Retirees who help raise their grandchildren are being encouraged to check if they qualify for specified adult childcare credits, a government initiative that could increase their state pension entitlement. The little-known benefit allows eligible family members to earn Class 3 National Insurance credits for informal childcare provided to children under 12.
The measure, introduced in April 2011, has gained renewed attention following a sharp rise in applications. According to figures from HM Revenue & Customs obtained through a Freedom of Information request, over 42,900 claims were made between October 2023 and September 2024, a 43% increase compared to the previous year.
Credits That Bridge Childcare and Pension Entitlement
The specified adult childcare credits scheme is designed to ensure that those who step in to help with childcare duties do not miss out on National Insurance contributions, which are essential for building up the full state pension.
To qualify, an applicant must be under state pension age (currently 66), and care for a child under 12 while the child’s parent is working and receiving Child Benefit. The credits are transferred from the parent to the caregiver and must be applied for annually, starting from the October following the end of each tax year.
According to HMRC, over the past five years, a total of 131,594 applications were submitted, with 104,433 approved. The growing uptake suggests increasing awareness of this often-overlooked entitlement.
Each full year of approved credit is currently worth £330 in state pension income for the 2025/26 financial year, amounting to a potential £6,600 over a 20-year retirement.
Claims can also be backdated to the programme’s start date in April 2011, provided the care conditions were met during that period. Applicants must provide evidence that the child’s parent was working and not already claiming credits themselves.
Application Numbers Surge as More Families Catch On
The rise in applications may reflect both growing economic pressures on families and the increasing reliance on grandparents for informal childcare.
According to Jon Greer, head of retirement policy at Quilter, :
“Applications for specified adult childcare credits are surging as more families catch on to the fact that looking after grandchildren doesn’t just help with childcare but can also boost your retirement income.”
With over double the number of applications submitted in 2023/24 compared to four years prior, the scheme is gaining traction as a strategic financial benefit. The annual transfer of credits not only supports working parents but also helps older caregivers avoid gaps in their pension record, which could otherwise reduce their weekly entitlement in retirement.
