Parents earning £75,000 could gain £16,000 in Child Benefit payments and leave themselves £170,000 better off in retirement under new rules

by | Mar 11, 2024

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New analysis from Quilter, the financial adviser, highlights the significant impact of the Child Benefit changes in the Budget last week. A parent earning £75,000 could gain £16,000 in Child Benefit payments by increasing their pension contributions by £400 a month while also leaving them nearly £170,000 better off in retirement.

Calculations reveal that a family with two young children, where one parent earns £75,000, could increase their pension contributions from £200 to £600 per month and claim an impressive £15,931 over the 12-year period during which their children are eligible for Child Benefit payments. The long-term result would also be to increase their pension pot by £167,364 at age 68, assuming a modest growth of 2% after charges and inflation.

Under child benefit, parents receive £24 a week for one child and £15.90 for each additional child. Those amounts are due to rise to £25.60 and £16.95 a week in April.


However, the High-Income Child Benefit Charge (HICB) is calculated based on income after pension contributions. Consequently, if someone increases their pension contributions they may fall below or closer to the income threshold. This not only boots the amount of Child Benefit but also allows them to take advantage of the generous tax relief on pension contributions.

The HIBC was introduced in January 2013 and has significantly reduced the number of families in receipt of Child Benefit and has therefore been a big target for change.

Shaun Moore, tax and financial planning expert at Quilter:


“Last week’s news will be hugely popular with families where one parent is earning over £50,000. However, these parents can reap even more reward if they up their pension contributions. 

“Parents often don’t realise that they can receive much more in Child Benefit payments by upping their pension contributions while also setting themselves up for a more prosperous retirement and taking advantage of the favourable tax relief available. Although this does mean that someone has to increase how much they are saving for retirement, the benefits mean that the ultimate gain far out strips the spend.

“There is still a significant proportion of people in the UK who are not saving enough for retirement and utilising this quirk in the system could help them achieve their retirement aspirations. Everyone’s financial circumstances are different and seeking professional financial advice is always best to ensure that your whole financial life is accounted for.”


*Calculations assume someone already has a £100,000 pension pot at age 40 and already contributes £200 every month. Also assumes that the children still have 12 years of Child Benefit payments available, based approximately on the average age people have children.

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