A million grandparents throwing away pension perks worth up to £5k

Children playing
Someone who claims these credits for a year could get an extra £250 on their pension Credit: PA

Only a fraction of eligible grandparents are topping up their state pension at no cost, meaning hundreds of thousands of people are losing up to £5,000 at retirement, according to new analysis.

Under the Government’s “specified adult childcare credit” scheme, grandparents who have not yet reached state pension age and who look after children younger than 12 while their parents go to work can claim National Insurance (NI) credits towards a full state pension.

Around 10,000 carers are taking advantage of the top-up, according to a Freedom of Information request by Royal London, an insurer – a significant jump from the 1,300 who claimed in 2016.

But the firm’s analysis calculated that up to one million grandparents are eligible for these credits, meaning hundreds of thousands more are missing out.

Research by Grandparents Plus, a charity, found that around two thirds of grandparents report that they spend time looking after grandchildren.

Steve Webb, of Royal London, said the Government scheme needed to be much better publicised. “It is increasingly common for grandparents to spend time each week looking after their grandchildren, often to enable a parent to go out to work,” he said. 

“It would be quite wrong if these grandparents suffered financially in terms of their own state pension as a result.”

The scheme works by transferring NI credits, obtained when a parent claims child benefit, from the working parent to the caring family member at no cost to either party.

There is no minimum hours requirement, and claims can be backdated to when the scheme was first introduced in 2011. 

These credits can be of considerable value to someone who would not otherwise build up a full state pension, which requires 35 years of contributions.  Someone who claims these credits for a year could get an extra £250 on their pension, or around £5,000 in total over the course of a typical twenty year retirement.

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laura.miller@telegraph.co.uk

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