A little-known pension credit for grandparents could add thousands to the mix.
HM Revenue and Customs (HMRC) figures show more than 150,000 applications have been made over the past eight years for the valuable credit, which can help boost the amount of state pension someone receives.
The figures, obtained by wealth manager and financial adviser Quilter, come as many grandparents prepare to take on additional childcare responsibilities to help parents through the summer holidays.
The Specific Adult Care Credit (SACC) provides a valuable opportunity for grandparents or other family members who care for children to increase their pension.
This credit is designed to help people under state pension age build up their state pension entitlements.
The credit works by transferring National Insurance (NI) credits received by a parent or guardian as a child benefit recipient to an eligible family member. This can help fill in gaps in people's NI records.
You may receive the credit if you are an eligible family member who cares for a child under age 12 and the child's parent or primary guardian does not need the credit.
Freedom of information (FOI) requests submitted by Quilter to HMRC show that between October 2023 and April this year, around three quarters (76%) of applications were approved.
For example, if you have already gained a qualifying year of NI, your application may be rejected because you have worked or received other NI credits.
Another potential reason why credit is not awarded is if no one is claiming child benefit for your child, so there is no NI credit to transfer.
Additionally, you can only use one credit per child benefit claim, regardless of how many children you have. So if two grandparents are looking after your child's two children, only one credit will be available and the child benefit recipient will have to decide who should get the credit.
Additionally, the beneficiary must be under state pension age at the time the care is provided and the child's parent or primary guardian must consent to the application.
Based on information provided by HMRC, Quilter said a total of 156,933 applications were received between October 2016 and April 2024, with 123,138 approved and 33,795 rejected.
Jon Greer, head of retirement policy at Quilter, said: “These credits are not only important in securing your full state pension if you have gaps in your National Insurance record, but they are also a more cost-effective way than paying out of pocket. Make up the years you missed.
“It’s also good to know that the number of hours a grandparent helps with child care is not relevant to the claim. Eligible grandparents should be able to claim, even if it's just one day a week.
“More needs to be done to highlight the availability of these credits and educate people on how to apply correctly to avoid rejection.