Insurer Royal London say that hundreds of thousands of people caring for members of their family are missing out on valuable pension credits which could make a massive difference to the amount they receive throughout retirement.

Data they obtained under the Freedom of Information Act show that more than 10,000 grandparents and other family members received help with their state pension in 2017/18 for looking after grandchildren – a sevenfold increase on two years ago.  But Royal London estimates that lack of awareness of this scheme means that this is just the tip of the iceberg.

Under a government scheme, a family member who is looking after a child under 12 while the child’s parents are out at work can benefit from a National Insurance credit.  The parent (who has gone back to work) is likely to be paying NI in their own right and so no longer needs the NI credit that comes with receipt of child benefit.  They can sign this over to the family member who is looking after their child, at no cost to themselves.

Such credits are added to the National Insurance record of the grandparent (if they are still under state pension age) and help them to build up a full state pension. 

The numbers missing out are not known precisely, but according to research by charity Grandparents Plus, around two thirds of all grandparents report that they spend time looking after grandchildren.  Given that there are more than seven million grandparents in Britain (of all ages) with grandchildren under 16, the 10,084 who currently claim NI credits is likely to be a small fraction of those who are entitled.

Commenting, Steve Webb, Director of Policy at Royal London, who tabled the FOI, said: “Whilst it is great news that thousands more grandparents are now benefiting from this scheme, the numbers are still a drop in the ocean out of all those who could benefit.  It is increasingly common for grandparents to spend some time each week looking after their grandchildren, often to enable a parent to go out to work. 

“It would be quite wrong if these grandparents suffered financially in terms of their own state pension as a result.  This scheme needs to be much better publicised and I would encourage any family with a grandparent under pension age who helps out with the childcare to find out more.”

One year of credits can be worth 1/35 of a full pension.  This means that someone who claims these credits for a year could get an extra £250 on their pension, or around £5,000 in total over the course of a typical twenty-year-retirement.

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