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How Thousands Could Earn a Retirement Boost Simply to Care for Grandchildren

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Tens of thousands of grandparents could miss out on a little-known retirement benefit that would increase their income when they retire.

Due to the high cost of childcare, more and more parents are relying on family members to care for their children so that they can return to work.

But many caregivers don’t realize they are entitled to valuable retirement loans that could be worth thousands of pounds to offset their time.

Missing: Less than 16,000 grandparents have signed up for the Specified Adult Childcare credit scheme

Research by the charity Age UK found that a fifth of grandparents over the age of 50 – or five million people – regularly take care of their grandchildren.

But exclusive figures from HM Revenue & Customs (HMRC) show that fewer than 16,000 of them have signed up for a scheme designed to increase their pensions each year.

To claim the full new state pension, which is currently worth £185.15 a week, you need 35 years of national insurance contributions.

You can build your track record by paying National Insurance on your earnings during your working life or by claiming National Insurance credits.

If you have children under the age of 12 and you apply for child benefit, you will automatically receive the parental benefit.

But once you’ve gone back to work, you may not need them.

In that case, you may transfer your entitlement to a family member who helps with childcare and who may have a gap in your own national insurance schemes.

These are known as itemized adult childcare credits – and can be very valuable.

Each year of credit is worth a year of national insurance contributions or one 35th of the full state pension.

At current rates this equates to £5.29 a week, £275 a year or about £5500 on a 20-year retirement. You can also backdate claims to 2011.

Eligible family members include not only grandparents, but also aunts and uncles, siblings, cousins, parents who do not live with the child and the partners of those relatives.

There is no minimum requirement for the number of hours of care.

Research by charity Age UK has found that a fifth of grandparents over 50 - or five million people - provide regular childcare for their grandchildren

Research by charity Age UK has found that a fifth of grandparents over 50 – or five million people – provide regular childcare for their grandchildren

And you can even claim, for example, remote childcare during lockdown via phone calls.

But according to HMRC, only 15,311 people claimed specified childcare credits for adults between October 2021 and July 2022.

Between October 2020 and September 2021, 15,927 applications were approved. From October 2019 to September 2020, there were an additional 15,007 claims.

HMRC says it does not know how many people could be entitled to the perk because it does not keep track of how many people help with childcare.

But former pensions minister Sir Steve Webb, of Lane Clark and Peacock consultancy, says 100,000 grandparents and other relatives could easily be missing.

Experts warn that, in addition to a lack of awareness of the benefit, the system is far too complicated.

To be eligible for the credits, parents must continue to apply for child support or notify HMRC that they still want to receive the credits.

Families are entitled to child support if both partners earn less than £50,000 a year.

If one or both earn more than this, they must repay the benefit in whole or in part through the supplement for high incomes.

Pension credits: to claim the full new state pension, which is currently worth £185.15 a week, you will need 35 years of national insurance contributions

Pension credits: to claim the full new state pension, which is currently worth £185.15 a week, you will need 35 years of national insurance contributions

This has proved controversial over the years, with thousands of families being stabbed with hefty penalties after not realizing they had to pay back the money.

Many have since completely opted out of the benefit.

But this means that they have also lost their right to national insurance contributions.

And unless they fill in a form, relatives who help with childcare cannot appeal either.

In addition, child support claims can only be made retroactively for three months, meaning caregivers could lose out on thousands of pounds.

Sir Steve Webb says: ‘Since childcare costs are so high, family care is often the only way people can afford to work, and it would be a shame if the family member providing it would damage their own state pension.

“These transferable credits help to solve that problem. But the system only works if the child’s parent claims child benefit or at least claims the corresponding national insurance contributions.

“This is a free and easy way for families to support each other, and I would encourage any family that could benefit from it to learn more and file a claim.”

You must complete a form (gov.uk/government/publications/national-insurance-application-for-specified-adult-childcare-credits-ca9176) to claim Specified Adult Childcare credits.

The child’s parent is also required to co-sign the document certifying that you have cared for their child for the period specified, and that they agree to transfer their credit to you.

You will receive one credit per household. So if you take care of two children from the same household, you can only claim once.

But if you take care of two children from different families, you can make two claims.

For more information, please contact Age UK’s toll-free advice line on 0800 169 65 65.

moneymail@dailymail.co.uk

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