Missing Years - Child Beneft to "wrong" partner - NI credits wasted - why no automatic reallocation?

1957DfurdPensionist

I have just read the latest MSE email reminding again about the looming 5. April 2025 Voluntary NI contribution deadline to take advantage of the doubled-down two year time period extension ...

I am gob-smacked to learn that HMRC are now prepared to backdate reallocation of Child Benefit from one partner to another so that the non-working partner at various life junctures receives NI credits for old missing years instead of the partner that was working and paying NI anyway, so didn't need the credits.

I was main breadwinner for the first part of our long 20+ year marriage, but my partner took over that position half way through and unusually the kids came along after that change.  We were divorced more than 20 years ago now, but were communicating well enough after the divorce to read about NI credits and then optimise the Child Benefit allocation which covered the last few years until our youngest was 16.  But the arrangement was not backdated - no-one ever suggested it could have been...

... Until Now!

I've paid for VC's but despite now having 43 years contributions, like so many of us courtesy of the totally blind treatment of contracting out effects, I am still not entitled to a full new State Pension!  One "reason" stated to me is that it was not worth paying for any year earlier than 2016/17.  No-one has made it clear why that should be so.

Probably the only reasonably valid assessments of contracting out effects are the cases of a few state employees within the same organisation for life. COPE simply cannot be consistently properly calculated for anyone with a typical multiple employment organisation, multiple pension scheme, multiple pension wind up and multiple pension provider takeover record.  Did you know that some of those pension providers have got away with (and with High Court approval) redesigning fund management in such ways as to directly subsidise their own employee pension schemes?  And that includes funds redirected from HMRC/IR for contracting out.  Don't get me started on who did that and when ...


Now I learn that maybe, yes maybe, I can bite my lip on contracting out and persuade HMRC to reallocate earlier years Child Benefit NI credits.

This all makes absolutely no sense to someone who went to a top university at government expense back in the 70s learning cutting edge science, mathematics and of course logical thinking, and has spawned unfortunate millennials who are even better educated and each owe the govenment large five figures lent at exhorbitant interest rates and which they will have to pay off completely well before 30 years are up and well before they can ever retire.

In recent months, I have spent many hours on the telephone to DWP and HMRC trying to optimise my pension, including paying full Class 3 VC's and then subsequently persuading them to allow Class 2.  Also persuading them to backdate the date of payment of the VC's so that it did not cost me the enhanced pension I had just purchased during the first few months (when I hadn't yet paid) of what will be an 18+ months deferred pension by the time I actually get to take it!  When I think of the horrendous telephone waiting times (over an hour to HMRC yesterday) and then the total waste of HMRC agent time arguing one aspect for improvement (e.g. VC's at Class 2 not Class 3) when another might do the same thing far more quickly (e.g. this apparently relaxed Child Benefit reallocation) I cannot help wonder how ordinary folks are being right royally shafted when all that is required is a simple computer program to run through couple's historic NI records to reallocated wasted NI credits to all non-working partners.  Or are we too aloof as a country to risk automatically backdating extra credits to skivers, burn-outs and absent parents, even if it means spending billions on handling hundreds of thousands of repeated enquiries from the likes of me?

Yes silly me.  Skivers and non-economically actives should of course suffer maximum karma in retirement, irrespective of whether they passed the old 30 year NI contribution for full state pension requirement a decade and a half before reaching age 65.

So now I have to find someone who knew us as a couple (a neighbour? which of our 6 joint marital homes would that neighbour need to be linked to - if not already dead and buried!) to write a letter "to whom it may concern at HMRC" confirming we did indeed jointly care for the children in those odd years even before the divorce. I.e. odd years where I may be missing an NI Full Year or two, but due to being in full-time work my partner isn't for those years e.g. while I was based at home starting a limited company business, but not taking a salary. Then later when we were both full-time employed and then hit by a takeover and redundancy but decided I could not be assed to rot in a Job Centre queue every two weeks until I got another job.  Just a very typical family experience.

What a complete waste of government resources this VC nonsense has been.  What a total palava.

I now live in a country where each year just living here counts towards the state pension.  No if's, no buts, no COPE, no backlogs ... no doubts about the numbers - just fully transparent fairplay.

squirrelpie

Sorry, is there a question there? (TL;DR)

Flugelhorn

squirrelpie said:

Sorry, is there a question there? (TL;DR)

that is what I was wondering - is it to with someone else deciding remotely who should get the child benefit NI credits? 

I went to uni at government expense in the 70s and was able to work out who in the house should get it just fine 

1957DfurdPensionist

Flugelhorn said:

squirrelpie said:

Sorry, is there a question there? (TL;DR)

that is what I was wondering - is it to with someone else deciding remotely who should get the child benefit NI credits? 

I went to uni at government expense in the 70s and was able to work out who in the house should get it just fine 

The question sits plainly in the title.  Wasted Child benefit NI credits could easily have been automatically reallocated , especially when the 2015 pension reforms were introduced alongside those crazy very opaque COPE justifications.  Yes, I agree hindsight is wonderful, especially when government eyes had drifted so far off the previous State Pension ball!

Foresight may have been rather more useful for the public good in this case, unless that is, the likelihood of those fast approaching retirement working out exactly where they had been short-changed by 5. April 2023 (later 5. April 2025) was thought most likely to achieve continuing long term government windfall savings (same with pension credits never being automatically offered to those who obviously qualify but too confused/too proud to claim).  Money inadvertently left on the table by large parts of the populace just gives the Chancellor more future elbow room!

Flugelhorn said:

I went to uni at government expense in the 70s and was able to work out who in the house should get it just fine 

Naturally you solicited your neighbour's approval of the Child Benefit allocation before claiming, and once you had made the decision you had no reason to alter it after later typical life events e.g. back-to-work after maternity break / unexpected redundancy events?

Flugelhorn

1957DfurdPensionist said:

Flugelhorn said:

I went to uni at government expense in the 70s and was able to work out who in the house should get it just fine 

Naturally you solicited your neighbour's approval of the Child Benefit allocation before claiming, and once you had made the decision you had no reason to alter it after later typical life events e.g. back-to-work after maternity break / unexpected redundancy events?

Simple. I had the children  got the child benefit. later DH looked after the children and we swapped so he had the child benefit. no redundancy (would have been nice but no chance in the NHS). 

1957DfurdPensionist

Flugelhorn said:

Simple. I had the children  got the child benefit. later DH looked after the children and we swapped so he had the child benefit. no redundancy (would have been nice but no chance in the NHS). 

Happy for you that the matter was relatively simple to manage, and that you are safely out the other side with NHS defined benefit pension (x2?). Full nSP despite contracting out was essentially just a bit of icing on the nhs pension cake for you guys I guess? Well done in earning a just reward for long careers in what became a difficult public service arena.

I do however think you may somehow got the wrong idea about the concept of redundancy in the private sector. I can assure you redundancy ain't "nice" - not in the private sector, anyway, and nor was the premature willy-nilly winding up of so many private sector contracted out DB pensions, including three in my case.  Who knows how on earth the contracted out parts of those has been dealt with in terms of calculating COPE decades later?