Many people are missing out on a valuable boost to their future pension. Could you or your partner be one of them?

It’s a little-known benefit, but if you care for a family-member’s child aged under 12, such as your grandchild, you may be entitled to free National Insurance credits to help you top up your contributions.

Specified Adult Childcare credits (SACc), introduced in 2011, are designed to ensure those below state pension age that had given up work to look after children could still build up the state pension entitlement that they would have received had they remained in work.

But it can also be claimed by people in their fifties or sixties who have retired early.

It’s clear that not everyone has cottoned on to the credits. While around 12.6 million people in the UK claim State Pension, since 2016 only 157,000 people have applied, according to HM Revenue and Customs.

How does it work?

When a child’s parent or primary carer is employed or self-employed, and already paying NI contributions, they may not require the additional NICs they would otherwise accrue from Child Benefit claims. These “extra credits” can therefore be transferred to the caregiver, with each year’s credit increasing their state pension by as much as £328 annually at the present level of State Pension.

Over the lifetime of a standard retirement, this could typically add up to over £6,000 of inflation-proof income.

Caregivers can claim if they are an eligible family member and responsible for caring for a child whose parents claim Child Benefit. There is only one credit available for each Child Benefit claim, no matter how many children are on the claim itself.

For example, if two grandparents provided care for their daughter’s two children, there is only one credit available for transfer. The Child Benefit recipient must decide who should have the credit. Credits can only be transferred if the parent does not need them and agrees to the grandparent’s application.

However, if the grandparents provided care for their daughter’s child and their son’s child, there are likely to be two Child Benefit recipients. This means two credits are available for transfer.

Also… your normal caring arrangements may have been affected by COVID-19. If you have provided care in a different way, for example over the telephone or video, you can still apply for credits for the tax years 2019 to 2020 and 2020 to 2021.

Remember: the credits are available for transfer only if you are under the state pension age ­– currently 66-years-old, but claims can also be backdated to April 6, 2011 when the scheme began.

How to apply for the credits

Go to https://www.gov.uk/guidance/apply-for-specified-adult-childcare-credits for more information, and for the form you will need to complete