Carer grandparents missing out on state pension credits

More than 100,000 grandparents and other family members are missing out on valuable state pension credits for looking after their grandchildren while their mother returns to work, a Freedom of Information request has discovered.

Grandmother hugging her grandson.A FoI request to HM Revenue & Customs by Royal London has revealed massive non take-up of a scheme designed to help grandparents who make sacrifices to help their daughters or daughters-in-law get back to work after the birth of a child.

The FOI reply from HMRC shows that the scheme, known as the ‘Specified Adult Childcare Credit’, was utilised by just 1,298 grandparents and other family members in the year to September 2016. Royal London estimates over 100,000 grandparents of working age could benefit if the scheme was more widely known.

Under current rules, 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 credits for looking after the child.   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 1/35th of the full rate of the state pension or £231 per year.  Over a 20 year retirement this would be a loss of over £4,500.

Royal London is calling on the Government to make these rights more widely known, particularly to new mothers, so that those who make sacrifices for the sake of their children and grandchildren do not lose out.

Royal London director of policy Steve Webb says: “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.   The Government needs to act quickly to alert mothers to the fact that they can sign over the National Insurance credits that they do not need”.

Grandparents Plus chief executive Dr Lucy Peake says: “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.”