MORE than 100,000 grandparents have boosted their state pension just by looking after their grandchildren.
But thousands of eligible grandparents could be missing out on nearly £6,600 in retirement if they do not claim the credits, experts warn.
Specified Adult Childcare credits are a type of National Insurance credit that can help you qualify for the full state pension.
They can be claimed when a parent who receives child benefit is paying National Insurance and can work because another family member is looking after their child.
The child must be aged under 12.
This does not need to be full-time care and can include picking up a child from school or looking after them during the school holidays.
Anyone with gaps in their National Insurance record can claim the credits to help them qualify for the full state pension.
You need 35 years of National Insurance contributions to get the full new state pension, which is worth £230.25 a week.
But only 104,433 people have successfully claimed the credits in the past five years, according to exclusive data from HM Revenue and Customs (HMRC) obtained by wealth manager Quilter.
Just 42,962 people applied for the credits last year, even though 78% of applications are successful.
Jon Greer, head of retirement policy at Quilter, said awareness of the credits “remains far too low”.
He added: “Many eligible grandparents could be missing out on thousands of pounds simply because they don’t realise they qualify or how to apply.
“We would welcome a renewed effort by the government to raise awareness of these credits, particularly among lower-income families and communities where gaps in NI records are more common.”
Every year of transferred credit will boost your state pension by £330 a year.
This could add nearly £6,600 to the value of your state pension over the course of a 20 year retirement.
You can also backdate your claim to 2011, when the credits were introduced.
What are the different types of pensions?
WE round-up the main types of pension and how they differ:
Personal pension or self-invested personal pension (SIPP) – This is probably the most flexible type of pension as you can choose your own provider and how much you invest. Workplace pension – The Government has made it compulsory for employers to automatically enrol you in your workplace pension unless you opt out. These so-called defined contribution (DC) pensions are usually chosen by your employer and you won’t be able to change it. Minimum contributions are 8%, with employees paying 5% (1% in tax relief) and employers contributing 3%. Final salary pension – This is also a workplace pension but here, what you get in retirement is decided based on your salary, and you’ll be paid a set amount each year upon retiring. It’s often referred to as a gold-plated pension or a defined benefit (DB) pension. But they’re not typically offered by employers anymore. New state pension – This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £203.85 a week and you’ll need 35 years of National Insurance contributions to get this. You also need at least ten years’ worth to qualify for anything at all. Basic state pension – If you reach the state pension age on or before April 2016, you’ll get the basic state pension. The full amount is £156.20 per week and you’ll need 30 years of National Insurance contributions to get this. If you have the basic state pension you may also get a top-up from what’s known as the additional or second state pension. Those who have built up National Insurance contributions under both the basic and new state pensions will get a combination of both schemes.Am I eligible?
To qualify you must be an eligible family member, such as a grandparent, aunt, uncle or older sibling.
You need to be below the state pension age, which is currently 66.
There is no minimum number of hours you need to look after a child to qualify, so you should be able to claim even if you care for them just one day a week.
Only one credit is available per claim, regardless of how many children you are looking after.
For example, if you look after two of your grandchildren who live in the same household then you can only claim one credit.
How do I claim?
You need to wait until October 31 to apply for the current tax year.
This is because HMRC needs to check that the parent or main carer already has a qualifying year of National Insurance.
They should check their National Insurance record to make sure they have credits they can transfer.
Parents and carers can check their National Insurance record on the gov.uk website.
Before you apply for the credits you will need the child’s details and a record of the periods when you provided care for them.
You will also need the contact details of the child’s parent or main carer who receives the child benefit.
Both you and the person who receives the child benefit must sign a declaration on the application form.
You then need to complete the CA9176 form online.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
You cannot save your progress, so ensure you have all the information to hand before you get started.
You will then need to print and send the form to HMRC using the postal address on the application.
Once you have sent the form you can check when you should expect to receive a reply online.
For more information visit gov.uk/guidance/apply-for-specified-adult-childcare-credits.
How can I make sure my application is approved?
Around 9,289 applications were rejected last year, according to official figures.
Most applications are declined for one of two reasons.
The first is that the person claiming already has a qualifying year of National Insurance, for example if they are working or receiving other credits.
Or they could be receiving child benefit for the child themselves, so the National Insurance credits are applied automatically.
Errors on the application can also cause it to be rejected.
Double check your form for mistakes before you submit it to avoid being caught out.
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