Figures show someone who can boost their credits from 30 to 35 years could be £1,375 better off each year after they retire and receive their state pension
Over the past eight years, more than 150,000 applications have been submitted for valuable credits that can increase the amount of state pension someone receives, according to figures from HM Revenue and Customs (HMRC).
These figures were released by wealth manager and financial adviser Quilter as many grandparents gear up to take on additional childcare responsibilities over the summer holidays, providing parents with much-needed support. Specified adult childcare credits (SACCs) offer a significant opportunity for grandparents or other family members caring for a child to enhance their own pension.
These credits are intended to assist individuals below state pension age in accumulating their state pension rights. The credits function by transferring the national insurance (NI) credit that a parent or carer receives as a child benefit recipient to an eligible family member. They can help fill gaps in people’s NI records.
Eligible family members who have cared for a child under 12 may be able to receive these credits if the child’s parent or primary carer does not require the credits themselves. A Freedom of Information (FOI) request submitted by Quilter to HMRC revealed that about three-quarters (76%) of applications were approved between October 2023 and April this year.
Applications may be rejected if, for instance, they already have a qualifying year of NI, perhaps due to employment or receipt of other NI credits. Another reason why credits might not be given is if no-one has claimed child benefit for the child, meaning there’s no NI credit to pass on.
Plus, each child benefit claim only comes with one credit, no matter how many kids are involved. So, if two grandparents look after their child’s two kids, they can only get one credit between them and it’s up to the person who gets the child benefit to choose who gets the credit.
The carer must have been younger than the state pension age when they were looking after the kid, and the child’s parent or main guardian has to agree to the application. Quilter, having looked at the figures from HMRC, found that between October 2016 and April 2024, there were 156,933 applications submitted, 123,138 approved, and 33,795 turned down.
Jon Greer, head of retirement policy at Quilter, said: “These credits are not only crucial for securing the full state pension if you have gaps in your national insurance record, but they are also a cost-effective method of doing so, versus paying to fill in missed years.”
“It’s worth knowing too that the number of hours a grandparent helps out with childcare is irrelevant to the claim. Even if it’s just one day a week, eligible grandparents should be able to claim. More needs to be done to highlight that these credits are available and to educate people on how to correctly apply so they avoid rejection.”
“If not, this unsung workforce of child carers will fail to benefit despite playing a critical role in keeping the economy going especially over the summer months when working parents struggle with the rising costs of childcare and grandparents step in to save the day.”
Previous research from St James’s Place (SJP) suggested 150,000 grandparents could be missing out on Specified Adult Childcare Credits. Figures from SJP show someone who can boost their credits from 30 to 35 years could be £1,375 better off each year after they retire and receive their state pension.
More information about SACCs can be found at www.gov.uk/guidance/apply-for-specified-adult-childcare-credits.
