Family members (not just grand-parents) who look after a relatives children may be able to increase their State Pension entitlement by claiming the Specified Adult Childcare Credit.
We all know that when we pay national insurance contributions on our earnings, or are in receipt of child benefit, then we are accruing entitlement to the State Pension for our retirements. For 2022/23 a full entitlement is £9,628 per annum which is not to be sniffed at, especially with ever-increasing energy bills to pay.
Did you know though, that if you are a working parent and already entitled to state pension credits because you are paying national insurance through being at work, your ‘spare’ credits can be claimed by family members who look after your children for you (provided there is no election in place to pay reduced national insurance contributions).
These credits then count towards your family members entitlement for state pension. So if someone is a few years short of full entitlement, or short of any entitlement at all then this could make all the difference to their future lifestyle.
Sign me up!
In order to qualify for this little known benefit, the relative must satisfy the following conditions;
- They have not already reached state pension age
- They look after a child or children under the age of 12 whilst the parent or main carer is working. As Specified Adult Childcare credits work by transferring the national insurance credit attached to Child Benefit from the Child Benefit recipient to a specified adult, there is not a credit available for each child under 12 cared for, there is a credit for each Child Benefit recipient.
- Does not already have a qualifying year through their own national insurance credits for the given year i.e. has not already ‘earned it’.
- Is ordinarily resident in the UK
- The parent or main carer does not need the credit from their child benefit claim or their own national insurance record
- A joint claim is made by all parties, using a form which can be found at https://www.gov.uk/government/publications/national-insurance-application-for-specified-adult-childcare-credits-ca9176
I myself have personal experience of this, having been able to help both of my parents get up to full state pension entitlement through them looking after my children over the past 10 years.
If you qualify, there is nothing to lose but potentially a lot to gain!
Take a look at this factsheet provided by HMRC for more information https://www.gov.uk/government/publications/national-insurance-credits-for-adults-who-care-for-a-child-under-12-fact-sheet/specified-adult-childcare-credits-fact-sheet
There are lots of little wins like this which we can identify and work on as part of our financial planning with clients. It’s often said, but very true; we don’t know what we don’t know. So please share this far and wide and you could help somebody get that little bit more in their retirement.
