Specified Adult Childcare Credits – Boost Your State Pension

Specified Adult Childcare credits. Got any idea what we’re talking about? If not, don’t worry. It seems most of those eligible are unaware that this government scheme even exists.

It’s fairly commonplace for family members – particularly grandparents – to look after young children in order for the child’s parent/s to return to work. Often, these carers reduce their own working hours to be able do this, or even give up work completely.

Despite this, many working-age grandparents are unaware that they could qualify for National Insurance (NI) credits, which can be used to boost their State Pension in retirement. So, we’ve taken a look at Specified Adult Childcare credits in more detail, including how you could make a claim.

What are Specified Adult Childcare credits?

If you have children under 12 and your parents – or other family members – are caring for them whilst you’re working, you may be able to transfer unused Class 3 NI credits to them as ‘Specified Adult Childcare credits’.

With 10 years’ worth of credits to go back through, Specified Adult Childcare credits could be worth tens of thousands of pounds in extra State Pension benefit.

What’s more, since the outbreak of the pandemic last March, ‘normal’ caring arrangements have been forcibly abandoned with children out of school and parents working – not to mention home schooling – remotely. If your parents or family members have provided care over the telephone or via video link during that time, they may also be eligible for NI credits (for the tax years 2019/20 and 2020/21).

How do Specified Adult Childcare credits work?

Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the parent/main carer who receives the Child Benefit to the grandparent/family member who provides care for a child under the age of 12.

A Child Benefit claim must have been made for the child in the last 10 years in order for Specified Adult Care credits to be awarded. Here’s an example of how it works:

• David and Natalie care for their daughter Leanne’s two children. That means there is only one NI credit available for transfer. So, as the Child Benefit recipient, Leanne must decide who gets the available credit: David or Natalie.

• Next door though, Neil and Lara provide care for both their daughter’s child and their son’s child. As there are two Child Benefit recipients in this instance, there are two Specified Adult Childcare credits available for transfer. So, unlike their neighbours, Neil and Lara will both benefit from the additional credits to their State Pension – as long as their son and daughter agree to split the credits accordingly.

How will it affect my State Pension?

To be eligible for the full new State Pension (£175.20), you need a total of 35 qualifying years of NI contributions or credits. As well as earning NI credits by working and paying NICs, you can also attain NI credits as a parent or carer. Specified Adult Childcare credits count towards your qualifying years.

Here’s an example of just how big a difference these credits could make to someone’s financial security during retirement:

• Betty is a grandmother who regularly looks after her daughter’s two young children.
• She has 27 qualifying years of NI contributions towards her State Pension. But, she is due to reach the state retirement age later this year.
• Given her circumstances, she’s not eligible for a full State Pension under the new system. She’ll therefore receive £135.15 per week.
• However, the successful transfer of her daughter’s Specified Adult Childcare credits gives her a total of 35 qualifying years.
• This entitles Betty to the full £175.20 per week come her retirement. That’s a weekly uplift of over £40 for the rest of her life!

Am I eligible for Specified Adult Childcare credits?

You can apply for Specified Adult Childcare credits if:

• You’re a grandparent, or family member, caring for a child under 12.
• You were aged between 16 and the state pension age when caring for the child.
• You’re a UK resident (excl. the Channel Islands or the Isle of Man).
• The child’s parent/main carer is entitled to Child Benefit and has a qualifying year for National Insurance.
• The child’s parent/main carer agrees to your application by countersigning the form and confirming that you a) cared for their child for the period stated, and b) can have their Class 3 NI credit for the period stated.

You should NOT apply if:

• You already have a qualifying year of NI.
• You’re already receiving Child Benefit for the child.
• You’re the partner of, and live with, the Child Benefit recipient (parent/main carer) and you want to transfer the parent’s credits from your spouse or partner to yourself. Click here if this applies to you.

There’s a full list of ‘what counts as a family member for the purposes of Specified Adult Childcare credits’ available on the government’s website.

How do I apply for Specified Adult Childcare credits?

Specified Adult Childcare credits can be awarded retrospectively, from April 6^th 2011 onwards. To apply, you will need to complete an application form. The required details include:

• Applicant’s personal details. That is the family member caring for the child.
• The personal details of the Child Benefit recipient. That is the child’s parent or main carer.
• The child’s details and the associated periods of care.

Furthermore, the applicant and the parent/main carer must both sign their declarations on the application.

To apply now, click here. Or, if you’d like more information on Specified Adult Childcare credits – or State Pension and National Insurance credits more generally – it’s advisable to seek the specialist advice of an accountant. So, get in touch today.