If you care for a child under the age of 12 then you can increase your state pension if the parents sign over their child benefit National Insurance credits under a little-known rule
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Grandparents could add an extra £2,675 a year to their state pension using National Insurance credits – provided they look after their grandchildren often.
This could mean an extra £53,500 over their whole retirement.
This is because parents can sign over their National Insurance (NI) contributions to their elderly relatives, including their own parents.
The state pension you get in retirement depends on how many NI credits you’ve built up over your working life.
You need at least ten years’ worth of NI contributions to qualify for any sort of state pension, and at least 35 years to get the full amount, which is currently £179.60.
If an elderly relative doesn’t get the full amount, and spends a lot of time looking after grandchildren under the age of 12, it is possible to top up their state pension by allowing them to claim Specified Adult Childcare Credits.
This is where working parents sign over their child benefit NI credit to someone else.
But mums and dads should only do this if they’re in work or earning credits another way themselves.
According to investments and savings firm Hargreaves Lansdown, grandparents risk missing out on more than £53,500 over the course of a 20-year retirement by not transferring NI credits.
These figures are based on a grandparent who has 25 years of contributions and looked after grandchildren for ten years, but didn’t claim, the Sun reports.
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This means they would miss the chance to boost their pension from around £128 to £179.60 a week – multiply this over the 20 years, and it could mean missing out on more than £53,500.
Of course, it does depend on if they’re not already getting the full state pension, and their individual circumstances.
How to apply for Specified Adult Childcare Credits
You can get these by using form CA9176 on the Gov.uk website.
Both you and the parent transferring the credit will need to sign the form, so you must be in agreement that you’re happy to go ahead with the transfer.
You should also be aware that only one grandparent or family member can receive the credit – and the credit is per child benefit claimant, not per child.
You also must have been under the state pension age of 66 when you cared for the child in question.
The government will not take applications for any tax year until at least the following October.
Finally, the credits can be backdated to April 6, 2011, which is when the scheme came into effect.
Two million pensioners in the UK receive less than £100 a week in state pension, a report revealed last week .
The figures come as speculation mounts over next April’s pay increase, with the government deliberating on whether the triple lock will be suspended in 2022 to dodge a record 8% rise for the elderly .
For those who retired after April 2016, the full UK flat rate state pension is currently £179.60 a week.
The full basic state pension for those who retired before April 2016 is currently £137.60 per week.
If you’re looking to boost your retirement income, one of the easiest ways to do so is through applying for pension credits .