Hundreds of thousands of grandparents missing out on pension credits

Hundreds of thousands of grandparents could be missing out on state pension credits for looking after their grandchildren while the parents are working, Royal London has found.

A freedom of information (FOI) request made by the mutual insurer found that 10,000 grandparents claimed the credit in 2017/18, up from 1,298 in 2015/16, despite approximately 1.1 million grandparents being eligible for the credits.

The credit applies for grandparents under pension age who look after their grandchildren to allow their son or daughter to go to work, meaning the grandparent receives the national insurance (NI) credits that the parent would receive through child benefit.

Commenting, Royal London director of policy, Steve Webb, said: “Whilst it is great news that thousands more grandparents are now benefiting from this scheme, the numbers are still a drop in the ocean out of all those who could benefit.

“It is increasingly common for grandparents to spend some time each week looking after their grandchildren, often to enable a parent to go out to work. It would be quite wrong if these grandparents suffered financially in terms of their own state pension as a result.”

Royal London added that the 1.1 million is likely to be on the high side, as the credits only apply to children up to 12, additionally, if the daughter isn’t paid to work she can’t transfer her credits, while some grandparents may also be working, meaning they cannot collect the top-ups.

A year of credits is worth 1/35 of the full state pension, currently £8,767, meaning grandparents could be missing out on £5,000 over the course of a 20-year retirement.

The scheme, known as ‘specified adult childcare credit’, is open to all family members and requires the child benefit recipient to sign to indicate they no longer wish to receive the NI credits that comes with the child benefit.

“This scheme needs to be much better publicised and I would encourage any family with a grandparent under pension age who helps out with the childcare to find out more,” Webb added.

Claims can be backdated to 2011 and there is no minimum hours requirement.

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