Thousands of grandparents across the UK could be missing out on a significant state pension boost worth up to £350 a year, or an average of £7,000 over the course of their retirement, through a little-known HMRC scheme called Specified Adult Childcare Credits.
How the scheme works
The scheme allows family members, such as grandparents, who care for children under the age of 12 to build up their National Insurance record. Parents who are currently claiming Child Benefit can transfer the National Insurance credits they accumulate to the grandparents. This is particularly beneficial for grandparents who may have gaps in their employment history, as the state pension is based on National Insurance contributions.
The full weekly state pension is maximised at £184.90 for those on the basic pre-2016 pension and £241.30 for post-2016 retirees. Achieving these maximum amounts requires roughly 35 years of National Insurance credits. Those with gaps receive less, with the exact calculation provided by the Department for Work and Pensions upon reaching state pension age.
Success rates and financial impact
Wealth management firm Quilter reported that HMRC approved 159,116 out of 202,000 applications received between 2016 and 2025, a success rate of 79%. A successful claim could increase state pension payments by about £350 a year, which for someone with average life expectancy equates to an additional £7,000.
Eligibility and transfer process
The Low Income Tax Reforms Group explained: "Many people – often grandparents – look after their relative’s children to allow the parents to go out and work. This can mean they are not building up entitlement to the state pension. Specified adult childcare credits may be available to ensure state pension entitlement is preserved for these 'family carers'."
Where parents receive National Insurance credits from Child Benefit but do not need them because they are paying National Insurance contributions through employment or self-employment, they can transfer these spare credits to a relative who cares for the child. Even if the parent has opted not to receive Child Benefit payments due to the high income child benefit charge, they still receive the National Insurance credits as long as they have claimed Child Benefit. If no claim has been made, a claim can only be backdated by three months.
HMRC's guidance states: "These credits work by transferring the weekly National Insurance credit a parent or carer gets, as the Child Benefit recipient, to an eligible family member. They can help to stop gaps in your National Insurance record. You will get a Class 3 National Insurance credit for each week or part week you provided care for the child."
Only one credit is available per Child Benefit claim, regardless of the number of children. For example, if two grandparents care for their daughter's two children, only one credit can be transferred, and the Child Benefit recipient must decide who receives it. If care is provided for children from two different families, two credits may be available. If no Child Benefit claim exists for the child, no credit can be awarded.
