Grandparents who gave up job to look after grandkids urged to reclaim £100s
A scheme specifically designed to protect grandparents from damaging their future state pension rights when they give up work to look after their grandchildren has seen a massively underwhelming take-up rate.
The ‘Specified Adult Childcare Credit’ scheme is so little known that just 1,298 grandparents (and other family members) benefited in the year to September 2016.
According to life insurance and pensions company, Royal London, this figure is actually a smaller number than two years earlier when 1,725 were benefiting.
It estimates there are around 1.27 million working mothers with one or more child under the age of 12 relying on a grandparent to provide childcare. As such, its calculations suggest there could easily be over 100,000 grandparents of working age who could benefit by £230 a year if the scheme was more widely known.
As a result, it’s calling on the government to make these rights more widely known, particularly to new mothers, so that those who make sacrifices for the sake of their children and grandchildren do not lose out.
Our Q&A below explains more about the scheme and how much you may be able to reclaim.
What is the ‘Specified Adult Childcare Credit’ scheme?
Introduced in April 2011, it allows grandparents or other family members who have given up work to care for a child under 12 to receive National Insurance (NI) credits to help build up their entitlement to the State Pension. It also allows you to fill in any gaps in your NI record to ensure you get the full State Pension and other benefits.
You need to be a grandparent or other family member caring for a child under 12, this includes brothers, sisters, aunts and uncles. You need to be aged 16, and under state pension age when you cared for the child.
How does it work and how can I claim?
Under current rules, if a mother goes back to work after the birth of a child she can sign a form that allows a grandparent (or other family member) to receive National Insurance credits for looking after the child. A grandparent who gives up work to look after the grandchild would otherwise be losing out on valuable state pension rights. You can apply here for the Specified Adult Childcare Credits.
How much can I get?
If a working age grandparent misses out on one year of state pension rights because they are spending time with a grandchild instead of doing paid work, this would cost them 1/35th of the full rate of the state pension or £231 per year. Over a 20-year retirement this would be a loss of over £4,500, according to Royal London.
Can I back date a claim?
Yes. The scheme started from April 2011. Usually you should complete the form after the end of the tax year or years in which you want to apply for the credits, from October so that the Department for Work and Pensions (DWP) can check the NI credits. But the DWP confirmed there’s no deadline for making claims.
‘Grandparents are a lifeline to squeezed families’
Royal London director of policy Steve Webb said: “Many families rely heavily on the support provided by grandparents to enable them to combine paid work and family life. The fact there is a scheme to make sure that grandparents do not lose out, by protecting their state pension rights, is a very good thing.
“But the scheme is not much use if hardly anyone takes it up. The government needs to act quickly to alert mothers to the fact that they can sign over the National Insurance credits that they do not need”.
Dr Lucy Peake, chief executive of Grandparents Plus, said: “Grandparents play a crucial role in caring for millions of children up and down the country, and are a lifeline to families squeezed by falling incomes and rising childcare costs.
“When they give up their own jobs to help out, they shouldn’t damage their future state pension in the process, and the system for making sure grandparents are protected in this situation needs to be much better publicised. The contribution they are making within their families and to the wider economy is enormous, and it’s important that it’s recognised.”