Adult Childcare Credit
ADULT CHILDCARE CREDIT
A MUST READ FOR ALL GRANDPARENTS AND FAMILY WHO TAKE ON CHILDCARE
Relatives looking after a child may be entitled to a State Pension top up worth over £244 per year, but 1000’s are missing out!
Adult Childcare Credit
Introduced by the coalition government in 2011, where a grandparent or family member is looking after a child under the age of 12, and this allows the child’s parent to get back to work, they may be entitled to claim a National Insurance credit to help them build up their State Pension entitlement.
With many parents returning to work, and the surging cost of childcare, more and more family members, mainly grandparents are stepping into this role. Although this brings many personal rewards, this credit is the least that this unrecognised workforce deserves.
Research from Royal London has found that many carers, most of whom are the child’s grandparents are yet to claim this very valuable benefit. More than 19,000 are now claiming this credit however Steve Webb, ex Pensions Minister and Policy Director at Royal London estimates up to 100,000 relatives could be eligible, meaning over 80% of people who could claim may be missing out.
Here at MMB Magazine we don’t want you to be part of this statistic.
To receive the full State Pension, retirees need to have accumulated 35 years’ worth of National Insurance Contributions which are credits built up for every year a person works or receives certain benefits. For many grandparents in particular they may stop working to help with child care, which could impact on how much they receive from their State Pension.
Royal London who carried out a report into this matter last year, said that if you miss one year of NI contributions and don’t make these up, you could lose 1/35th of the full Flat Rate State Pension. This is currently £165.35 per week.
For every year missed, this is the equivalent of £244.40 per annum of inflation proofed income in retirement.
How does it work?
If the parent receiving Child Benefit returns to work, and a grandparent or family member looks after the child, the parent can sign a form which allows the family member to receive National Insurance credits for looking after the child. Where a parent receives Child Benefit (usually the mother), they can sign over the National Insurance credit they receive as a recipient of Child Benefit. The parent returning to work does not need the credit as they are back at work and paying National Insurance and therefore getting their own credit towards their State Pension.
Once the parent has returned to work, any relative can claim, so long as they are of working age and the child is under 12.
Even better, these credits can be backdated to 6 April 2011!
Who is Eligible?
You may be entitled if you are a family member looking after a child under 12 whilst the parent in receipt of child benefit is back at work.
You must be over 16 and below the State Pension age when you care for the child.
What should you do next?
If you are caring for a child under the age of 12, or you know someone who is, I strongly urge you to review your National insurance record to see whether this valuable allowance could benefit you.
The information provided in this blog entry is a high-level overview of the Adult Childcare Credit. For further information or to find out if a family member may qualify, please follow the link below:
This link provides further information about the qualification criteria, the application process, and a helpline number to call!
If this article helps you, or someone you know make a claim for this valuable benefit, we would LOVE to hear your success story.
Victoria Hicks is MMB Magazines columnist for all things family finance. A Director & Chartered Financial Planner with a young family herself. Contact or read more about Victoria Hicks here