualifying years. So even if a mother had spent 20 years at work and 20 raising children, she could get the full basic state entitlement.

And the child benefit changes?

Here's the catch with the Government's new proposals. A portion of the childcare pension credits are linked to child benefit claims. In theory: if you cease to claim child benefit, you no longer get the credits. This was reported by TheTimes.co.uk.

It means that if the Government presses ahead and withdraws all child benefit to families where one parent or more is a higher rate taxpayer earning over £43,875, it will be harder for their partners to build up state pension entitlement and some may no longer qualify for the full amount at retirement.

Is it really going to happen?

The Government will almost certainly need to find a way around this problem. It would be criminal to let stay-at-home mums lose out like this - particularly after the positive reforms last April.

And sure enough, after concerns were voiced yesterday the Department for Work and Pensions and the Treasury moved to reassure mums that no one will lose out.

Once again, this is an example of how poorly thought-out George Osborne's child benefit changes seem to be.

The child benefit changes have already been labeled 'brutally simple' because families with an annual income of nearly £88,000 could still claim child benefit, if neither income exceeds £44,000, but a family with one earner on £45,000 will have it removed.

Being forced to fiddle around with a loophole that stops women from building up retirement entitlements is another embarrassment for the Chancellor, George Osborne, as he attempts to make swingeing cuts to Britain's public spending.

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