Grandparents who looked after their grandchildren while the children's parents were at work could be eligible for a little-known state pension boost. This boost, known as "specified adult childcare credits," can increase state pension allowances by thousands of pounds.
How the Childcare Boost Works
The amount of state pension a person receives is based on their National Insurance (NI) record, which consists of "qualifying years" of employment. Those who do not earn enough NI credits to qualify for the full state pension can manually accumulate individual NI credits, sometimes boosting their pension allowances significantly.
The childcare boost redirects NI credits that would have otherwise gone to an off-work parent to the family member providing childcare instead. Claims can be backdated to 2011.
Eligibility Criteria
To qualify, the childcare must have been provided before the claimant reached state pension age, and it only applies to children under 12 years old. The child's parent must also be registered for child benefit, even if they are not receiving it.
According to MoneySavingExpert.com, "That's crucial, because the child benefit is what entitles the parent to NI credits if they either aren't working, or are working but earning less than £129 a week. If that parent then starts to earn enough through employment to get an NI credit, the credit they received from their child benefit is up for grabs and can be transferred to a family member who's helping to look after the child."
Real-Life Success Stories
The tip was shared by MoneySavingExpert.com, with readers reporting substantial boosts. One reader named Mick said: "This describes our circumstances perfectly. My wife retired five years early to help with our young grandchildren. She was four years short of the full state pension. We will now save £3,000 from not having to buy the missing years."
Another reader, Andy, added: "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/week to £221/week, giving an additional £2,496 a year."
Additional Information
NI credits can also be purchased from HMRC to fill in employment gaps. This little-known boost could help many pensioners increase their allowances significantly.
