Older couples who regularly look after their grandchildren could be missing out on up to £7,170 in extra State Pension. This lesser-known benefit, called Specified Adult Childcare Credits, can be claimed by grandparents who provide childcare for a family member under the age of 12 while the parents work.
How the credit works
The amount of State Pension you receive is based on your National Insurance (NI) record, which is made up of 'qualifying years'. If you haven't earned enough automatic credits to qualify for the full State Pension, there are ways to apply for NI credits manually. One such way is looking after a family member under 12 while their parent(s) work. This transfers the NI credits that would normally go to an off-work child-caring parent to the family member providing the care.
Data from Confused.com shows that grandparents look after their grandchildren for an average of two days a week, with almost three in 10 (29%) providing childcare for at least three days every week. Despite this, 62% of grandparents provide care for free.
Take-up and impact
HMRC data shows that 42,964 applications for Specified Adult Childcare Credits were made in 2023/24, with around four in five being approved. The potential boost of £7,170 could make a significant difference to retirement income.
Tara Evans, personal finance editor at Confused.com, said: "Grandparents are quietly providing an enormous amount of childcare for families across the UK, helping parents stay in work while saving them hundreds or even thousands of pounds in childcare costs each year. But our research suggests many families are missing out on a valuable pension benefit simply because they don't know it exists. If an eligible grandparent is looking after children while the parents are working, it's worth checking whether they could claim the Specified Adult Childcare Credit. The application is relatively straightforward, and for people who have gaps in their National Insurance record, these credits could make a meaningful difference to their State Pension in retirement."
Real-life examples
One grandparent, Mick, told Money Saving Expert: "My wife retired five years early to help with our young grandchildren. She was four years short of a full state pension. We will now save £3,000 from not having to buy the missing years."
Another said: "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. My new State Pension will rise from around £173/wk to £221/wk, giving an additional £2,496 per year. I wouldn't have known about this without you and the team."
