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State pension payments often serve as the bedrock of retirement income, but not everyone is receiving the full sum. This is because payments typically hinge on National Insurance contributions, with a set number usually required to unlock the full state pension.
Amid the cost of living crisis, people will want to receive as much as they possibly can.
There is a way for grandparents to potentially boost their state pension payments, but it involves a specific action.
Many grandparents will already be looking after their grandchildren, and spending important quality time with them.
However, this labour of love could be rewarded, especially if the care is occurring while the child’s parent is at work.
Any family member who offers free childcare to help parents, can apply for National Insurance credits.
These credits could be especially valuable, helping to go towards the state pension and give it a well-needed boost.
This is a process known as the Specified Adult Childcare Credit, which many are unaware of.
It is most important to note this can only be claimed by people who are under state pension age, looking after a child under the age of 12 voluntarily.
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If a parent is at work, they will typically pay their own National Insurance contributions.
As a result, it is unlikely they would need credits they could otherwise get from Child Benefit.
The Specified Adult Childcare Credit process therefore allows parents to sig over the credit to a grandparent, or other eligible person looking after the child.
This can be done without charge, and could help all those involved.
The Government website explains: “As Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to a specified adult, there is not a credit available for each child under 12 cared for, there is a credit for each Child Benefit recipient.
“For example, if two grandparents are caring for their daughter’s two children, there is only one credit available for transfer and the Child Benefit recipient must decide who should have the credit.
“However, if the grandparents are caring for their daughter’s child and their son’s child, there are likely to be two Child Benefit recipients and therefore two credits available for transfer.”
Eligible people will receive a Class 3 NI credit for each week or part week they cared for the child.
These contributions help build entitlements to the state pension, and can therefore help to stop gaps in one’s NI record.
Experts estimate this could be worth up to £2,340 in state pension.
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To apply for Specified Adult Childcare credits, people will need to complete an application form.
The application requires the:
- Personal details of the applicant – family member caring for the child
- Child’s details and the period of care
- Personal details of the child’s parent (or main carer) – the Child Benefit recipient
- Applicant and the parent must both sign their declarations on the application.
People should also be aware the credits can be awarded retrospectively.
The scheme goes all the way back to April 6, 2011 at the earliest, meaning nearly 12 years of credits are available to some.
The Government website added: “We cannot accept applications for a particular tax year until the following October at the earliest.
“For example, for the tax year 2018 to 2019 applications must not be made until October 2019.
“This is because we need to check the parent already has a qualifying year for National Insurance purposes, and that can take until the October.”
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