Written by Ian Robinson – Independent Financial Planner
A changing economic and social landscape, in particular the financial pressures in the housing market, has meant that increasingly more people aged between 18-34 are living at home and keeping closer geographical ties with their family – a pattern akin to historical social norms. According to the Office for National Statistics (ONS), 25% of 18-34-year-olds were living at home in 2007 compared to 32% in 2017.
As a result of this, in addition to rising life expectancies, more grandparents are stepping in to assist with childcare. However, unbeknownst to them they could be missing out on approximately £250 a year in financial aid, which would top up their pensions. This could equate to around £5,000 over a 20-year retirement.
For those grandparents who care for children whilst the parents work, it could be worth enquiring about their eligibility for Specified Adult Childcare Credits. These are class 3 National Insurance (NI) credits which are transferred from the Child Benefit recipient to the family member taking care of a child aged 12 and under.
The current system results in Child Benefit recipients automatically qualifying for NI Credits, which count towards their state pension if they do not return to work. If the parent does return to work, these can be transferred to the grandparent taking care of the child. The Specified Adult Childcare Credits can be used to top up an individual’s state pension, which is particularly valuable for those who may have gaps in their NI history or who have retired early to care for their grandchildren.
The number of hours a grandparent provides childcare assistance is irrelevant to the claim, meaning that just one day a week is required to be eligible to claim. However, where the childcare responsibility for one child is shared, the child benefit recipient must decide who should receive the transferred credits. Where there are multiple children, more applications can be filed.
This scheme is not restricted to grandparents, those eligible includes:
- A parent who does not live with the child
- Grandparent, great-grandparent or great-great-grandparent
- Brother or sister
- Aunt or uncle
- Civil partner
An individual will not receive Specified Adult Childcare Credits if they already have a qualifying year of national insurance or are receiving child benefit for the child.
Please note that to receive the credits an application must be completed. These can be backdated where applicable. For further information or to apply, visit Gov.uk.
This is solely for informational purposes and nothing in it is intended to constitute advice or a recommendation.
While considerable care has been taken to ensure this information is accurate and up-to-date, no warranty is given as to its accuracy