State pension: Grandparents could boost sum by £3,000

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Families looking to cut expensive childcare costs during the cost of living crisis are turning to relatives for help, however, many grandparents don’t realise they can be financially compensated for their time.

If before reaching state pension age, an individual care for a young family member while the child’s parents were at work, there’s a “little-known credit” that could boost their state pension by £1,000s.

These credits work by filling in gaps you may have in your national insurance record, which is what dictates your state pension amount.

Research from Age UK has shown five million grandparents have provided regular childcare for their grandchildren at some point so they could benefit from these credits.

Under the ‘Specified Adult Childcare Credit’ scheme, a parent on Child Benefit for a child under 12 who goes to work can sign over the National Insurance credit they get for being on child benefit to another family member.

Specified Adult Childcare credits will help build up one’s National Insurance contributions.

This means claimants will receive a Class 3 NI credits for each week or part week they cared for the child (Class 3 NI credits help to build entitlement to the state pension and, until April 2017, certain bereavement benefits).

It can also help stop gaps in one’s National Insurance record.

On the Government website it states that people can apply for Specified Adult Childcare credits if:

  • They are a grandparent, or other family member caring for a child under 12
  • They were over 16, and under state pension age when they cared for the child
  • They are ordinarily resident in the United Kingdom, meaning England, Scotland, Wales and Northern Ireland, but not the Channel Islands or the Isle of Man
  • The child’s parent (or main carer) is entitled to Child Benefit and has a qualifying year for National Insurance without needing the parent’s class 3 NI credits which they receive automatically from Child Benefit (they can check their National Insurance record online to see if they have any gaps in contributions)
  • The child’s parent (or main carer) agrees to their application by countersigning the form to confirm that:
  • They cared for their child for the period stated
  • They can have the Class 3 NI credit for the period stated.

Specified Adult Childcare credits can be awarded retrospectively, to April 6, 2011 at the earliest.

If someone had been providing childcare every year since 2011/12, and now put in a claim for all years from 2011/12 until 2021/22, this would be eleven years of credits and could add just over £3,000 per year.

There is no minimum hours requirement in place, as long as the parent of the child confirms care was provided by another family member – such as the grandparent.

As a result, even a grandparent who drops the child off at school, or picks them up at the end of the day could benefit.

Grandparents who provided care over the internet during lockdown could even qualify, as Government rules were relaxed during this period.

It must be noted these National Insurance credits only count towards future state pension entitlement.

If people are already on track to get the full state pension, or are receiving a full state pension already, adding extra childcare credits won’t boost it beyond the maximum.

The first thing people can do before claiming the extra childcare credits is checking their state pension entitlement.

Britons aged between 45 and 70 may find that buying extra NI years is the best way to boost their state pension.

People can check their state pension entitlement by using the state pension forecast calculator on the Government website.

The full new state pension is £185.15 per week, but some may get less than this if they were contracted out before April 6, 2016.

The full basic state pension, for older retirees, is currently £141.85 per week, but both old and new state pension will be boosted by 10.1 percent from April 2023 onwards.

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