2 min read

Can your grandchildren help to pay your pension?

It seems that fewer people can afford to move too far away from their family home anymore – in 2017, 32% of adult children were still living with their parents.

This means more and more people are maintaining closer geographical ties with their families, as used to be the case many decades ago.

As a result, when these “children” start their own families, they often need help from their parents to look after the kids while they are at work.

Grandparent childcare is a real thing – for some, spending time with grandchildren is a real joy, whilst for others, it can be a restrictive tie. Whichever it is, it is possible for some grandparents (and other family) to benefit financially and get something back for all their hard work.

Grandparents or family members who care for children while their parents work, may be eligible to claim additional National Insurance (NI) Credits towards their state pension. This is particularly valuable if they have gaps in their NI record.

It is called Specified Adult Childcare Credits and it works by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to the family member who is providing care for a related child under 12 years old.

Currently, those in receipt of Child Benefit automatically qualify for National Insurance Credits that will count towards their eventual state pension if they don’t return to work. However, when the parent does return to work, they are able to pass these credits on to a grandparent or family member who is caring for the child.

The grandparent/family member will receive a Class 3 NI credit for each week or part week that they care for the child. The credits were introduced in April 2011 and you must make an application to receive the credits which can be backdated.

Each credit is worth 1/35 of the value of the state pension which is around £250 per year, so not inconsequential.

Who counts as a family member: