Thousands of grandparents missing out on £244 a year – how to claim it back
Thousands of people who are helping to bring up their grandchildren could be missing out on valuable credits which would help to build up their pension, research has found.
More than 19,000 grandparents have made use of the childcare national insurance credit, which was introduced by the coalition government in April 2011, minister for pensions and financial inclusion, Guy Opperman, said.
However an estimated 100,000 people qualify for it – which means 80% of grandparents are still missing out.
To qualify in full for the new state pension , retirees need to have accumulated 35 years’ worth of National Insurance Contributions (NICs) – which are credits built up for each year they’re in work.
However, giving up employment early could mean many don’t reach the necessary amount.
Instead, if you’re looking after a child below the age of 12, you can apply for ‘childcare credits’ to top you up.
Royal London – who carried out a report into lost credits last year – said that if you miss a year of NI contributions and don’t make it up, you’ll lose 1/35th of the full rate state pension (currently £164.35/week).
That’s equivalent to £4.70 a week or £244.40 a year.
How does "grandparents’ credit" work?
Grandparents who give up their job to look after their grandchild could be losing out on their state pension rights.
However, under the rules surrounding specified adult childcare credits, if a mother goes back to work after the birth of a child she can sign a form that allows a grandparent, or other family member, to receive National Insurance (NI) credits for looking after the child.
This means the person can continue to build up their National Insurance Contributions as they look after the child.
These credits can be backdated until 6 April 2011 and the Government encourages everyone who is eligible to apply.
Currently around 19,000 grandparents are claiming it – which means more than 81,000 could be missing out.
Your benefits explained
It’s NOT just for grandparents though
Grandparents’ credit is just one element of Specified Adult Childcare credits which covers anyone looking after a child (under 12) that’s related to them, full time.
This ensures any gaps in their National Insurance record is covered, which boosts their chances of getting the full state pension (currently £164.35 a week or £8,546.20 a year).
"With childcare costs surging to become a disproportionate amount of people’s salary, grandparents often throw families a much needed lifeline by taking on the care," tax expert, Rachael Griffin at Old Mutual Wealth explained.
“However, the vast majority of this workforce are not seizing what they rightly deserve, as Guy Opperman has confirmed that since 2011 just 19,000 people have taken advantage of the government’s childcarecredits.
“While spending your days taking trips to the zoo and having picnics in the park may sound like a holiday, taking care of young children while doing so make it’s more akin to working a full time job. National Insurance credits are the least this unsung workforce deserves.”
Financial support for parents
Who counts as a family member?
You may be entitled to childcare credits if you are a grandparent or other family member who cares for a child aged under 12, usually while the parent is working.
Those eligible must be over the age of 16 and below the state pension age (when they cared for the child).
Mother or father who doesn’t live with the child
Grandparent, great-grandparent or great-great-grandparent
Brother or sister
Aunt or uncle
Husband or wife or former husband or wife
Civil partner or former civil partner
Partner or former partner
Son or daughter / half-brother or half-sister or step/adopted sibling
How to claim Adult Childcare Credits
Anyone looking to claim childcare credits can do so online here – don’t forget you can also backdate it to 2011.
You won’t be able to claim if you have already qualified for National Insurance for that year (ie if you have been in employment or claim another form of NI credits).
If you have any issues with the applications process, you can call the National Insurance helpline on 0300 200 3500.
"Many families rely heavily on the support provided by grandparents to enable them to combine paid work and family life," explained Sir Steve Webb, former pensions minister.
"The fact that there is a scheme to make sure that grandparents do not lose out, by protecting their state pension rights, is a very good thing," he added.
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