Grandparents who regularly look after their grandchildren could be missing out on up to £7,170 in extra State Pension, a benefit that remains widely underclaimed. The revelation comes as the new Prime Minister, Andy Burnham, has pledged to ease the cost-of-living crisis, but many families are unaware of the financial support available through the Specified Adult Childcare Credits scheme.
How the State Pension boost works
The amount of State Pension you receive depends on your National Insurance (NI) record, which is built from 'qualifying years'. If you have gaps in your NI record, you may be able to claim credits that count towards your pension. One lesser-known route is for grandparents who care for a child under the age of 12 while the parents work. This allows the NI credits that would normally go to a non-working parent to be transferred to the grandparent instead.
To qualify, the grandparent must be under State Pension age and the parent must be working and have a valid Child Benefit claim. The scheme is designed to recognise the vital childcare provided by extended family members, but many eligible grandparents are missing out simply because they don't know it exists.
Research reveals the scale of the issue
Data from Confused.com shows that grandparents look after their grandchildren for an average of two days per week, with nearly three in ten (29%) providing care for at least three days weekly. Despite this, 62% of grandparents provide that care for free, potentially missing out on thousands of pounds in pension credits.
HMRC figures reveal that in 2023/24, only 42,964 applications for Specified Adult Childcare Credits were made, with around four in five being approved. This suggests that many eligible grandparents are not claiming the benefit, leaving money on the table.
Impact on pension income
For those who are short of the full State Pension, these credits can make a significant difference. One grandparent, Mick, told Money Saving Expert: "My wife retired five years early to help with our young grandchildren. She was four years short of full state pension. We will now save £3,000 from not having to buy the missing years."
Another grandparent shared: "Following your advice, I claimed NI credits as a grandparent for looking after our grandchildren after I'd retired from work. The application was easy and although it took around 25 weeks to process, I was given four years' worth of NI credits, and my new State Pension will rise from around £173/wk to £221/wk, giving an additional £2,496 per year. I wouldn't have known about this without you and the team."
Burnham's promise to pensioners
The news comes as Andy Burnham becomes Prime Minister, vowing to help with the cost of living. He has promised to keep the triple lock and protect state pensioners from HMRC income tax bills, as the State Pension nears the £12,570 personal allowance. This could mean that pensioners may soon face tax on their State Pension, making it even more important to maximise their income.
With the average parent spending £339 per child on childcare during the six-week summer holidays, and one in five expecting costs to exceed £500, many families will rely on grandparents for help. But grandparents should be aware that they may be entitled to claim these credits, which could boost their retirement income.
How to apply
The application process for Specified Adult Childcare Credits is relatively straightforward. You need to fill in a form (CA9176) and send it to HMRC, along with the necessary details. The credits are then applied to your NI record, potentially increasing your State Pension.
Clara Evans, Personal Finance Editor at Confused.com, said: "Grandparents are quietly providing an enormous amount of childcare for families across the UK, helping parents stay in work while saving them hundreds or even thousands of pounds in childcare costs each year. But our research suggests many families are missing out on a valuable pension benefit simply because they don't know it exists."
She added: "If an eligible grandparent is looking after children while the parents are working, it's worth checking whether they could claim the Specified Adult Childcare Credit. The application is relatively straightforward, and for people who have gaps in their National Insurance record, these credits could make a meaningful difference to their State Pension in retirement."
With the potential to gain up to £7,170 in extra pension, it's a benefit that should not be ignored. Grandparents who provide regular childcare should check their eligibility and consider applying to secure their financial future in retirement.
