Grandparents who regularly help care for their grandchildren could be missing out on thousands of pounds in extra State Pension payments, thanks to a little-known scheme run by HMRC. Older family members who look after children under the age of 12, whether during term time or school holidays, may be able to boost their State Pension through Specified Adult Childcare credits.
How the scheme works
The scheme allows eligible carers to receive National Insurance credits, which can increase their pension entitlement over time. Each additional year of credits is currently worth around £303, meaning some people could boost their income by more than £6,000 over a typical 20-year retirement. Specified Adult Childcare credits work by transferring National Insurance credits linked to Child Benefit from the parent or main carer to a family member who provides childcare. This applies where the parent does not need the credits themselves, usually because they are already working and building up their own National Insurance record.
Key rules and limits
Only one credit can be transferred per Child Benefit claim, regardless of how many children are included. This means families may need to decide which relative should receive the credit if more than one person provides care. However, where children are covered by separate Child Benefit claims, for example if grandparents help care for grandchildren from different families, more than one credit could be available. If no Child Benefit claim is in place, there are no credits available to transfer.
Backdating and pandemic rules
Claims for Specified Adult Childcare credits can be backdated as far as April 6, 2011, potentially allowing eligible grandparents to fill gaps in their National Insurance record. Special rules were also introduced during the Covid-19 pandemic. Guidance on GOV.UK states that people may still qualify for credits if they provided childcare remotely, such as via phone calls or video, during lockdown periods in the 2019/20 and 2020/21 tax years.
State Pension amounts
The full New State Pension is currently worth £241.30 a week, or £12,547 a year. Most people need around 35 years of National Insurance contributions to receive the full amount, while at least 10 years is required to qualify for any payment. Some people may have been ‘contracted out’ and will need more than 35 years.
Who can apply
You may be eligible if you provided care for a child under 12 (or under 17 if disabled), were over 16 and below State Pension age at the time, live in the UK (excluding the Channel Islands and Isle of Man), and have agreement from the child’s parent or main carer, who must sign the form. Eligible family members include grandparents, great-grandparents, siblings, aunts and uncles, as well as certain step-relatives and partners.
Who should not apply
You should not apply if, for the same period, you already have a qualifying National Insurance year through work or other credits, or are receiving Child Benefit yourself and already get credits automatically. Those living with a Child Benefit claimant who want to transfer credits to themselves may need to complete a different form.
When and how to apply
Applications can only be made after October 31, following the end of the tax year you are claiming for. Claims can currently be submitted for years from 2011/12 through to 2024/25. You will need your personal details as the carer, details of the child and when you provided care, and details of the child’s parent or main carer (the Child Benefit recipient). Both you and the Child Benefit claimant must sign the application to confirm the arrangement. Parents are also advised to check their National Insurance record before applying to make sure there are credits available to transfer. Full details on eligibility and how to apply are available on the GOV.UK website.
