As families head into the long summer holidays, many working parents will turn to grandparents for help with childcare. While grandparents are a vital support in keeping childcare costs down, thousands could be missing out on a financial boost to their future retirement income.
Royal London is highlighting that grandparents who care for grandchildren may be eligible for ‘grandparents’ credits’, officially known as Specified Adult Childcare Credits, where parents transfer unused National Insurance credits to a grandparent who helps with childcare, helping towards them claiming a full State Pension.
For grandparents under State Pension age providing regular childcare to under-12s, these credits can help fill gaps in their NI record. Over time, this can make a significant difference, with one year currently worth around £358.50 a year in State Pension, or £7,170 over 20 years of retirement.
To benefit, parents receiving Child Benefit can transfer their unused National Insurance credits to the grandparent providing care through the Specified Adult Childcare credits system. However, this requires an application from both parties, meaning many miss out simply because they don’t realise it’s an option.
A missed opportunity, especially for women
An incomplete NI record can affect anyone, but women are more likely to have gaps due to time spent out of work caring for children or relatives.
With at least 35 qualifying years needed for the full State Pension, missing credits can have a lasting impact on retirement income and contribute to the gender pension gap.
In addition, some people may have been ‘contracted out’ of the State Pension in the past, meaning they paid lower NI contributions while building up pension benefits elsewhere. This means that they won’t receive the full amount of State Pension, even if they have 35 years of contributions. Adding more years of State Pension credits can help to increase State Pension.
Encouragingly, Specified Adult Childcare credits can be backdated to 6 April 2011 meaning those who have helped with childcare in previous years could still benefit by making a claim.
“Grandparents play a huge role in supporting families, particularly during the school holidays when childcare can be both expensive and hard to find.
Clare Moffat, pensions and tax expert at Royal London, said:
“Many don’t realise that the care they’re providing could also help boost their own State Pension. For those with gaps in their National Insurance record, claiming these credits could make a real difference to their retirement income.
“As more families rely on grandparents over the summer, it’s important to make sure grandparents are getting the credit they deserve. It’s well worth checking your eligibility and making sure you’re not missing out on something you’re entitled to.”
*The full new state pension for 2026/2027 is £12,547.60, so 1/35th is £358.50 a year pa
Life expectancy at age 67 for women is 87 (20 x £358.50 = £7,170)
