Looking after a grandchild may boost your pension

Paul Lewis / 27 August 2013

Grandparents and other relatives who are not in paid work and look after children under 12 years old could be entitled to National Insurance credits which may help them qualify for a full state pension.

There are four main conditions:

First, the child’s parent gets child benefit for a child under 12.

Second, that parent has a full National Insurance record for the whole tax year. That doesn’t mean they have to work all the year. But they have to have paid enough contributions at work in that year for it to count towards their state pension.

Third, the grandparent or other relative has provided some care for the child in every week during that tax year. ‘Provided care’ is not defined but as long as the relative has looked after the child for some time in the week that is sufficient. For example, after school during term time and visits or days out in the school holidays.Credits can be given for individual weeks or fewer weeks than the whole tax year but that may not be enough to make the year ‘count’ towards the caring relative’s state pension.

Fourth, the relative claiming the credits has to be aged 16 or more but under state pension age for the whole of the tax year.

How does the scheme work?

The scheme works because the parent who gets child benefit for a child under 12 is entitled to National Insurance credits if she (or he) does not work. But if they work they have no need of the credits and they can be passed to a relative who helps look after the child.

The parent and the relative have to apply jointly and state that care took place each week of the tax year. 

Although grandparents are the most likely group to benefit, the term ‘relative’ includes dozens of different people, some fairly distantly related. It includes the parent’s brothers and sisters, uncles and aunts, husbands, wives, civil partners or just partners of these people (and former partners of them too), children of any of those people and their partners, etc. Half siblings and adopted siblings are treated equally. Only one relative can get a credit for a particular period. 

How to claim?

At the moment claims can be made for the tax year 2011/12 (which ran from April 6, 2011 to April 5, 2012). That was the first year the scheme operated. Claims for 2012/13 will be accepted from October 2013. 

The people who should claim are working age relatives who have a gap in their National Insurance record – fewer than 35 years if they will reach state pension age on April 6, 2016 or later. Buying a year’s contributions would cost more than £650 so the credits are well worth having for nothing.

Click here for more details and a claim form.

And there is more on grandparents and childcare at www.grandparentsplus.org.uk

* Read Paul Lewis' money articles every month in Saga Magazine.

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