Grandparents could be missing out on £2,675 state pension boost – how to claim
GRANDPARENTS could be missing out on a £2,675 annual boost to their state pension, which could total £53,500 over their whole retirement.
If you look after your grandchildren you could claim credits that will contribute to your pension pot when you retire.
Grandparents can claim Specified Adult Childcare Credits that top up their National Insurance contributions.
But if you don't claim the credits, you could see thousands of pounds wiped off your state pension.
The amount you could miss out on depends on individual circumstances.
According to investments and savings firm Hargreaves Lansdown, you could lose out on more than £53,500 over the course of a 20-year retirement.
Top tips to boost your pension pot
DON’T know where to start? Here are some tips from financial provider Aviva on how to get going.
- Understand where you start: Before you consider your plans for tomorrow, you'll need to understand where you stand today. Look into your current pension savings and research when you’ll be eligible for the state pension, and how much support you’ll receive.
- Take advantage of your workplace pension: All employers are legally required to provide a workplace pension. If you save, your employer will usually have to contribute too.
- Take advantage of online planning tools: Financial providers Aviva and Royal London have tools that give you an idea of what your retirement income will be based on how much you're saving.
- Find out if your workplace offers advice: Many employers offer sessions with financial advisers to help you plan for your future retirement.
This works out at £2,675 in missing money each year.
In order to qualify for the full new flat rate state pension of £179.60 a week, you need to have 35 years’ worth of National Insurance contributions or credits.
To get any state pension at all you need at least ten years’ of contributions.
Sarah Boles, personal finance analyst at Hargreaves Lansdown, said: "If you don’t have enough, then your years caring as a grandparent can make an enormous difference."
For example, someone with 30 years of National Insurance contributions will receive around £153 a week from their state pension.
If they spent five years looking after their grandchildren, but didn’t claim the credits, they would miss out on the chance to take them to the full 35 years.
Excluding inflation and pension rises, that could leave them more than £27,500 worse off during a 20 year retirement.
A grandparent who had 25 years of contributions and looked after grandchildren for ten years, but didn’t claim, would miss the chance to boost their pension from around £128 to £179.60 a week.
Over 20 years this could mean missing out on more than £53,500.
How to claim
The credits initially belong to whichever parent gets the child benefit, who can claim them while they’re not working and are looking after their child.
If the mum or dad goes back to work and a grandparent steps in to look after the child, the parent can sign the credits over to them.
If no one has claimed Child Benefit for the child there is no attached credit to transfer – therefore Specified Adult Care credits cannot be awarded.
There is a credit for each Child Benefit claimant – not for each child cared for.
For example, if two grandparents are caring for their daughter’s two children, there is only one credit available for transfer.
But if the grandparents are caring for their daughter’s child and their son’s child, there will be two Child Benefit claiments and therefore 2 credits available for transfer.
During the pandemic, grandparents can also claim credits for care provided over the phone or on video calls.
To claim Specified Adult Childcare credits you will need to complete an application form.
You will need to provide your personal details, as well as information about the child and the periods of care.
As part of the application process you also need to input the personal details of the child's parent – the Child Benefit recipient.
Finally, both the applicant and the parent must both sign the form.
Specified Adult Childcare credits can be awarded retrospectively, to 6 April 2011 at the earliest.
But you must have been under the state pension age of 66 when you cared for the child.
The government will not accept applications for a particular tax year until the following October at the earliest.
Carers are also able to claim a different National Insurance credit, which could top up their state pension payment by £5,000 a year.
Brits need a pension pot of £305,000 for a comfortable retirement, according to the latest research.
The government is proposing changes to the way pensions are taxed – check how the plans could impact you.
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