Caring for grandchildren over the summer can boost your state pension

Providing regular childcare to under-12s can boost your state pension but two thirds of over-50s are unaware of the option, new research reveals.

A single extra National Insurance credit adds £303 a year to a full state pension at today’s rate, which would add up to more than £6,000 over a typical 20-year retirement.

You can also put in a retrospective claim for ‘grandparent credits’ going back to 2011. 

This is especially useful if you are short of the minimum 10 years needed to claim any state pension, or under the 35 years required to get the full rate – now £203.85 a week or around £10,600 a year.

Providing childcare: Many grandparents step in to help, especially over the school holidays

The boost is only available for looking after children whose parents were working, and so don’t need the credits from claiming child benefit to go towards their own state pensions.

‘Working parents struggling to find affordable childcare often turn to grandparents to help care for their offspring, especially over the long school summer holidays,’ says Clare Moffat, pensions expert at Royal London.

‘Thousands of grandparents are failing to claim, often because they’re simply unaware they can.

‘Although an incomplete NI record affects both women and men, more women are likely to have stopped work because they’re caring for children, elderly relatives, or for health reasons, and have gaps in employment.’

Royal London found 59 per cent of over-50s didn’t know credits could be claimed for helping out with childcare, and 29 per cent were unaware you need 35 qualifying years on your NI record to get a full state pension.

The findings were drawn from a nationally representative survey of 4,000 people carried out in June.

Separate research found grandparents will spend 264 hours, the equivalent of 11 full days, looking after grandchildren during the summer holidays.

‘The cost of living crisis and phenomenal rise in childcare costs has meant grandparents have increasingly been called upon,’ says Moffat.

‘For most people, the state pension provides the foundation for their retirement income and it can make a big difference if you have gaps. So, it’s really important to check your record and claim what you’re entitled to.’

> Check your National Insurance record and your state pension forecast

How do you claim ‘grandparent credits’

More formally known as ‘specified adult childcare credits’ these can be applied for from 1 October onward in the year following the tax year for which you intend to claim.

A parent needs to have registered for child benefit, although not necessarily to receive the payments as they can make a ‘credits only’ claim if one partner earns over the £50,000 limit.

However, the parent must not require the credits t their own state pension, which is common as many go back to work and so pay contributions towards their National Insurance record anyway.

Former Pensions Minister Steve Webb, now a partner at LCP, gave a rundown of the rules on grandparent credits in a column for This is Money.

He says the key things to remember are:

– There is no minimum hours requirement, and as long as the parent of the child confirms that care was provided by another family member, that person can benefit

– These are National Insurance credits towards future state pension entitlement, so they apply only to those who are currently under pension age

– Signing over the NI credit costs nothing to the parent who is going out to work and making their own NI contributions – this NI credit is ‘going spare’

– Provided that the parent either claims child benefit, or even just claims the NI credits only – not the payments if they earn over the limit to qualify – the credits can be signed over

– Although the person caring for the child will often be a grandparent, other family members such as aunts and uncles can also apply.