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Thousands missing out on this pension boost

John Fitzsimons
Written By:
John Fitzsimons

Just one in five people eligible for a carer’s credit are claiming them, potentially damaging their income in retirement.

That’s according to new research from financial advisers Quilter, which tabled a Freedom of Information request to establish the number of people claiming the credit last year.

Across 2020 just 5,209 people claimed carer’s credit, which is down by 20% on the previous year. But it’s also just a fraction of the number of people who are eligible for the credit, which could boost their eventual income once they pass retirement age.

What is carer’s credit?

Carer’s credit was introduced more than a decade ago, and is designed to offer support to people who care for a loved one but who do not qualify for carer’s allowance.

It is effectively a National Insurance credit, and you can claim it if you care for someone for at least 20 hours a week.

Each credit counts as a year’s National Insurance contribution, and as your state pension entitlement comes down to your record of contributions, it can be a big deal.

For each year missing on your contribution record, you lose 1/35th of the state pension. As Quilter points out, that works out at around £260 per year, o £5,200 over the course of a two-decade retirement.

There is information about eligibility for carer’s credit, as well as the form you need to fill in to claim the credit, on the website.

How many people are claiming the credit?

Back in 2015, the Department for Work & Pensions suggested that around 200,000 carers are eligible for the credit, many of whom are women. It’s believed that this figure will only have increased in the six years since.

Yet a paltry fraction of those eligible have actually claimed the credit.

The table below details how many people have claimed the credit each year since it was introduced in 2010.

Year Number of claims
2010 956
2011 1,458
2012 1,690
2013 2,626
2014 2,516
2015 3,349
2016 4,037
2017 5,121
2018 6,067
2019 6,489
2020 5,209

On the plus side, up until last year there was a steady increase in the number of people claiming these credits and improving their financial position in retirement. Yet there’s no avoiding the fact that thousands of people who qualify for these credits are not claiming them currently.

In total, 40,000 different carers have claimed the credits, which as Quilter points out represents just a fifth of those likely to be eligible.

Olivia Kennedy, financial planner at Quilter, said that over the last year it was inevitable that there will have been a “dramatic increase in the already sizeable unpaid carer population”, but warned that often these people do not even recognise themselves as carers and so may not think about the financial support available to them.

She added: An update on the elusive Social Care White Paper is anticipated in the upcoming Queen’s Speech. This long-awaited policy reform needs to take into account the substantial work unpaid carers do and ensure they are getting all the resources and support they deserve as a result.”