Thousands of grandparents helping out with childcare could lose out when they reach retirement age.
Around 100,000 people are thought be be eligible to claim so-called grandparent's credit - but only around 19,000 have done so, meaning around 80% of people are missing out.
And new claimants can back-date their claim right back to when it was introduced in 2011 - meaning it could add £2340 to your pension pot.
Read more: National Insurance changes: How much can you earn before you lose out?
The credit is paid into your state pension for when you retire - it's not paid as cash - but it could make the difference between getting your full pension or not. Here we explain how the credit works and how you can claim it.
What is the grandparent's credit?
Grandparents' credit is just one element of Specified Adult Childcare credits which covers anyone looking after a child who's related to them, full time. It helps to make sure you don't lose out on your state pension at retirement if you are not working and look after young family members
There are concerns that grandparents who give up their job to look after their grandchild could be losing out on their state pension rights and this credit means the person can continue to build up their National Insurance Contributions as they look after the child.
How does it work?
It works by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to a family member who is providing care for a related child under 12, or 17 if they have disabilities. The working parent signs a form that allows a grandparent, or other family member, to receive National Insurance (NI) credits for looking after the child.
This ensures any gaps in their National Insurance record is covered, which boosts their chances of getting the full state pension ( £185.15 a week or £9,628/year from April 6).
Who can claim it?
Those eligible to claim must be over 16 and below the state pension age (when they cared for the child).
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Mother or father who doesn't live with the child
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Grandparent, great-grandparent or great-great-grandparent
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Brother or sister
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Aunt or uncle
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Husband or wife or former husband or wife
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Civil partner or former civil partner
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Partner or former partner
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Son or daughter / half-brother or half-sister or step/adopted sibling
Anything else I need to know?
You can apply for Specified Adult Childcare credits if:
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You looked after a child aa stated above
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You are ordinarily resident in the United Kingdom
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The child’s parent (or main carer) is entitled to Child Benefit and has a qualifying year for National Insurance without needing the parent’s class 3 NI credits which they receive automatically from Child Benefit (they can check their National Insurance record online here to see if they have any gaps in contributions
The child’s parent (or main carer) must agree to your application by countersigning the form to confirm that:
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You cared for their child for the period stated
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You can have the Class 3 NI credit for the period stated
How much will I get?
These credits can be backdated until 6 April 2011 and the Government encourages everyone who is eligible to apply. According to Royal London, if you miss a year of NI contributions and don't make it up, you'll lose 1/35th of the full rate state pension. That's equivalent to £5.20 a week or £275.08 a year from next week..
Those who have been providing childcare in earlier years can backdate their claim to the point at which the scheme started i.e. in 2011. This could mean claiming up to nine years’ credits, currently worth £2,340 of annual State Pension.
I've already retired - can I claim it?
You can claim for the years you looked after your grandchildren full-time prior to your retirement.
I looked after my grandchildren remotely to let their parents work during lockdown. Can I still claim?
Family members who provided free childcare in person, over the phone or by video call over the last year during the pandemic and subsequent lockdowns can apply. When the first lockdown began in March 2020, normal caring arrangements were affected by restrictions imposed across the country, but if you provided care in a different way, you can still apply for NI credits for the financial years 2019 to 2020 and 2020 to 2021.
I used to look after my grandchildren when they were younger. Can I still claim?
Yes, you can claim for the years you looked after your grandchildren full-time.
I am working part-time. Can I claim?
No. You won't be able to claim if you have already qualified for National Insurance for that year (ie if you have been in employment or claim another form of NI credits).
Is there any exceptions to who can claim?
If no-one has claimed Child Benefit for the child there is no attached NI credit to transfer and Specified Adult Care credits cannot be awarded.
Why should I claim it?
To qualify in full for the state pension, retirees need to have accumulated 35 years' worth of National Insurance Contributions (NICs) - which are credits built up for each year they're in work. However, giving up employment early could mean many don't reach the necessary amount.
Kay Ingram, former Director of Public Policy at national financial planning group LEBC said: “Each credit currently buys £250 of annual State Pension, payable for life from State Pension age.
“Those carers not paying National Insurance themselves can claim these valuable top-ups to their State Pension. Many older women have less than the 35 years of NI credits from their own working life, which contributes to the Gender Pension Gap which means those supporting younger generations by providing free childcare can improve their retirement prospects.”
When can I apply?
Applications for a particular tax year cannot be accepted until the following October at the earliest, which means for the tax year 2021 to 2022 applications will open in October 2022 and for 2022 to 2023, in October 2023. If you have been providing childcare, it's crucial that you take note of when and how you did so, this will help make the application process much simpler and quicker to complete.
How do I apply?
To apply for Specified Adult Childcare credits you will need to complete an online interactive application form.
The application requires the:
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Personal details of the applicant – the family member caring for the child
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Child’s details and the periods of care
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Personal details of the child’s parent (or main carer) – the Child Benefit recipient
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Applicant and the parent must both sign their declarations on the application
