The Department for Work and Pensions (DWP) offers a wide range of financial support schemes for older people, of which the state pension is one of the most important.
However, one hidden benefit is relatively unknown but can add considerably to the pension payment. This is linked to providing childcare throughout term time or school holidays for children under the age of 12.
Traditionally, mothers choosing to take care of their children instead of working have been known to qualify for National Insurance (NI) credits. In turn, these credits build up towards their state pension. But, rather confusingly, these credits can be transferred to older people who have not yet reached state pension age.
Currently, each year of NI credit adds around £303 a year to the new full state pension. Over a typical 20-year pension, this can add up to more than £6,000. This boost is facilitated by a scheme known as Specified Adult Childcare.
DWP Specified Adult Childcare
'Specified Adult Childcare' is a scheme which works simply by transferring NI linked to child benefit from the parent to another family member who is caring for a related child under the age of 12. This is extended to 17 if the child is disabled.
The claimant will get a Class 3 National Insurance Credit for each week or part of a week that they looked after the child. It is however important to note that there is only one credit available for each claim for child benefit, regardless of the number of children being cared for.
For instance, if both grandparents have looked after their daughter's two children, there is only one credit available for the transfer and the child benefit claimant should choose who gets the credit.
However, if the grandparents have looked after both their daughter's child and their son's child, it is likely that there will be two Child Benefit claimants and two Credits can be transferred.
Conversely, if no one is claiming child benefit for the child, no National Insurance credit will be transferred and credits will not be available.
Essentially, this boost is intended for children whose parents are employed and who therefore do not need the National Insurance credits arising from claiming child benefit in order to contribute to their own State pension.
Importantly, people can apply retrospectively for specified adult childcare from 6 April 2011. At present, the new full state pension is £221.20 a week, or £11,502 a year.
However, to qualify for this maximum amount, you need to have paid National Insurance contributions for around 35 years. You need a minimum of 10 years' contributions to receive any payment.
Who is Eligible to Apply?
You may apply for the Specified Adult Childcare scheme if:
- You are an eligible family member who provided care for a child under 12
- You were over 16 and under State Pension age when you provided care for the child
- You are ordinarily resident in the UK but not the Channel Islands or the Isle of Man
- The child’s parent (or main carer) has claimed Child Benefit but does not need the credits themselves
- The child’s parent (or main carer) agrees to your application by counter-signing the form to confirm that you:
- Provided care for their child for the period stated
- Can have the credits for the period stated
The deadline for submitting your claim is the 31st October following the end of the tax year for which you wish to apply. In fact, it is necessary for any claimant to check that the parent or main carer already has a qualifying year for National Insurance purposes.
For further guidance about Specified Adult Childcare, you can visit the GOV.UK website.