Do you rely on grandparents or other family members to help with childcare while you work?
Many families rely on grandparents, or other family members, for support with childcare to allow parents to work. In the most recent Northern Ireland Childcare Survey 2021 we reported that over half of households used grandparents to provide some or all of their family’s childcare needs.
Where a grandparent or other family member – who is under state pension age – has stopped working and is now providing informal childcare, this could impact on their state pension entitlements – and financial security – in the future. It is important therefore that grandparents and family members in this situation are aware that they may be able to claim National Insurance credits – known as “specified adult childcare credits” – towards their state pension, to cover any gaps in contributions.
Specified adult childcare credits
In order to qualify for any state pension, you need at least 10 years’ worth of National Insurance (NI) credits, and at least 35 years’ worth to receive the full state pension amount. These credits are typically gained through work. If someone has given up working, in order to provide childcare, then this could impact on their eligibility for the full state pension. They can fill any gaps in contributions by applying for specified adult childcare credits.
The scheme works by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to a family member who is providing care for a related child (for example, from the parent of a child, to the child’s grandparent). This is even the case where a parent or carer has applied for Child Benefit but has chosen not to receive payment due to the High Income Tax Charge. However, if no one has claimed Child Benefit for the child there is no attached NI credit to transfer and specified adult childcare credits cannot be awarded.
Importantly, the Child Benefit recipient’s pension entitlement is not affected, as they will receive the relevant credits through working. In essence, these are ‘spare’ NI credits, but that could significantly uplift the pension entitlement of eligible family members.
Who is eligible?
To be eligible, you must be under state pension age, live in England, Scotland, Wales or Northern Ireland, and not already qualify for National Insurance credits in the relevant year you are applying for (for example, because you have been working or receive other NI credits).
The child you are caring for must be under 12 years of age. There is a broad definition of who qualifies as a family member for the purposes of these credits.
How much can you claim?
You do not receive an amount of money directly as a result of your claim, rather this scheme is intended to help you build up your National Insurance contributions – by stopping gaps in your NI record, you will be entitled to more money when you reach state pension age. Each yearly credit is worth 1/35 of the value of the state pension, currently equating to around £275 per year.
How much you’ll get in extra credits depends on how long you’ve been providing care, and whether you have any gaps in your National Insurance contributions. You can check your National Insurance record online to see if you have any gaps in contributions.
The credits can be awarded retrospectively, back to 6 April 2011 at the earliest.
To calculate how much you’ll get, work out the number of years you have been providing childcare (since 2011). Provided this number is less than, or equal to, the gap in your NI contributions, you can multiply it by £275 to get a rough idea of what you may be entitled to (note, there is a maximum state pension and, once you qualify for that amount, you cannot increase your entitlement).
For example: Jane has cared full time for her grandchildren for five years. She was not working during this time, and has an equivalent gap in her National Insurance contributions. Jane may be entitled to an additional £1,375 per year of state pension (provided this does not exceed the maximum state pension amount).
Note that there is one credit available to transfer per child benefit claimant, rather than per child.
For example: Jane and Paul care for their daughter’s two children. There is only one credit available and the family will have to decide which grandparent should receive the credit. However, if Jane and Paul cared for their daughter’s child, and their son’s child, there are likely to be two child benefit recipients – one for each set of parents. In this case, there would be two NI credits available for transfer.
Impact of COVID-19
For the tax years 2019/2020 and 2020/2021 the Government changed the rules around these credits because social distancing meant that many grandparents and others weren’t able to care for their grandchildren in the normal way. During that time the care given by grandparents, or other family members under state pension age, could be over the phone, by video or other forms of socially distanced contact. From the start of the 2021 tax year eligible care reverted back to being ‘in person’.
How to claim the credits
You (the family member providing care for the child) can apply for the credits using this form on the government’s website. You will need to provide:
- personal details of the applicant – the family member caring for the child
- child’s details and the periods of care
- personal details of the child’s parent (or main carer) – the Child Benefit recipient.
Both the applicant and the child’s parent must sign a declaration. Applicants for a particular tax year cannot be made until the following October. For example, you can apply now for a credit to cover the tax year 2021/22.
Find out more
This is a complex scheme. If you need any help you can call the National Insurance helpline on 0300 200 3500 or visit the Government’s website.
Our Family Benefits Advice Service offers advice and guidance on the wide range of financial support that families may be entitled to – to speak to one of our trained advisors, call Freephone 0800 028 3008 or email firstname.lastname@example.org.