Pensions - Articles - State pension top up for looking after your grandchildren

New figures revealed to insurer Royal London under the Freedom of Information Act show that more than 10,000 grandparents and other family members received help with their state pension in 2017/18 for looking after grandchildren. This represents a sevenfold increase on two years ago. But Royal London estimates that lack of awareness of this scheme means that many hundreds of thousands more family carers are still missing out on help.

 Under a government scheme, a family member who is looking after a child under 12 while the child’s parents are out at work can benefit from a National Insurance credit. The parent (who has gone back to work) is likely to be paying NI in their own right and so no longer needs the NI credit that comes with receipt of child benefit. They can sign this over to the family member who is looking after their child, at no cost to themselves.

 Such credits are added to the National Insurance record of the grandparent (if they are still under state pension age) and help them to build up a full state pension.

 In 2015/16 a Freedom of Information request by Royal London revealed that just 1,298 grandparents and other family members were benefiting from the scheme. Following a burst of publicity, the number claiming rose to 10,084 by 2017/18, according to a new FOI response. But this is still thought to be a small fraction of all the people who could benefit.

 The numbers who are missing out are not known precisely, but according to research by charity Grandparents Plus, around two thirds of all grandparents report that they spend time looking after grandchildren. Given that there are more than 7 million grandparents in Britain (of all ages) with grandchildren under 16, it is hard to believe that the 10,084 who claim NI credits is more than a small fraction of those who are entitled.

 Commenting, Steve Webb, Director of Policy at Royal London, who tabled the FOI, said: “Whilst it is great news that thousands more grandparents are now benefiting from this scheme, the numbers are still a drop in the ocean out of all those who could benefit. It is increasingly common for grandparents to spend some time each week looking after their grandchildren, often to enable a parent to go out to work. It would be quite wrong if these grandparents suffered financially in terms of their own state pension as a result. This scheme needs to be much better publicised and I would encourage any family with a grandparent under pension age who helps out with the childcare to find out more”.

 These credits can be of considerable value to someone who would not otherwise build up a full state pension. One year of credits can be worth 1/35 of a full pension (because 35 years of contributions are needed for the full rate). The full state pension is currently £8,767 per year, and 1/35 of this is around £250. This means that someone who claims these credits for a year could get an extra £250 on their pension, or around £5,000 in total over the course of a typical twenty year retirement.

 Useful information:
 - The scheme is known as the ‘specified adult childcare credit’ (this is because other family members such as aunts and uncles can also apply, not just grandparents);
 - Under the scheme, the child benefit recipient can sign to indicate that she (or he) no longer wishes to benefit from the NI credit that comes with the child benefit; this might be because they are out at work and paying NICs in any case, so do not benefit from the credit;
 - There is no minimum hours requirement, and claims can be backdated to when the scheme was first introduced in 2011;
 - More information can be found at:  

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