More than 123,000 grandparents have boosted their state pension by more than £300 a year, by applying for adult childcare national insurance credits.
Data from Quilter showed that over the past eight years there have been more than 157,000 applications for Specified Adult Childcare credits.
According to Quilter, the credits could make someone more than £6,000 better off over the course of a typical retirement.
Specified Adult Childcare credits provide an opportunity for grandparents, or other family members caring for a child under 12, when the child’s parent or primary carer is employed or self-employed and already paying national insurance contributions through their work and may not require the additional NICs they accrue from child benefit claims.
Therefore the ‘extra’ credits can be transferred to the child’s caregiver, potentially increasing their state pension by £328 annually, with no minimum number of hours needed to look after the child.
A Freedom of Information request submitted to HMRC by Quilter revealed on average 19,616 people apply for the credit each year with around 15,400 applications proving successful.
The government introduced the system in 2011 and it was designed to ensure those who were below state pension age, but had given up their career to look after children, could still build up state pension rights that they would have continued to receive had they remained in work.
Jon Greer, head of retirement policy at Quilter, said: “These credits are not only crucial for securing the full state pension if you have gaps in your national insurance record, but they are also a cost-effective method of doing so, versus paying to fill in missed years.
"It’s worth knowing too that the number of hours a grandparent helps out with childcare is irrelevant to the claim. Even if it's just one day a week, eligible grandparents should be able to claim.
“More needs to be done to highlight that these credits are available and to educate people on how to correctly apply so they avoid rejection.
"If not, this unsung workforce of child carers will fail to benefit despite playing a critical role in keeping the economy going especially over the summer months when working parents struggle with the rising costs of childcare and grandparents step in to save the day. “
alina.khan@ft.com
