The Department for Work and Pensions (DWP) is urging grandparents to check their eligibility for Specified Adult Childcare credits, as many could be missing out on up to £11,000 in state pension benefits.
The warning follows recent research by SunLife, which revealed that 59 per cent of grandparents provide regular childcare for their grandchildren, dedicating an average of 18 hours per week to this unpaid service.
The study found that their efforts are saving families an estimated £89.8billion annually in childcare costs.
Despite the significant financial impact of their support, many grandparents are unaware that they may be entitled to National Insurance credits through the childcare which could substantially boost their state pension by £11,000.
Mark Screeton, CEO at SunLife, emphasised the significance of this contribution stating: “Our research shows that grandparents are saving their grandchildren’s parents more than £200 on average in childcare costs during the working week, in addition to savings on food, transport, and other expenses.
“This amounts to an overall saving of around £13,500 a year, which is a significant amount.”
The study also found that if grandparents were paid for their 18.5 hours of weekly childcare, they would earn an annual salary of £10,945 – nearly equivalent to the state pension.
While most grandparents are happy to offer their services for free, the financial impact can be significant. Around 83 per cent of grandparents spend their own money whilst caring for grandchildren, up from 81 per cent last year.
On average, they spend £50 per week on food, transport, and activities, amounting to over £2,600 annually.
For some of these grandparents, the additional expense “is a struggle,” so it may be more important than ever to check if they they are eligible for extra credits.
Who is eligible?
Grandparents who have cared for a child under 12 since April 6, 2011, may be eligible, provided the child’s parent or guardian receives Child Benefit and agrees to transfer their credits.
Who can apply for Specified Adult Childcare credits?
Britons can apply as long as:
- they are an eligible family member, who provided care for a child
aged under 12 - they were aged 16 years and over, but under state pension age, when they provided care for the child
- they are ordinarily resident in the UK, but not the Channel Islands or the
Isle of Man - the child’s parent or main carer has claimed Child Benefit, but does not need the credits themselves
- the child’s parent or main carer agrees to their application
An eligible family member includes the mother or father who does not live with the child, a grandparent, great-grandparent or great-great-grandparent, aunt or uncle, and a brother or sister.
Even if parents decline Child Benefit payments due to the High Income Child Benefit tax charge, they can still receive NI credits and transfer them to grandparents who can use this to boost their state pension entitlement to receive the full amount.
Those who are unsure about their state pension entitlement can take a state pension forecast. This online service can tell people how much state pension they could be entitled to, when they can claim it and how to increase the amount if they can.
The amount one can get is based on an estimate of what their National Insurance record could be when they reach state pension age.
To receive the full state pension, individuals need a certain number of qualifying National Insurance years, typically earned through work. However, credits can be earned in cases where people cannot work due to caregiving responsibilities or disabilities. While many people receive these credits automatically, some must actively claim them.
Under new state pension rules, individuals need at least 10 qualifying years on their national insurance record to receive any pension, with around 35 years required for the full new state pension and 30 years for the full basic state pension.
St. James’s Place estimates that boosting qualifying years from 30 to 35 could mean an additional £1,375 per year in retirement income.
With over 150,000 grandparents potentially missing out, checking eligibility is crucial. To claim Specified Adult Childcare credits, grandparents can visit the Government website for detailed information.
Claire Trott, divisional director at St. James’s Place said: “You don’t have to sacrifice your state pension to help with childcare. 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.”
