Pension: Expert gives advice on preparing for retirement
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Millions of pensioners rely on their state pension income to support them in retirement. With the cost of living continuing to rise, maximising the amount of state pension one can receive is crucial, but many people could be missing out on an extra sum.
By completing a simple check, Britons could find out if they are entitled to more state pension.
Grandparents or other relatives who provided unpaid childcare could claim additional credits to improve their state pension. Some people may be newly eligible for this boost to their state pension, while others may be able to backdate their claim as far back as 10 years.
This credit is called the Specified Adult Childcare Credit, and backdating one’s claim all the way back to 2011 could mean a windfall of £2,340.
School and nursery closures during the COVID-19 pandemic saw many more families relying on the help of relatives to provide childcare. For some, social distancing rules even meant childcare had to be provided remotely, through telephone or video call.
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The Government has confirmed that people who provided care this way will still qualify for the state pension increase, and can claim for the financial years 2019 to 2020 and 2020 to 2021 if they helped to care for a child remotely during that time.
Some 35 years of National Insurance contributions or credits are required to get the full new state pension. These are usually accumulated via paying National Insurance, or receiving credits when in receipt of certain benefits.
People who have gaps in their National Insurance record will receive less than the full state pension entitlement, and a minimum of 10 years of NI contributions or credits is required to get any state pension at all.
Specified Adult Childcare Credit is one potential way of filling these gaps at no cost, as one will receive a credit for every week or part week they provided care for a child. These credits will help to build up one’s state pension entitlement.
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People who provide free childcare for a relative to a child under 12 (or under 17 if the child is disabled) while both of their parents worked can claim the credit. The claimant must be over 16 and below state retirement age, which is currently 66 for both men and women.
The parents of the child cared for must each earn at least the equivalent of 16 hours per week paid at National Living Wage, which is currently £142.56 a week, and be entitled to Child Benefit. Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the original recipient to the family member who provided care.
If Child Benefit is not being received for the child, there is no NI credit to transfer and therefore no Specified Adult Care Credit to be received.
Claimants must be ordinarily a resident in the United Kingdom, i.e., England, Scotland, Wales or Northern Ireland. This does not include the Channel Islands or the Isle of Man.
People who already have a qualifying year of National Insurance – which would normally be because they work or receive other NI credits – should not apply. People wanting to check whether there are gaps in their National Insurance record can do so online.
The recipients of Child Benefit for the child should not apply for Specified Adult Childcare credits themselves, as they already get credits through Child Benefit. People who are the partner of, or live with, a Child Benefit recipient and are looking to transfer the credits from their spouse or partner to themselves should also not apply.
Since Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to a specified adult, there is only one credit available for each Child Benefit recipient helped by a relative, not for each under 12 cared for.
As an example, if two grandparents cared for their daughter’s two children, only one credit is available for transfer, and the Child Benefit recipient must decide who should get it. However, if two grandparents are caring for their daughter’s child and their son’s child, there are likely to be two credits available.
The application requires the personal details of the applicant, which is the family member providing free care for the child, personal details of the child’s parent or main carer (the Child Benefit recipient), the child’s details and the periods of care.
The parent or main carer of the child must also agree to the application by countersigning the form, confirming that their relative did indeed provide unpaid care for their child for the period stated and agreeing that they can receive the NI credit for that period.
Claiming the Specified Adult Childcare Credit does not affect the parents’ eligibility for other free childcare benefits.
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