Grandparents boost retirement income using little-known NI credit scheme

Over 10,000 grandparents and other relatives are receiving help with their state pension for looking after grandchildren, but many more are missing out on this benefit due to lack of knowledge about the scheme, according to Royal London.

Information Royal London gained through the Freedom of Information Act showed that by 2017/18, 10,084 relatives – mainly grandparents – benefited from a little-known Government scheme known as the Specified Adult Childcare Credit, which was a massive increase from 2015/16 when the number of those benefiting was just 1,298. However, with seven million grandparents in Britain with grandchildren under 16, many more people could likely benefit.

Under the scheme, grandparents – as well as other close relatives such as aunts and uncles – who look after a child under the age of 12 while the child’s parents are at work can benefit from a National Insurance (NI) credit that can be used to enable them to build up a full state pension. As long as the parent who has gone back to work is paying NI in their own right, and therefore no longer need the NI credit that comes with receipt of child benefit, it can be signed over to the family member who is looking after their child. This is added at no cost to the parent.  

This scheme is particularly beneficial to grandparents under the state pension age and who are looking to improve their retirement income. Using the NI credits available through the scheme, they can improve their ability to receive the full state pension without having to work extra years.

Find out more about the Specified Adult Childcare Credit.