Grandparents missing out on credits for doing childcare

Grandparents, Family


Many grandparents who help out with childcare are missing out on National Insurance credits, according to a Freedom of Information request to HM Revenue & Customs by insurance firm Royal London.

The FOI figures show that the scheme designed to help grandparents across the country is benefiting an average of just two grandparents per Parliamentary constituency.

Under current rules, if a mother goes back to work after the birth of a child she can sign a form that allows a grandparent (or other family member) to receive National Insurance credits for looking after the child.  It is designed to help working grandparents who might lose state pension rights if they give up work for a period to help with childcare.

If a working age grandparent misses out on one year of state pension rights because they are spending time with a grandchild instead of doing paid work, this would cost them 1/35th of the full rate of the state pension or £231 per year.  Over a 20-year retirement this would be a loss of over £4,500.

The FOI reply from HMRC shows that this system, known officially as the ‘Specified Adult Childcare Credit’, has benefited just 1 ,298 grandparents (and other family members) in the year to September 2016.   This is a smaller number than two years earlier when 1,725 were benefiting.    But calculations by Royal London suggest that there could easily be over 100,000 grandparents of working age who could benefit if the scheme was more widely known.

Royal London is calling on the Government to make these rights more widely known, particularly to new mothers, so that those who make sacrifices for the sake of their children and grandchildren do not lose out.

Royal London Director of Policy, Steve Webb said: Many families rely heavily on the support provided by grandparents to enable them to combine paid work and family life.   The fact that there is a scheme to make sure that grandparents do not lose out, by protecting their state pension rights, is a very good thing.  But the scheme is not much use if hardly anyone takes it up.   The Government needs to act quickly to alert mothers to the fact that they can sign over the National Insurance credits that they do not need.”

For more information about applying for the credit, click here.

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