Grandparents missing out on childcare benefits

Grandparents who look after their grandchildren are missing out on thousands of pounds worth of government help towards their pensions, a report has revealed.

Scottish grandmother Jenny Ackland regularly looks after her grandson.

Seven times more grandparents or other relatives made a claim for National Insurance credit last year compared to 12 months earlier because they help with childcare to allow their children to return to work, according to a study from Royal London.

However, the financial services firm said that nine out of ten people who are eligible for the benefit may still not have claimed.

A recent report from Killick & Co found that over 9.2 million grandparents UK-wide spend an average of nine hours a week looking after grandchildren, saving parents over £1,900 in childcare fees. Meanwhile, figures from Age Scotland recently revealed that more than a third of Scottish grandparents over the age of 50 – around 370,000 people – provide regular childcare for their grandchildren.However, under government rules, where a grandparent is looking after a grandchild and this allows the child’s parent to get back to work, the grandparent may be entitled to a National Insurance credit to help them build up a full state pension, potentially adding hundreds of pounds a year onto their entitlement - and thousands of pounds over the course of their retirement.

Figures obtained by Royal London found that a year ago, just 1,298 grandparents had claimed National Insurance credit in the year from October 2015 to September 2016. However, after publicising the poor take-up of the credit, there were 9,486 applications in the year to September 2017 – a sevenfold increase in one year.

But Royal London warned that many grandparents may be missing out on this benefit, estimating that only around one in 10 of those who may be entitled have claimed so far.

Steve Webb, director of policy at Royal London and previously the UK government’s pensions minister, said: “It is right and proper that when grandparents sacrifice their own working life to help a family member get back to work, they should not also damage their own state pension prospects.

“This National Insurance credit is a valuable right and it is good news that the numbers claiming have risen so dramatically in such a short space of time. But we believe that there are tens of thousands more grandparents who could be entitled to benefit and would encourage more of them to find out about the scheme and to make a claim.”

Under government regulations, a grandparent who looks after a grandchild for one year could add around £230 per year to the amount of state pension they get in retirement. Over a typical twenty year retirement this could be worth more than £4,500.