Grandparents flock to little-known childcare credit scheme to boost state pension by £330 a year

28 May 2025

A record number of grandparents and family members are applying for a government scheme that can add thousands of pounds to their state pension, new data obtained by Quilter, the wealth manager and financial adviser, reveals.

A Freedom of Information request to HMRC shows that 42,964 applications were made for specified adult childcare (SAC) credits between October 2023 and September 2024 equating to a 43% increase on the previous year and more than double the number seen just four years ago.

Over the past five years, a total of 131,594 applications have been submitted, with 104,433 successfully approved. The surge in interest highlights growing awareness of this valuable but often overlooked scheme.

With just a couple of months until the summer holidays, many parents may already be calling on grandparents for help with childcare. But while the informal support provided by relatives is often essential, it can also come with financial benefits if families take the time to transfer unused national insurance (NI) credits.

Specified adult childcare credits provide a means for grandparents or other family members to boost their state pension by receiving NI credits when caring for a child under 12. When the child’s parent or main carer is working and already building up qualifying years through their own NI contributions, the ‘extra’ credits associated with their child benefit claim can be transferred to a relative who provides childcare.

Each year of transferred credit is currently worth £330 in additional state pension income for 2025/26, potentially adding nearly £6,600 over a 20-year retirement.

*Annual change is based on the total number of applications received each year.

The government introduced the system in 2011 to ensure that those who gave up or reduced work to care for children could still build up state pension entitlement, provided they were below state pension age at the time of care. Importantly, there is no minimum number of hours a person needs to provide care to be eligible.

Who can apply and why claims are rejected

To qualify, you must be an eligible family member (such as a grandparent, aunt, uncle, or older sibling) providing care for a child under 12 whose parent receives child benefit and agrees to the credit transfer. You must also be below state pension age, which is currently 66.

Only one credit is available per child benefit claim, regardless of how many children are being cared for. For example, if you care for two grandchildren in the same household, only one credit can be transferred.

Applications are often rejected for two main reasons: either the applicant already has a qualifying year of national insurance (for example, because they are working or receiving other credits), or they are the recipient of child benefit for that child themselves, in which case the NI credits are already applied automatically.

Claims can be backdated to 6 April 2011, and applications for a specific tax year can be submitted from 31 October of the following tax year.

Jon Greer, head of retirement policy at Quilter, comments:

“Applications for specified adult childcare credits are surging as more families catch on to the fact that looking after grandchildren doesn’t just help with childcare but can also boost your retirement income.

“Each year of credit is currently worth £330 on your State Pension and yet awareness remains far too low. Many eligible grandparents could be missing out on thousands of pounds simply because they don’t realise they qualify or how to apply. We would welcome a renewed effort by the government to raise awareness of these credits, particularly among lower-income families and communities where gaps in NI records are more common.”