Thousands missing out on 'grandparents' credit'

Only 1,298 grandparents and other family members benefited in 2016

Updated: 

Thousands of people who are helping to bring up their grandchildren could be missing out on valuable credits which would help to build up their pension, research has found.

A Freedom of Information (FOI) request submitted to HM Revenue and Customs (HMRC) by Royal London found only a low number of applications had been made for "grandparents' credit".

Under the rules surrounding specified adult childcare credits, if a mother goes back to work after the birth of a child she can sign a form that allows a grandparent, or other family member, to receive National Insurance (NI) credits for looking after the child.

Grandparents who give up their job to look after their grandchild could otherwise be losing out on their state pension rights.

If a working-age grandparent misses out on one year of state pension rights because they are spending time with a grandchild instead of doing paid work, this would cost them one 35th of the full rate of the state pension or £231 per year. Over the course of a 20-year retirement, this would be a loss of more than £4,500.

Royal London said its FOI request had found a "massive non take-up" of the scheme, which is benefiting an average of just two grandparents per parliamentary constituency.

It found that just 1,298 grandparents and other family members benefited in the year to September 2016. The numbers have dwindled compared with two years earlier, when 1,725 were benefiting.

Royal London said its calculations suggest more than 100,000 grandparents of working age could benefit if the scheme was more widely known about.

The credits were introduced from 2011, and someone may be entitled to receive them if they are a grandparent or other family member who cares for a child aged under 12, usually while the child's parent is working. Those eligible would be under state pension age when they cared for the child.

Royal London said more should be done to alert people to these rights, particularly new mothers.

Former pensions minister Sir Steve Webb, who is now director of policy at Royal London, said: "Many families rely heavily on the support provided by grandparents to enable them to combine paid work and family life.

"The fact that there is a scheme to make sure that grandparents do not lose out, by protecting their state pension rights, is a very good thing. But the scheme is not much use if hardly anyone takes it up."

Dr Lucy Peake, chief executive of charity Grandparents Plus, said: "Grandparents play a crucial role in caring for millions of children up and down the country, and are a lifeline to families squeezed by falling incomes and rising childcare costs.

"When they give up their own jobs to help out, they shouldn't damage their future state pension in the process, and the system for making sure grandparents are protected in this situation needs to be much better publicised.

"The contribution they are making within their families and to the wider economy is enormous, and it's important that it's recognised."

More information about specified adult childcare credits can be found at www.gov.uk/government/publications/national-insurance-credits-for-adults-who-care-for-a-child-under-12.

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