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Thousands of grandparents may be missing out on state pension uplift

Rebecca Goodman
Written By:
Rebecca Goodman

More than 150,000 grandparents who care for children aged 12 or under are missing out on a valuable state pension uplift, a new report asserts.

Those who look after young children can apply for national insurance credits, yet many who are eligible are not taking advantage of this scheme, according to data from the British investment management company St. James’s Place.

Less 9% of eligible grandparents are currently receiving the credits, it said.

Last year there were around 21,000 applications made to HM Revenue & Customs (HMRC) for what is known as Specified Adult Childcare credits. But the report states that more than 90% of eligible grandparents are failing to apply for the  credits introduced in April 2011.

Around 40% of grandparents over age 50 provide regular care for their grandchildren, according to research from Age UK.

To get a full state pension when you stop working, which is now worth £10,600 a year after an increase this week, you need 35 qualifying years on your national insurance record in many cases. To get any state pension at all you need at least 10 qualifying years.

It’s possible to boost your national insurance credits, and increase your state pension allowance, by using Specified Adult Childcare credits if you regularly provide care for a grandchild under age 12. The credits are available for grandparents, or other family members, who care for a child while the parent, or the main carer, is working.

To receive the credits, you need to make an application to HMRC. The credits work by transferring the child-benefit national insurance credit from the parent to the family member providing the care.

This could make a difference of £1,375 per year if a grandparent was able to boost their credits from 30 to 35 years.

The news comes as a recent report shows that more than half (55%) of UK adults expect the value of the state pension to fall before they retire.

‘You don’t have to sacrifice your state pension to support your family’

Claire Trott, divisional director for retirement and holistic planning at St. James’s Place, said: “The state pension is the cornerstone for many when planning for retirement, so it is crucial to make sure you have accrued enough NI credits.

“With so many grandparents helping out with childcare it’s important to remember you don’t have to sacrifice your state pension to lend a hand and support your family.

“For those who are subject to the High Income Child Benefit tax charge it can be tempting to not claim NI credits to save hassle, but for those whose parents are helping to take care of their children, it can be a great way to support them in the future.

“If you’re earning national insurance in your own right, you can pass on the credit to a parent if needed. It is a simple process, but the child benefit needs to be claimed, although a tick of a box means no payment will be made and so no tax charge will be incurred.”