Grandparents missing out on pension protection

Grandparents who give up work to take care of their grandchildren could be missing out on valuable state pension rights, figures revealed by Royal London have shown. So, if you are a grandparent who is not yet retired, but is taking care of a little one, make sure you're building up all of the pension that you deserve.

National Insurance credits

Mothers who go back to work after giving birth can fill in a form from the Government website that would allow a grandparent or other family member to receive National Insurance credits for looking after their child, thereby helping the family member safeguard their pension as they sacrifice work to help out. This counts for any working age family member leaving work to take over childcare duties, who would otherwise lose some of their state pension (at the tune of £231 per year out of work).

With most childcaring not done by parents falling on the shoulders of grandparents, this means that many pre-retirement age grandparents might miss out on quite a significant chunk of their state pension. Royal London has taken it upon itself to investigate this matter by filing a Freedom of Information request to HM Revenue & Customs for figures on the uptake of the 'Specified Adult Childcare Credit' scheme.

Abysmal uptake

What these figures reveal is that just 1,298 grandparents (and other family members) benefited from the scheme in the year to September 2016, which is actually a decrease from the 1,725 that benefited the year before. Given that there are approximately 100,000 grandparents of working age in the UK who are taking care of their grandchildren and would therefore benefit from the scheme (according to calculations made by Royal London), uptake is clearly far below what it should be.

Most of this can be explained by the lack of awareness of the scheme, which is why Royal London has called upon the Government to make these rights more well known, especially to new mothers. With state pensions becoming ever-more crucial, anyone who for any reason is not paying for National Insurance (by not earning enough or at all) should check if there are any Government schemes that could protect their future from a pensions gap.

Dr Lucy Peake, chief executive of Grandparents Plus, commented: "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."

Securing your pension

So, if you are taking care of a loved one's child and are not yet getting National Insurance credits for it, go to the Government's website to find out how to secure your rights. If you're confused about pensions in general, why not stop by our guides on pensions and retirement first to make some sense of it all. And if you're nearing retirement, why not see if an annuity could be for you? An annuity is designed to secure your income in retirement, which means you would only have to worry about taking the best care of your grandchild.