Many grandparents are set to receive a state pension boost this summer through a little-known credit that could potentially add thousands to their pension pots. The initiative, discovered through HM Revenue and Customs (HMRC) figures by Quilter, has already benefited over 150,000 applicants in the past eight years.
The Key to Boosting Your Pension
This boost comes in the form of adult childcare credits, specifically designed for grandparents or other family members who provide additional childcare support. These credits serve as a valuable means to enhance one's state pension entitlements before reaching state pension age.
How to Access the Credit Boost
To access this credit boost, one can transfer the national insurance (NI) credit obtained from child benefits to an eligible family member. Eligible recipients must be family members caring for a child under the age of 12, in cases where the child's primary caregiver does not require the credits themselves.
Key Considerations
According to Quilter's freedom of information (FOI) request to HMRC, an impressive 76% of applicants were approved between October 2023 to April 2024. However, individuals with a qualifying year of NI may face rejection. Additionally, if no one in the family claims child benefit for the child, the credit boost may not be claimable.
Important Points to Note
It's imperative to understand that only one credit per child benefit claim is allowed, even if multiple family members provide childcare. Thus, effective communication within the family is essential to determining who should receive the credit. The caregiver must also be below state pension age during the care period, and consent from the child's parent or main caregiver is mandatory.
Expert Insights
Jon Greer, head of retirement policy at Quilter, highlights the significance of these credits in securing a full state pension, especially for individuals with gaps in their national insurance records. He emphasizes the accessibility of these credits, irrespective of the number of hours spent on childcare, making it a cost-effective alternative to filling in missed years. Greer advocates for increased awareness and education on the application process to minimize rejections and ensure more grandparents benefit from this invaluable opportunity.