Data obtained by Royal London under the Freedom of Information Act has found a seven-fold increase in the number of grandparents claiming help towards their state pension because they are looking after grandchildren. But many more grandparents are still yet to claim the help which is available.
Under current rules, where a grandparent is looking after a grandchild and this allows the child’s parent to get back to work, the grandparent may be entitled to a National Insurance credit to help them build up a full state pension. The way the system works is that the person receiving child benefit for the child (usually the mother) signs over the National Insurance credit that she receives as a child benefit recipient to the grandparent. (The mother does not need the credit herself because she is back at work and paying NI Contributions in her own right).
A year ago, Royal London obtained HMRC figures which showed that just 1298 grandparents (or other family members) had claimed this National Insurance credit in the year from October 2015 to September 2016. However, after publicising the poor take-up of the credit, interest has surged. A new FOI reply shows that there were 9486 applications in the year to September 2017 – a sevenfold increase in one year. But Royal London estimates that this still represents only around 1 in 10 of those who may be entitled and is encouraging more grandparents to claim.
A grandparent who looks after a grandchild for one year could add around £230 per year to the amount of state pension they get in retirement. Over a typical twenty year retirement this could be worth more than £4,500.
Steve Webb, Director of Policy at Royal London said:
"It is right and proper that when grandparents sacrifice their own working life to help a family member get back to work, they should not also damage their own state pension prospects. This National Insurance credit is a valuable right and it is good news that the numbers claiming have risen so dramatically in such a short space of time. But we believe that there are tens of thousands more grandparents who could be entitled to benefit and would encourage more of them to find out about the scheme and to make a claim."
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Note to editors
The formal title of this National Insurance credit is the ‘Specified Adult Childcare Credit’, and details of how to apply can be found here: https://www.gov.uk/government/publications/national-insurance-credits-for-adults-who-care-for-a-child-under-12-fact-sheet/specified-adult-childcare-credits-fact-sheet
The credit would mainly be relevant to grandparents who look after grandchildren but could apply to other family members such as uncles and aunts who look after a child so that the child’s mother can go out to work. The person doing the caring needs to be under state pension age to benefit from a credit towards their future state pension.
A National Insurance helpline is available for those with queries:
National Insurance Helpline:
Phone: 0300 200 3500
Textphone: 0300 200 3519
Monday to Friday, 8am to 8pm, Saturday, 8am to 4pm
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.