How grandparents could boost their state pension by up to £7,000
Grandparents looking after their grandchildren could be missing out on as much £7,000 towards their state pensions. Here’s how to clock up National Insurance credits while providing daycare.
Thousands of grandparents taking on childcare responsibilities for children under 12 could be entitled to National Insurance credits which could boost their state pension by as much as £7,000.
Around 26% of children aged zero to four receive childcare from a grandparent, according to the latest data from the Department for Education.
More than a fifth of kids aged five to seven receive care and 15% of children aged eight to 11.
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However, many of these grandparents are likely missing out on Specified Adult Childcare Credits (SACCs), which top up NI records and boost state pension payments.
New Freedom of Information figures from wealth manager Quilter reveal there have been nearly 160,000 successful claims for SACCs since 2015. But this means there are likely thousands of grandparents eligible for the credits who have yet to put in a claim.
“If you’re a grandparent who is no longer working and think you may have gaps in your NI record, then making sure you claim yours could mean a bigger state pension,” Kalpana Fitzpatrick, digital editor-in-chief at MoneyWeek said.
“Most people need 35 years’ NI credits – if you do not have this, then applying for SACCs is one way to boost your record. If a parent has returned to work and no longer needs the credits, then this can be passed to grandparents involved in childcare.”
What are Specified Adult Childcare Credits?
Launched in 2011, Specified Adult Childcare Credits let a parent receiving Child Benefit transfer the NI credit to an eligible family member such as a grandparent.
It is a useful way to ensure the NI credit you can get from Child Benefit for a child under 12 isn’t wasted if you are working and already paying enough National Insurance contributions towards your own state pension.
The credit can be transferred to a family member who is, say, looking after a baby or toddler while the parent works (saving on nursery fees), or for looking after a youngster during the school holidays.
This can in turn help the family member to boost their NI record and state pension.
There is eligibility criteria to meet if you want an application for SACCs to be successful though.
The benefit can only be claimed for a child up to the age of 12, by an eligible family member. An eligible family member is defined as a:
- mother or father who does not live with the child
- grandparent, great-grandparent or great-great-grandparent
- aunt or uncle
- brother or sister (including a half-brother or half-sister, a step-brother or step-sister, or an adopted brother or an adopted sister)
You can also qualify as an eligible family member if you are either the:
- Current or previous spouse, partner or civil partner of anyone in the list above
- Son or daughter of the current or previous spouse, partner or civil partner of anyone in the list
You can apply for Specified Adult Childcare Credits as long as:
- You are an eligible family member, who provided care for a child under 12
- You were aged 16 years or over, but under state pension age, when you cared for the child
- You are ordinarily resident in the UK, but not the Channel Islands or the
Isle of Man - The child’s parent or main carer has claimed Child Benefit and doesn’t need the National Insurance credits themselves
- The child’s parent or main carer agrees to your application
The child’s parent or main carer will need to countersign the form, confirming they agree that, for the specified period, you provided care for their child, and they’re happy you can have the credits.
How Specified Adult Childcare Credits can boost your state pension
You need 35 years of NI contributions to receive a full new state pension, and at least 10 years to qualify for any new state pension.
If you’ve checked your NI record and you’re not in line for the amount you want, SACCs can give you a boost.
Each year of transferred credit is currently worth an extra £350 per year, meaning a claim could boost someone’s retirement income by more than £7,000 over the course of a typical retirement, according to calculations done by Quilter.
There is no minimum requirement for the number of hours of childcare provided. Even if you’re providing care one day a week, you could be eligible.
However, there is just one credit available per Child Benefit claim, no matter how many children are on the claim.
For example, if two grandparents provided care for their daughter’s two children, there is only one credit available for transfer.
But, if they provided care for both their daughter’s child and their son’s child, there will be two Child Benefit recipients, and therefore two credits that can be transferred.
How to apply for Specified Adult Childcare Credits
To transfer the National Insurance credit, Child Benefit must have been claimed. Otherwise, credits cannot be awarded.
The credits are available for transfer only if the grandparent is under the state pension age, currently 66 years old, but claims can be backdated to 6 April 2011.
Applications for a specific tax year can only be submitted after 31 October of the following tax year.
To apply, complete the form CA9176 on gov.uk, then print and post it to HMRC. The government recommends you “get all of your information together before you start” as the form is completed online and you can’t press save.
