‘Little-known benefit’ can boost your state pension by up to 10 years | Personal Finance | Finance
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As of October 5, grandparents or other relatives who provided unpaid childcare may claim additional credits to boost their state pension. Some families could be newly eligible for a state pension boost, while others could claim backdated credits for multiple years.
School and nursery closures during the COVID-19 pandemic saw an increase in family members helping out with childcare while the parents or main carer of the child had to work.
Social distancing rules meant that for some, childcare had to be provided remotely through either telephone or video call. The Government has confirmed that people who provided care in this way will still be eligible for Specified Adult Childcare Credit and can claim for the financial years 2019 to 2020 and 2020 to 2021 if they have helped to remotely care for a child.
This scheme may be attractive to people who have not earned enough years of National Insurance contributions to receive the full state pension. To be entitled to the full new state pension, one needs 35 years National Insurance of contributions or credits. These are traditionally accumulated via paying National Insurance or receiving credits, or when receiving certain benefits, such as Jobseeker’s Allowance, Child Benefit, Working Families Tax Credits or Carers Allowance.
People with gaps in their National Insurance record will receive less than the full state pension, and a minimum of 10 years of contributions or credits is needed to get any state pension at all.
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Specified Adult Childcare Credit could help people to fill these gaps, as they will receive a Class 3 NI credit for every week or part week they provide unpaid care for a child. These credits will then assist in building one’s entitlement to state pension. In order to claim, people should fill out an application, which can be done through the Government website, completing form CA9176 or by calling 0300 200 3500.
The application form requires the personal details of the applicant (which is the family member who is providing care for the child), the details of the child and the periods when care took place, as well as the personal details of the child’s parent or main carer (i.e., the recipient of Child Benefit). The applicant and the parent or carer must also both sign their declarations on the application.
People who have provided free childcare to a child under 12 while both of their parents worked can claim the credit, or under 17 if the child is disabled. To be eligible, the carer must be over 16 and under state retirement age, which is currently 66 in the UK for both men and women.
Another piece of the criteria is that the parents must each earn the equivalent of 16 hours per week at National Living Wage or above (this is currently £142.56 per week) and also be entitled to Child Benefit.
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If Child Benefit has not been claimed for the child, there is no attached NI credit to transfer and Specified Adult Care credits cannot be received. This is because Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the Child Benefit recipient over to the family member who is providing free care for the child.
The application must be agreed to by the child’s parent or main carer, who need to countersign the form in order to verify that their relative cared for their child for the period of time stated, and thus confirming that they can receive the Class 3 NI credit for that time.
Only people who are ordinarily a resident in the United Kingdom, i.e., England, Scotland, Wales or Northern Ireland, but not the Channel Islands or the Isle of Man can claim the benefit.
People who already have a qualifying year of National Insurance – because they work or receive other NI credits should not apply for the credit. One’s National Insurance record can be checked online to see if there are any gaps in contributions.
People who are a parent or main carer of the child and are thus receiving Child Benefit should not apply for Specified Adult Childcare credits themselves, as they already get credits through that Child Benefit. People who are the partner of, or live with, a Child Benefit recipient and who are attempting to transfer the credit from their spouse or partner to themselves should also not apply for it.
Crucially, claiming this credit does not affect parents’ eligibility for other free childcare benefits they are hoping to apply for.
Kay Ingram, Chartered Financial Planner at Ingram’s Insights provided more insight as to how the credit works, as well as its benefits.
She said of the little-known benefit: “For those carers who are not paying National Insurance through employment or self-employment, and under state pension age, each year’s credit buys 1/35th of the state pension. This is currently worth £266 per year of extra state pension and increases in value when the state pension rises each year.
“Claims for backdated years credits can be made right back to 2011, when the scheme was first introduced. So, if eligible for every year since then, up to £2,394 of extra state pension could be claimed.”
Ms Ingram also explained how the credit works in situations where more than one family member helps to care for a child. She explained: “Where several family members help out, only one can claim the credit in each tax year, so families need to decide which carer can benefit most from the credits and is not eligible for credits in other ways. For example, where several grandparents look after the children of more than one family, or are eligible for benefit related credits.”
Claimants should also be aware that there is not one credit available for each child cared for, there is one credit for each Child Benefit recipient being helped. As an example, if two grandparents were caring for their daughter’s two children, there would only be one credit available, and the Child Benefit recipient would need to choose which grandparent should receive the credit.
However, if the grandparents were providing care for both their daughter’s child and their son’s child, there could be two Child Benefit recipients being helped, and therefore two credits available for the relatives providing unpaid care.
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