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Grandparents providing childcare can claim credits worth £275 a year

Paloma Kubiak
Written By:
Paloma Kubiak

Family members who provide childcare for working parents can claim ‘spare’ National Insurance credits to top up their state pension by around £275 a year.

From today (1 October), those family members providing childcare in the previous tax year (2021/22) can claim credits to boost their state pension.

To be eligible for the ‘specified adult childcare credits’, parents must earn above the lower earnings limit.

However, the carer must be under state pension age as these credits count towards future retirement income. They also can’t have earned any qualifying NI credits during the time they want to claim for. Meanwhile, the child must be under 12, or 17 if they have disabilities.

It allows the working parent to essentially sign over the NI credit they get for receiving child benefit to the carer. This applies whether parents actually receive the benefit or just the credit and no money as part of the benefit.

Under the scheme, there’s no minimum hours requirement, just as long as the parent of the child confirms that care was provided by another family member who doesn’t earn their own NI credit.

Each year can add up to 1/35 of the full state pension to the carer’s final pension figure. At current rates this is around £275 per year.

But as this scheme was introduced in 2011, carers can backdate claims, meaning for first time applicants, they could gain an extra £3,000 a year to their final state pension, according to calculations by Lane, Clark and Peacock LLP.

During the Covid lockdowns, the government confirmed that family members providing remote childcare, such as over Zoom were eligible to apply for the credits during the financial years 2019/20 and 2020/21.

Steve Webb, partner at LCP and former pensions minister, said: “Informal childcare by another family member is often what enables a parent to go out to work, especially given the high cost of formal childcare.

“It is important that grandparents and other family members who provide this care do not damage their own state pension prospects as a result.  National Insurance credits help people to protect their state pension while doing valuable work such as looking after a child.

“Now that applications are open for 2021/22, I would encourage anyone who thinks they might be eligible to put in an application. They should also think about whether they might have been entitled at any point since 2011, as there is currently no deadline for backdated claims”.

You can claim the specified adult childcare credits via the government website here.