Over 123,000 grandparents boost state pension by £300 per year by applying for adult childcare national insurance credits

25 June 2024

As the summer holidays loom and many grandparents get ready to take on additional childcare responsibilities, new data from Quilter, the wealth manager and financial adviser, shows that over the past eight years there have been more than 157,000 applications for Specified Adult Childcare Credits (SACC).

These credits can make someone over £6,000 better off over the course of a typical retirement.

Specified Adult Childcare credits provide a valuable opportunity for grandparents or other family members caring for a child under 12. When the child’s parent or primary carer is employed or self-employed and already paying National Insurance contributions (NICs) through their work, they may not require the additional NICs they accrue from child benefit claims. These ‘extra’ credits can then be transferred to the child’s caregiver, potentially increasing their state pension by £328 annually. Over a standard retirement, this could translate to a financial benefit of over £6,000.

The government introduced the system in 2011 and it was designed to ensure those who were below state pension age but had given up their career to look after children, could still build up state pension rights that they would have continued to receive had they remained in work. There's no minimum number of hours you need to be looking after the child.

A Freedom of information request submitted to HMRC shows that on average each year 19,616 people apply for the credit with around 15,400 applications proving successful. In total, 123,138 people have successfully claimed for the credit.

Two of the main reasons that Specified Adult Child Care Credit applications are rejected are because the applicant already has a qualifying year of national insurance – usually because they work or receive other NI credits or they are receiving child benefit for the child – in that case, they will already get the parent's NI credits automatically.

You can claim if you are an eligible family member and responsible for caring for a child whose parents claim Child Benefit; otherwise, there are no NI credits to transfer.

Additionally, there is only one credit available per Child Benefit claim, regardless of the number of children. For example, even if you care for two of your grandchildren, only one credit can be transferred to you. The credits are available for transfer only if you are under the state pension age, which is currently 66 years old. Claims can be backdated to 6 April 2011. However, the credits can only be transferred if the parent does not need them and agrees to the grandparent’s application. Keep in mind that applications for a specific tax year can only be submitted after 31 October of the following tax year..

The tax year for SACC runs from October to September each year

Jon Greer, head of retirement policy at Quilter says:

“It is fantastic to see more grandparents and other family members take advantage of Specified Adult Childcare Credits. The numbers of people applying for the credit have been steadily climbing and last year saw the most people apply on record with this year set to top that.

“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. “